Estate planning tools can be powerful when used appropriately. A power of attorney can be used to grant designated individuals, or “agents”, the right to act on your behalf, whether in a limited capacity or to fulfill a single purpose. Different power of attorney documents is used for different purposes.
Most of the time, a power of attorney cannot be valid if the principal, or creator of the document, is incapacitated. However, a durable power of attorney can be used to allow someone to act on your behalf even if you have been incapacitated. Furthermore, a springing power of attorney limits an agent’s right to act on your behalf only if you are incapacitated.
What is a Power of Attorney?
A power of attorney (POA) is a legal tool that grants someone (an agent) permission to act on your behalf (the principal). You can extend the ability to act on your behalf to multiple individuals. Powers of attorney can be used to grant this right temporarily, or permanently. They are highly flexible legal tools, meaning they can adapt to whatever you need them to do, provided the wording is correct and within the legal limits of what a power of attorney can do.
Powers of attorney are usually mobilized to help extend your ability to authorize things in your name to other people. For example, if you do not have the time to go oversee the sale of your property in another state, you can send an agent with a power of attorney to act in your name to authorize the sale. You can create a power of attorney to explicitly limit the agent’s abilities to act on your behalf to the sale of this property, within a given period.
However, powers of attorney are also useful to protect your healthcare wishes and financial responsibilities from incapacity. In a more generalized purpose, a power of attorney can be written to give a chosen agent the right to take control of your accounts to continue to provide payroll, manage costs and bills, and fulfill your financial obligations while you are incapacitated.
A healthcare power of attorney is also an important consideration for the case of incapacity. If you cannot communicate your wishes to your doctors, they will be forced to discuss your continued care with a personal representative, usually your next of kin.
A healthcare power of attorney allows you to determine specifically who should step forth to make critical decisions regarding your health. For example, without a power of attorney, your unmarried partner might not have the same level of say over your health as your estranged parents.
What is a Springing Power of Attorney?
Incapacity is a common obstacle to a regular power of attorney. Most of the time, a power of attorney is limited to only being active when you have the means to refute or revoke an agent’s ability to act in your name.
Being incapacitated can effectively give your agent carte blanche to do as they please – while they have a fiduciary duty to do what is in your best interest, it can still be more difficult to revoke their abilities as your agent, and the process usually involves a judge.
As such, you need to specify in your power of attorney document that you grant your agent the level of trust needed to act on your behalf even if you are incapacitated.
A springing power of attorney will only grant an agent the ability to act on your behalf as per the terms of the POA document after you are incapacitated. Some people prefer this over a durable power of attorney because they dislike the idea of giving someone else the ability to make decisions in their name, while still being able to manage their own affairs.
However, while practical, there are definite limits to what a springing power of attorney can do.
One of the greatest drawbacks to a springing power of attorney is that it is limited to the official determination of incapacity. An agent of a springing power of attorney must first get an official determination of incapacity from your doctor before they can make medical decisions on your behalf.
In critical moments, especially during the lifesaving operation that might occur just before incapacity is determined, this can be an untimely delay for the POA to go into effect.
Furthermore, your doctor is limited in their ability to disclose your medical condition – including a determination of incapacity – by state and federal medical privacy laws. If your chosen agent is not among a small list of people automatically granted the ability to receive information about your medical condition, there may be a few more hoops of red tape for the both of you to jump through before they can act as your medical agent.
Springing vs. Durable Power of Attorney
Whereas a springing power of attorney is limited to incapacity, a durable power of attorney allows a medical agent to act on your behalf even after incapacity. You can still limit their ability to act on your behalf to strictly medical decision-making – in which case the doctor will always ask you first – and may be able to avoid some of the drawbacks of a springing power of attorney.
However, this is not to say that a durable power of attorney is strictly superior. You can still write a release form for certain HIPAA-related issues to ensure that your chosen agent is granted the ability to make important medical calls on your behalf after incapacity, and while delayed, they will be able to make decisions for you.
Other Useful Estate Planning Tools
An estate plan typically involves wills and trusts, but alongside POAs, there are other useful documents that can help you prepare for the unexpected, and ensure that your family and loved ones know what you would have wanted.
Living Wills and Advance Directives
These are legal documents that allow you to predetermine your wishes with regards to certain medical procedures and medical fates, such as the right to refuse extraordinary lifesaving measures, or consent to certain treatments should they become necessary, and should you be incapacitated.
An estate plan is more than a series of documents – it is your wishes and will, put to paper as best as humanly possible. It is important to leave no room for error. Speak with an experienced legal professional about crafting an estate plan that best captures your intentions and realizes your wishes.