Immediate Versus “Springing” Power of Attorney

June 9, 2021

A power of attorney document names someone you trust to act on your behalf. The language used in the document will determine the powers given to the trusted individual and the circumstances in which the power is conferred. It may be something as simple as the power to conduct a one-time transaction because you will be out of the country or it may allow someone to manage your financial affairs for the remainder of your life due to an incapacitating illness.

Power of attorney documents can be either immediate or “springing”. An immediate power of attorney takes effect as soon as it is properly signed and executed. A springing power of attorney only becomes effective at such time as the principal is deemed as incapacitated. Any financial institution presented with a springing power of attorney will require proof of incapacity, typically in the form of a doctor’s letter.

While a springing power of attorney is often beneficial when someone becomes unexpectedly incapacitated, they are not without their problems. A few issues to consider include:

- Delay: Getting the proof of incapacity from a doctor may cause delays. These delays can be disruptive to financial affairs which may result in late fees, missed opportunities or worse.

- Privacy: HIPAA laws may create even more hurdles for getting the necessary incapacity info from the medical providers and into the right hands to effectuate the springing power of attorney.

- Defining Incapacity: Your springing power of attorney document will need to provide a definition of what incapacity means in order for the power of attorney to spring into effect. These definitions can vary based on the level of care needed, duration of the problem, etc.

These documents should be prepared long before incapacity occurs. Without financial and medical power of attorney documents in place, family members will endure the hassle and expense of obtaining guardianship. Being proactive is crucial because the principal must be competent in order to create and execute a power of attorney. He or she must be able to fully understand the powers being conveyed, when they are conveyed (immediately or springing) and to whom they are being conveyed (agent). A principal may select one agent to serve under the financial power of attorney and someone else to serve as healthcare agent under the medical power of attorney. Any of these documents can be revoked or revised by the principal as long as he or she is still competent.

To recap the different types of power of attorney options:

Durable Power of Attorney

A durable power of attorney allows your agent or attorney-in-fact to act for you now and continue to act for you if you should become incapacitated at some point in the future.

Springing Power of Attorney

A springing power of attorney does not become effective unless and until the principal becomes incapacitated. It “springs” to life when it is needed.

Non-durable Power of Attorney

A non-durable power of attorney takes effect immediately upon signing, but does not remain in effect once the principal is deemed incompetent. This is typically used in a simple, one-time business transaction.

To learn more about the use of power of attorney documents, contact the estate planning attorneys at Stouffer Legal in the Greater Baltimore area. You can schedule an appointment by calling us at (443) 470-3599 or emailing us at office@stoufferlegal.com.

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