Springing Power of Attorney
A power of attorney is one of the most powerful and effective tools in any estate planning arsenal. It can be used to accomplish a wide variety of tasks, from managing finances to making end-of-life medical decisions. But there are several different types of powers of attorney available under California law, and this variety can easily create confusion. One of those types of power of attorney is a “springing” power of attorney, which differs from other types of powers of attorney. If you’re considering incorporating a power of attorney into your estate plan, a California estate planning attorney can help you determine whether a springing power of attorney is right for you.
What Is a “Springing” Power of Attorney?
Power of attorney agreements involve two parties: the principal (the person who grants the power of attorney) and the agent or attorney-in-fact (the person who exercises the power of attorney under the agreement). There are several different types of power of attorney agreements available in California, including:
- General power of attorney: General power of attorney is the broadest form of power of attorney, allowing the agent to exercise all financial powers on behalf of the principal
- Limited power of attorney: Limited power of attorney is a narrower form, allowing the agent to exercise only the specific powers listed in the agreement
- Healthcare power of attorney: A healthcare power of attorney allows the agent to make medical decisions on behalf of the principal in the event that the principal becomes incapacitated
There are also two ways a power of attorney can become effective:
- Durable/non-durable power of attorney: A durable power of attorney becomes effective as soon as it is executed and remains in effect even after the principal becomes incapacitated. A non-durable power of attorney becomes effective when it is executed but ends when the principal becomes incapacitated. Power of attorney agreements is assumed to be non-durable unless they specifically state that they are durable.
- Springing power of attorney: A springing power of attorney becomes effective only when the principal becomes incapacitated. A springing power of attorney can authorize the agent to make both financial and medical decisions.
In short, a springing power of attorney “springs” into effect when the principal is deemed to be incapacitated. The agent has no authority under the agreement until that time. If you still have questions about how springing power of attorney differs from other types, please contact a California estate planning attorney.
Who Needs a Springing Power of Attorney?
A springing power of attorney can be an attractive option for principals who want to name an agent to make decisions on their behalf but are uncomfortable giving the agent power immediately. By choosing a springing form of power of attorney, the power of attorney agreement becomes effective only when the principal becomes incapacitated, thereby giving them total control over their finances until that time. Once the principal becomes incapacitated and the springing power of attorney takes effect, the agent can exercise any powers granted to them.
Agents under springing power of attorney typically have power over:
- Real estate transactions
- Personal property transactions
- Banking transactions
- Retirement plan transactions
- Stock and bond transactions
- Litigation claims and defenses
- Benefits from government programs
- Business operations
- Tax matters
- Insurance matters
A springing power of attorney can also empower the agent to make medical decisions for the principal, including:
- Consent to or refuse medical treatments
- Select or discharge healthcare providers or institutions
- Approve diagnostic tests, surgical procedures, and medications
- Direct the provision and withdrawal of artificial life support systems
- Donate the principal’s body, tissues, or organs and authorize an autopsy
While the agent may make decisions granted to them under the power of attorney agreement, the agent must nonetheless respect the principal’s wishes as stated in the agreement. For example, if the principal indicates in the power of attorney form that they do not want health care professionals to prolong their life, the agent is bound by that directive.
How to Create a Springing Power of Attorney
The requirements for executing a springing power of attorney in California are fairly simple. First, consult with a California estate planning attorney to determine which type of power of attorney is right for you. Then, decide which powers you want your agent to be able to exercise on your behalf. Remember, your agent can exercise both financial and medical powers if you empower them to do so.
If you decide that you are most comfortable with a springing power of attorney, ensure that your document contains language making it effective even if you become incapacitated. It should also contain language specifying when it will become effective. For example, if you want it to become effective upon your incapacitation, add language to that effect and define what “incapacitated” will mean in your particular situation.
Once your power of attorney agreement is drafted, have it acknowledged by a notary (or signed in the presence of two witnesses) and provide copies of the document to all relevant parties.
Drawbacks of Springing Power of Attorney
While a springing power of attorney can be an effective estate planning tool for some, it is not without its drawbacks. A significant drawback of a springing power of attorney is defining incapacity. It is not always clear when a person has become incapacitated, even under the definition set out in the power of attorney agreement. The agent wishing to exercise power under a springing power of attorney must obtain a determination from the principal’s healthcare provider that the principal is indeed incapacitated, which can cause delays of days or even weeks. Such determinations are also capable of being challenged by other interested parties. These uncertainties and delays can be avoided by choosing a durable power of attorney, thereby circumventing the need for an official determination of incapacity.
Still Have Questions About Springing Power of Attorney? Contact a California Estate Planning Attorney.
If you still have questions about springing power of attorney and whether it is right for you, an attorney can help you decide. For more information, please contact a California estate planning attorney at the Evans Law Firm, Inc., by using our online contact form or calling 415-441-8669 or toll-free at 1-888-50EVANS (888-503-8267).