Beware the Springing Power of Attorney: More Trouble than It’s Worth
When you visit your lawyer to do an enduring power of attorney, you’ll likely be advised that the authority of your attorney (the person/people you’re naming to handle your affairs) begins as soon as the power of attorney is signed. The power of attorney does not just begin when you lose capacity. Your attorney can start using the document right away. Some clients are concerned about this and ask if the power of attorney can be changed so that it only takes effect once they lose capacity. This is called a “springing” power of attorney, and is often a bad idea for three main reasons:
1. Capacity is a Sliding Scale
Loss of mental capacity is rarely like flipping a light switch. Adults usually become incapable over time. Your attorney may need to help you out prior to your official “incapacity”, which, in legal terms, means that a doctor has declared you no longer capable of handling your own affairs.
But capacity is a sliding scale. You might have good days and bad days. You might have enough capacity to get by for day-to-day matters, but not enough capacity to intelligently handle more complicated financial issues. A “clear line” when testing for capacity rarely appears, and, if it does, it does not usually happen at the time you need it to happen.
2. Time is of the Essence
Speaking of time: usually, when an attorney needs to use a power of attorney, they need to use it now. Even if you get to the point that a doctor would be prepared to swear a statutory declaration – often, a simple doctor’s note isn’t enough – to state that you are incapable, getting that document when you need it will probably a challenge. It may be days, weeks, or months before you can get to the doctor to hopefully obtain that document. Even then, what if you go to the doctor and you’re having a “good day”? The doctor may not be prepared to declare you incapable of handling your affairs at that moment.
3. A Matter of Trust
A power of attorney is a powerful document, and whomever you name should be someone you trust. If you make a power of attorney that is effective before you lose capacity (the usual, non-springing kind), then at least you’ll be able to monitor your affairs while you’re still mentally capable.
If you want your power of attorney only to take effect after you’ve lost capacity, what you’re saying is that you’re trusting your attorney to handle your finances when you cannot monitor them, but you don’t trust them to handle your finances when you can. Does that make sense?
The Bottom Line: How to Address Your Concerns
First, you should be naming people you trust to handle your finances. If you don’t trust the person you’re naming to be your attorney, then consider naming someone else.
Second, keep the power of attorney in your possession. Let your attorney(s) know where you’re keeping it, so that if you do lose capacity, they can access the document. Before then, however, hold on to it yourself so that they only have the power of attorney if you want them to have it.
If, after considering the issues, you still want to proceed with the springing power of attorney, most lawyers will follow your instructions. Beware, however, that a springing power of attorney usually creates more problems than it solves.
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