As you are preparing your estate plan, you will probably think about what you would like done if you become incapacitated due to an illness or injury. You already know that you want a power of attorney allowing someone to make health care and financial decisions on your behalf, even temporarily.
After spending a considerable amount of time carefully choosing the individual or individuals who will undertake these tasks for you under these circumstances, you may be ready to sign on the dotted line. However, you have another factor to consider — do you want those powers of attorney only to become “active” under certain circumstances?
Consider a springing power of attorney
Did you know that most powers of attorney become effective immediately upon your signing them? If that unnerves you, then you may want to consider including some conditions in your power of attorney as to when your agent, also called an attorney-in-fact, receives the powers you provide in your documents. You may want to make your power of attorney effective only when you become incapacitated, but who decides when that is?
A springing power of attorney can provide you with peace of mind, but having one can also create issues if you need your agent to take over decision-making for you. Consider the following:
- You need some form of definition of incapacitation, along with what proof will be necessary in order to determine you meet it.
- Your doctors will only be able to converse with your agent if you provide him or her with an authorization to bypass your doctors’ requirements under HIPAA, or the Health Insurance and Portability Act.
- You will probably need to consult with your financial institutions in order to figure out what they will need in order to honor your financial power of attorney and your agent’s authority. Some require you to use their forms, while others may question the veracity of the claim of incapacitation, so you need to work with them in order to clear the way for your agent.
- Some may question your trust of your agent if you weren’t willing to allow the power of attorney to become effective immediately.
A springing power of attorney may provide you with some peace of mind, but it could also seriously complicate the situation during your incapacitation. It may help to thoroughly explore your options regarding whether to use this type of power of attorney before making a final decision. Discuss the matter with your potential agent or agents, along with your estate planning attorney, to be sure you make the best decision for you should the time come when the document is necessary.