We advise each of our clients to execute a durable power of attorney, appointing a trusted family member or friend to handle financial and legal matters for them in the event they become incapacitated. This ensures continuity in paying bills and handling personal business, can help prevent loss of funds, and avoids the need to go to court for the appointment of a guardian or conservator.
Clients, often referred to as principals or grantors in legal documents, might expect these documents to take effect only upon their incapacity, to be “springing,” rather than effective immediately upon signing. But almost all of the durable powers of attorney we prepare for clients are immediately effective, even if they will not be used immediately, or ever.
We do this because these documents are only useful if they are accepted by third parties. If a bank, for instance, is presented with a springing power of attorney, it will need proof that the grantor is incapacitated.
A third party will likely accept a letter from the grantor’s doctor attesting to incapacity. But do we really want to make the person appointed under the power of attorney, referred to as the agent or attorney-in-fact, have to go to the trouble of getting such a letter? In all likelihood, they will already be overburdened dealing with the grantor’s illness while also trying to maintain other work and family responsibilities. To require them to seek out a physician’s certification of incapacity will only add to their tasks and delay their ability to act on behalf of the grantor.
It’s also possible that your agent will need to use your durable power of attorney because you are traveling or were injured or became sick while out of the country. In the first case, since you wouldn’t be incapacitated, your agent would not be able to use the power of attorney. In the second, it could be even more difficult to obtain a physician’s certification of incapacity.
The only reason to make a durable power of attorney springing is to make sure the attorney-in-fact does not act prematurely, before the grantor’s incapacity. If the grantor is afraid that this might happen, then she should reconsider whom she is appointing. Of course, some clients don’t have a lot of options as to whom they can appoint. If the attorney-in-fact does exercise the power of attorney while the grantor is competent and without her permission, she can always revoke the instrument.
For these reasons, we urge our clients to execute immediately effective durable powers of attorney as part of their estate planning. Only when they do not have complete confidence in the person they are appointing and have no reasonable alternatives do we advise them to consider making the appointment springing rather than immediately effective.