A financial power of attorney allows a person to “stand in your shoes” to act on your behalf if you can’t — this person (known as an agent) can pay your bills, take care of your banking needs, and otherwise take care of your business if you can’t. If you don’t have a financial power of attorney and you become unable to take care of your financial matters, your loved one may have to go to court to get conservatorship over your financial matters. And any time a court is involved, usually lots of money and time is wasted. Having a financial power of attorney is a crucial part of any estate plan.
Often times, people approach me to draft a “springing” financial power of attorney. While they like the idea of a person taking care of their finances if they can’t, they don’t trust their named agent enough to make the document effective immediately, as they worry about the agent abusing the power or even possible theft. They want the document to only be effective if they are incapacitated. While this sounds reasonable, sometimes there is a danger that a springing power of attorney will not work.
For example: Michael was having a wonderful time in Florida while he waited for his Idaho house to close. Unfortunately he took a bad fall and ended up in a Florida hospital. He had his Idaho power of attorney, but the problem was that is was “springing” — the power of attorney was only effective if he was incapacitated. Michael’s capacity was fine, it was just that he was unable to come back to Idaho to take care of business because he was injured. His “springing” power of attorney was useless to help him.
But even if Michael was incapacitated, there could be further problems. A doctor would still probably have to certify that he could no longer make his own decisions and reduce this opinion into a written letter or document. Sometimes doctors even refuse to even do this. Either way, this would cause delay and uncertainty, when swift action was required instead.
The most effective power of attorney is effective immediately to avoid these problems. If a named agent is not trustworthy enough to make the power of attorney effective immediately, this is usually a good sign that they should not be named as an agent at all!
An experienced attorney can help you find your way through many such pitfalls. Please give us a call to learn how we can help.