Naming an agent, or Attorney-in-Fact, in a Power of Attorney document is an important and frequent part of a person’s estate plan.  The agent is given powers by the principal (the person signing the document).  Virtually all Power of Attorney documents made today for estate planning purposes are designed to provide for an easy way for a person’s chosen agent (often a spouse, child, or close friend) to manage the principal’s essential decisions after they cannot speak for themselves or cannot adequately understand a decision and therefore do not have legal capacity to do so.  The designation for a Power of Attorney that can convey powers after the principal is incapacitated is that the Power of Attorney is “Durable”.  The law is that this power will end at the principal’s death, but when the powers of the agent will start can be decided by the principal.

A “springing” Power of Attorney does not confer any power to make decisions to the agent until the principal loses legal capacity.  For medical decisions this is the default under the law since whenever a person can speak for themselves and understand their situation, they will necessarily be present and able to make medical decisions for themselves.  Therefore, all Power of Attorneys for Health Care Purposes (sometimes called Health Care Proxies or Health Care POAs) are “springing”.  This same idea has some appeal to many of my clients for the purposes of their Power of Attorney for Financial Purposes (often called a General Power of Attorney or Durable Power of Attorney).  My general advice has been that a POA for Finances should become effective immediately and provide power to the Attorney-in-Fact before and after the principal is legally incapacitated.

The first rule in drafting the POA for Financial Purposes is always that the agent must be unquestionably trustworthy.  A client who feels that they trust “Billy”, but not until later, makes me very nervous as the drafter of the document.  If you don’t trust a person to act appropriately while you can watch them, why are we giving them power after you can’t?  As the principal you are the boss and you can revoke the POA if the agent makes it clear that they will not honor your wishes.  If you make the document active immediately then you have the opportunity to see how the agent uses it and may be able to provide them instructions on how you prefer your affairs to be managed.

Finally, in my experience the reality is that a POA that springs or has other attempted restrictions will not impede a dishonest agent from abusing it, but may very well stop an honorable agent from using the document efficiently or to address unanticipated issues.  Making a document “springing” creates an extra step or requirement for the use of the document just when it is most needed, while if the document had been active immediately, then it could be employed without the need to obtain a physician’s letter or other evidence of incapacity.  So, the decision of whether to make a Power of Attorney for Financial Purposes effective immediately or make it a springing power is an important one to consider and understand as you make your estate plans.  Generally speaking the immediate power has practical advantages that serve most people very well in my opinion, but you should consult with me, or your own attorney, before making a final decision for your own plans.

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Thompson Law Office, the Modern Law Firm, helps Nebraskans achieve the American Dream through owning homes, starting businesses, strengthening families, and shaping legacies.
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