When choosing between a springing power of attorney (POA) and the more common immediately effective power of attorney, you need to consider several factors:
Timing
A springing POA only becomes effective upon the occurrence of a certain event, such as the incapacity of the principal, while an immediately effective power of attorney becomes effective immediately upon execution.
Control
With a springing POA, the principal maintains control over his or her affairs until the event triggering the POA occurs. However, this may result in delays if the event takes time to occur, such as if the principal becomes incapacitated but is not formally diagnosed. With an immediately effective power of attorney, the agent has the power to act immediately, which can be beneficial in situations where the principal needs someone to act on their behalf quickly.
Trustworthiness of the agent
While it is common to name children or spouses as agents in case of incapacity, relatives may not be completely disinterested in assuming control over your finances (potential conflicts of interest). Your agent has a fiduciary duty to act in the principal’s (your) best interest. Still, if you are the founder of a family business, fears of being pushed aside, whether justified or not, may exist. Here the principal may feel more comfortable in choosing a springing POA because it only takes effect upon the occurrence of a certain event. However, this also means that the agent will not be able to act on the principal’s behalf until the event has been documented to have occurred.
Complexity of the principal’s affairs
Consider a slow decline in the principal’s ability to handle his or her affairs. If the principal’s affairs are complex, an immediately effective power of attorney may be more appropriate because it allows the agent to act immediately and handle the affairs without delay. On the other hand, if the principal’s affairs are relatively simple and the principal wants to maintain control until a certain event occurs, a springing power of attorney may be more appropriate.
Legal requirements
California has a statutory POA form. A previous post explains its benefits. The default for the statutory POA is an immediately effective POA. However, you can use this form to create a springing POA by filling in the ‘Special Instructions’ section. While it has been common to have one or more doctors determine your incapacity you can also assign a disability panel, which could consist of friends and family you trust, to make this decision.
Ultimately, the choice between a springing power of attorney and an immediately effective power of attorney will depend on the specific circumstances of the principal’s situation and preferences. It is important to consult with an attorney to ensure that the chosen power of attorney is appropriate and legally valid.
Power of Attorney – 6 things current and future Californians should know
