Power of Attorney: To Spring or Not to Spring?
Powers of Attorney are essential estate planning tools that come with all of our estate planning packages. Whether you have a simple will or a multi-million dollar trust, your planning should include powers of attorney. These documents allow you to authorize another individual – a spouse, adult child, sibling, parent, or close friend – to make decisions on your behalf when you are unable to. For example, if you are in a coma, develop dementia, or your past catches up to you and you are in federal prison.
We generally utilize two separate powers of attorney – one for healthcare decision-making and one for financial decision-making. The healthcare agent can make medical decisions if you are unable and the financial agent can make sure your bills get paid while you are in the hospital. You can choose the same or a different person for each. These documents allow your family to avoid going to court for expensive guardianship proceedings in the event that you are incapacitated and become unable to manage your affairs.
When setting up a power of attorney, you get to choose if yours will be “springing” or not. A non-springing power of attorney is effective the moment you sign it. This means that the person you select as your agent can go down to the bank, or anywhere else, and take action on your behalf today, which is why we need to make sure we select someone we deeply trust.
On the other hand, a springing power of attorney is only effective if a doctor declares you incapacitated. The issue with springing powers of attorney, and why we almost always recommend against them, is that there is a delay between when you are incapacitated and when a doctor formally declares it. Doctors are afraid of liability for malpractice and can be hesitant to declare a patient incapacitated. Even when the doctor is willing to make the call, weeks or months could pass before you can get an appointment to see them. All the while, nobody has the authority to manage your affairs, and your bills have gone unpaid.
As long as we have an agent we trust, we generally recommend non-springing powers of attorney. However, we will always discuss these issues with our clients to determine how to best suit each individual’s needs. If you or a family member do not have powers of attorney in place, call to schedule a free consultation with me at 406-727-2200.
Trevor Funseth
