Kinds of Powers of Attorney for Finances
There are two kinds of durable powers of attorney for finances: those that take effect immediately and those that take effect only upon your incapacitation where one or two doctors declare that you can no longer manage your financial affairs.
If you want your attorney-in-fact to take over your financial affairs now, you should make your power of attorney document effective as soon as you sign it. Your attorney-in-fact can begin helping you and can continue to do so if you later become incapacitated. You do not have to give up complete control over your finances, simply discuss with your attorney-in-fact how much help you need. If you become unhappy with the arrangement, you can revoke the durable power of attorney.
If you know or believe that you are likely to become incapacitated soon, you should make your durable power of attorney for finances effective right away. If you choose to make your document effective immediately, you and your attorney-in-fact should talk about what incapacity means to you so that there will be an understanding of when your attorney-in-fact should take matters into her own hands. Generally, incapacity signifies that you have lost some physical or mental abilities such that you can no longer effectively manage personal care, property, or financial affairs. Incapacity may be age-related, may be caused by an accident, or may be the result of a degenerative disease.
If you are uneasy making an immediately effective power of attorney, you can make a “springing power of attorney,” which allows the power of attorney to take effect only if at least one doctor examines you and declares that you cannot manage your finances. A springing power of attorney eliminates the danger that your attorney-in-fact will make her own judgment that you are incapacitated.
One drawback of a springing power of attorney is that in order for it to take effect, your attorney-in-fact has go through the time-consuming process of obtaining statements certifying that you can no longer manage your financial affairs. Another disadvantage is that a springing power of attorney may not be accepted by some people or institutions who may questions whether you have really become incapacitated.
To make a springing power of attorney, you have to decide who will be responsible for judging whether you are incapacitated. You may either name one or two doctors to make the determination of incapacitation or you may allow your attorney-in-fact to choose one or two doctors if the need arises. A second doctor’s statement is only necessary if it worries you to leave the decision in the hands of just one person. Keep in mind that if you name a specific doctor to certify your incapacity and that doctor is not available when a statement is needed, your attorney-in-fact can choose another doctor to make the determination.