A financial power of attorney (POA) is a document where the principal (the person creating and signing the POA) chooses agents to make financial decisions on their behalf. Years ago, it was commonplace to sign a POA that became effective or could be used only after you lost capacity. That means it could be used only after you were suffering from memory loss or dementia for example. These POAs that only worked after you lost capacity typically required a doctor to write a letter saying that you could no longer make financial decisions on your own. These powers of attorney are called springing powers of attorney because they are inactive until they spring into action upon your loss of capacity. A power of attorney that is effective right when you sign it is called an immediate or non-springing power of attorney.
At Wilson Legal, we do not believe that a springing power of attorney is not a good idea for several reasons.
- If your POA is not effective until after you lose capacity, then how will you be able to see the performance of your agent to know if they can handle the job? You can’t. Your agent may not even know how you do things or where to look for important passwords or account information.
- After you lose capacity, you can no longer “fire” a POA agent because they fail to do a good job by signing a new POA with different agents. You are stuck with the agents you originally picked.
- Your doctor may not be willing to write a letter when your agents feel that it is needed. And when the time comes to write the letter, a doctor may take several weeks to actually write it for you.
- You lose the benefit of being able to ask for help when it is convenient such as if your home closing is scheduled during a vacation. With an immediate power of attorney, your agent can handle the closing for you while your toes are in the sand of a beach.
Benefits of an Immediate Power of Attorney are:
- You have the opportunity to train and review agent performance.
- You can “fire” your POA agents if they fail to perform up to your standards by signing a new POA with different agents.
- You do not have to wait on or depend on a doctor to write a letter for you.
- You can use the power of attorney when it is convenient for you. When you are on vacation, your agent can be working for you.
If you have not looked at your power of attorney in a while, it is time to dig it out. If you have a springing power of attorney, ask yourself if you’d rather have the opportunity to set up your agents for success. If the answer is yes, then call Wilson Legal at 770-205-7861 and let’s get it fixed so you can have a better future.
