A Financial Power of Attorney serves many purposes. They can allow your attorney in fact (the person you nominate) to make decisions for you on your behalf. These decisions range from managing your financial accounts to selling your house. You can customize your power of attorney to limit the types of decisions your Attorney in Fact can make or you can allow broad authority to make all decisions.
That said, the choice of your Attorney in Fact is very important and should not be taken lightly. The two main types of power of attorneys for financial purposes are springing and non-springing.
A Springing Power of Attorney doesn’t authorize your Attorney in Fact to act on your behalf until a specified condition is met. The most common condition is incapacitation. So, until (usually 2) physicians have deemed you incapacitated, your Attorney in Fact can’t act on your behalf.
An easy way to remember how a Springing Power of Attorney works is that it ‘springs’ into action when you’re incapacitated.
The majority of my clients choose a springing durable power of attorney for that fact. They only wish to have someone making decisions for them if they are incapacitated and at no other times.
A Non-springing Power of Attorney takes effect the moment that you sign it. This means that the person you designate can access your financial accounts, open new accounts, etc. immediately. While this gives a considerable amount of power, some people prefer a Non-Springing Power of Attorney because of how convenient they are. Many elderly clients or clients that own their own business prefer the ability to let someone else run errands for them or sign documents or agreements on their behalf without having to be there. Even though they are mentally capable of doing the tasks, they prefer to let someone else have the ability to do them for them.
It is important to note that all power of attorneys cease to grant power to an attorney in fact the moment that the person dies. If you have any questions or would like to learn more about how a power of attorney could benefit you, please don’t hesitate to contact my office.