A key issue in preparing a Power of Attorney, or “POA,” is determining whether it will become effective 1) immediately or 2) only if you become unable to act for yourself. The second option is often referred to as a “springing” POA.
A “springing” POA does not become effective unless you (as the Principal) become “disabled” or “incapacitated.” This showing usually requires certification from one or more physicians. A common reason for choosing this type of POA is that allows the client to retain absolute control over assets unless he/she becomes unable to act on his/her own. A potential problem with this approach, however, is that sometimes POAs are needed quickly, and making the requisite showing can take time, especially if physician certifications are required. In addition, sometimes institutions such as banks, will not honor “springing” POAs out of fear that the requisite showing has not been made. Either of these problems can cause significant delays and frustration.
Perhaps the biggest advantage to drafting a POA that is effective immediately is just that – it will be ready to go when you need it. A common concern with this approach is that it allows the agent immediate control over the client’s assets. In designating your agent, however, you should only name individuals you trust completely. If there is any chance that your agent will misuse the POA, you absolutely should not name that person anyway.
You should discuss options for your POA with your attorney, consider the pros and cons of each, and choose what works for you.