Financial Power of Attorney - Immediate or "Springing Power"?

Elder Law Office of George F. Dickerman Attorney and Counselor at Law
3879 Brockton Avenue
Riverside, CA 92501
(951) 788-2156
http://www.elder-law-advocate.com

ELDER LAW NEWSLETTER

Financial Power of Attorney - Immediate or "Springing Power"?

I've written on this topic before, but I still receive questions about whether an "immediate" financial power of attorney is recommended vs. a "springing power".

Generally speaking, you should advise your clients against the granting of an immediate power of attorney.

The difference is simple: An immediate power grants your agent just that - the authority to immediately access your financial accounts and to do whatever you could do with your finances and property.

A "springing power" does not grant your agent any financial authority until, and unless, you become incapacitated and are no longer able to make sound financial decisions. The determination of "incapacity" generally requires that two qualified medical doctors sign a declaration, under penalty of perjury, that you suffer from some mental deficit that prevents you from making sound financial decisions.

Once these two declarations are obtained, your agent can then take them (along with the power of attorney) to any of your financial institutions and, with full legal authority, transact business for you.

If your client is mentally capable of making sound financial decisions, then there is no reason to allow someone else the authority to do so. There may be some exceptions to this; for example, a client may be going on an out of country vacation and needs to conclude a real estate sale that is time sensitive. Under this scenario, it may make sense to execute a limited - special power of attorney that grants the agent the immediate authority to sign all necessary real estate documents to conclude the sale. However, this special power of attorney would be drafted very narrowly in scope, to include only the specific authority needed to close the sale.

Financial powers of attorney are an important estate planning document that every adult should have. However, a red-flag warning should arise if you learn that one of your elderly client's children insists that their parent sign a power of attorney that grants that child/agent an immediate power to transact financial business. Placed into the wrong hands, a financial power of attorney can become a license to steal ( http://clicks.aweber.com/y/ct/?l=5gtZx&m=1h7DA.aGbz04AX&b=f9yf9XvwcGSuZq6WxTfJQA).

Unless some extenuating circumstances warrant the granting of an immediate authority, the safe approach is to grant only a "springing power" to an agent.