Springing power of attorney is a specific form of power of attorney that has its powers “spring” into effect as soon as an individual becomes incapacitated. Many people favor this form of power of attorney because they do not want to have their arrangement take effect while they are still fully capable of managing their own affairs.
However, after discussing your options with your estate planning attorney, you may realize there are situations in which springing power of attorney may cause more problems than it would otherwise solve. The following are a few examples:
Rather than being able to use the power of attorney as soon as the need presents itself, the agent who takes on the role must get an official determination of your incapacitation before being able to exercise those powers. Typically, this means you must have a physician certify that you are incapable of making decisions on your own accord.
Depending on the circumstances, this could take days or weeks, thereby complicating your finances or key medical decisions.
Vague definitions of incapacity
If your power of attorney forms require you to be incapacitated before they spring into effect, there must be a clear definition of what actually constitutes incapacity. This might differ depending on who you ask.
You must clearly define what will constitute incapacity for you, and ensure there are no loopholes. Then, the physician who provides the determination will need to agree that you meet the criteria you outlined in your estate plan. The problem is that you do not necessarily know what health changes will require help from other people to manage your finances. If you want help before you become officially incapacitated per your definition, you might not be able to get it.
There could also be a situation in which your estate planning lawyer or your agent determine you do not have the capacity to handle your affairs, but your doctor believes otherwise. In short, there are some gray areas related to the definition of incapacity.
Privacy issues under HIPAA
There are numerous laws, including the Health Insurance and Portability Act (HIPAA), that protect your right to maintain privacy regarding your medical information. Physicians may only release information about your condition in select circumstances. If a doctor is to certify your incapacity, your agent must prove the physician can legally release that information. This could require you to complete release forms long before you become incapacitated.
Even if you take this step, your agent could run into additional complications if the doctor is confused about the legal requirements or if there are delays in getting the paperwork processed.
When making your power of attorney decisions, be sure you are considering the potential challenges associated with springing power of attorney, along with the benefits of other arrangements available. Your estate planning attorney can provide you with more information and guidance on the best strategies to employ for your situation and needs.
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