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Granting a power of attorney (POA) is often done as part of the estate planning process. Sometimes you might grant a POA even without an estate plan. This might occur when you are anticipating being sedated for surgery or if you are a military member being deployed overseas who needs someone to handle financial matters at home while you are gone. You might also want to grant a POA that can be used any time, not just when you are incapacitated or out of the country. You may have heard of a springing durable power of attorney and a durable power of attorney and wonder what is the difference. In this blog post, we discuss whether you should you opt for a springing power of attorney.
A power of attorney is a legal document that gives someone the authority to act on the principal’s, or the person granting the POA, behalf when the principal is incapacitated or unable to make their own decisions. A springing durable power of attorney is one that only takes effect at a specific time in the future, specified by the principal in the POA when they grant it. A springing durable POA has no power until the specified conditions are met and becomes powerless again when those conditions no longer exist.
Because of the limited conditions under which this type of POA is effective, the principal must be extremely detailed and specific about those circumstances. One example where a principal might want to use a springing durable power of attorney might include when they are planning to undergo surgery and want to appoint someone to make decisions while they are in surgery. Another might include if the principal is incapacitated due to being unconscious, in a coma, or dementia. In these circumstances, the POA may indicate that one or more doctors must certify that they are incapacitated before the POA takes effect.
Because it is called a springing durable power of attorney, some individuals are confused when they learn there is a difference between a springing POA and a durable POA. However, they can be two different documents.
A springing power of attorney is one that only takes effect when the conditions specified within the document are present. If the principal’s incapacitation is not one of those specified conditions, the agent cannot make decisions on behalf of the principal while they are incapacitated. If the agent tries to use the POA when the indicated conditions are not present, they can face civil penalties, including damages in a lawsuit filed against them. Additionally, they can face criminal penalties for fraud, theft, exploitation, or embezzlement, depending on how they misuse this power.
A durable power of attorney is one that is effective immediately upon the principal naming their agent and signing the document. This means that the agent can use their authority immediately if needed. Additionally, the durability aspect means that the POA remains in effect even when the principal is incapacitated. If a POA is not durable, that means that the agent’s authority ceases when the principal becomes incapacitated. Even though this type of POA is immediately effective and durable, it is still possible for the agent to misuse their power and face civil or criminal penalties. A skilled Cleveland estate planning attorney with Rhodium Law, LLC may be able to assist you with granting a durable power of attorney for health care or financial matters, as well as explain the obligations associated with agreeing to be an individual’s agent.
A springing durable power of attorney combines both a springing power of attorney and a durable power of attorney. With this POA, the agent only has authority when the conditions specified by the principal are met, but they continue to have this authority when the principal is incapacitated. That limits the agent’s authority by not being effective immediately while also ensuring they have authority when it is needed most, during the principal’s incapacitation.
A springing durable power of attorney is not recommended often, but it does have benefits that could make it the right option in some circumstances. For example, it avoids any confusion about when the agent has authority by clearly indicating the circumstances under which they can exercise that authority.
Additionally, a springing durable POA limits the authority of the agent to specific circumstances and decisions. This can keep the agent from abusing their power. Many people find this useful when they need to give someone POA but do not completely trust the individuals they can choose from to grant this power.
Despite the potential benefits of a springing durable power of attorney, there are also significant drawbacks that can make this POA less effective or ineffective completely. Individuals should carefully consider their options before deciding which kind of POA to move forward with.
In some circumstances, establishing that the principal is incapacitated can be difficult. For example, if the principal has been diagnosed with dementia, they may have good days and bad days before the condition progresses to a point where they are incapacitated long-term. This can make it difficult to identify if they are just having one or a series of bad days or if their mental abilities have declined to the point of incapacity.
Hand in hand with determining incapacity, there can be unanticipated delays with a springing durable power of attorney. While waiting for an official certification that the individual is incapacitated, the POA cannot be used because the conditions specified in the POA have not yet been confirmed to exist. Therefore, while waiting for this confirmation, bills can go unpaid if it is a financial POA or medical decisions may be put on hold for a health care POA. These delays can have a snowball effect, creating additional problems for the agent or principal to deal with later.
With a durable power of attorney, most entities accept the POA and the agent’s authority. With a traditional durable POA, the principal can allow the agent to act on their behalf even if they are not incapacitated. However, a springing durable power of attorney requires specific conditions to exist in order to be effective. This means that some entities may refuse to accept the agent’s authority because they cannot confirm whether those conditions exist. While the entities themselves may not face legal action if they acted in good faith, they may not feel it is worth the risk to allow the agent to act when they cannot confirm the conditions required are present. If this happens, then the agent is unable to act on behalf of the principal and there may be issues with decisions being on hold, bills going unpaid, or other problems that may not be dealt with until or unless the principal regains capacity and can handle their own affairs again.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) established federal standards to protect people’s private health information. If an individual grants a springing durable power of attorney that requires that they are certified as incapacitated by one or more doctors, or otherwise specifies that specific health conditions or symptoms must be present, for the POA to be effective, some healthcare providers may hesitate over privacy concerns related to HIPAA. Particularly in cases where the principal is incapacitated, providers may be concerned that the springing durable POA being presented to them may have been revoked or is otherwise invalid and because they cannot confirm its validity with the principal, they may decline to confirm the principal’s status or provide information to the agent. This may result in the agent having to go to court to get authority. This will create longer delays before the agent can take action and defeats the purpose of having a POA.
A durable power of attorney is effective immediately upon the principal signing it. This means that the agent is immediately able to access the principal’s health information if it is a health care POA, or their financial information if it is a financial POA. The agent can also immediately use their authority if needed. A springing durable power of attorney requires the very specific conditions detailed in it to be met before it can take effect. This can be problematic as it can be difficult to define incapacity.
The American Academy of Family Physicians explains that capacity is an ability to make decisions regarding proposed medical treatments and other aspects of health care and is determined by the treating physician, while competence is a legal term relating to global decision-making, such as making decisions related to finances, property, wills, and other things. However, people often use capacity and competence interchangeably, which means the individual may include details defining incompetence rather than incapacity. Incompetence may not be determined by their health care provider, or because the details are incorrect, the provider may say the conditions in the POA are not met. Additionally, there are many medical conditions that may not cause incapacitation but might require the principal to grant a POA. In those instances, because the springing durable POA does not include those conditions, it may go unused despite the need for it.
A durable power of attorney is effective immediately. This allows the principal to take advantage of their agent’s authority whenever they like. A springing durable power of attorney, due to its requirements to name specific conditions under which it is effective, means that the agent can only serve under those specific circumstances. This means if a principal wants to allow their agent to go to their doctor’s office and ask questions on their behalf, they cannot with the springing durable power of attorney for healthcare. With a durable power of attorney for health care, the agent can perform this task, as the durable POA for health care does not require the principal to be incapacitated or meet any other conditions for the agent to get health information unless the principal has limited this authority, according to Ohio §1337.13.
Like any Ohio power of attorney, there is the potential for misuse with a springing durable power of attorney. However, because these types of POAs often require that the principal is incapacitated before they are effective, there is a greater potential for misuse. The principal does not have any way of allowing the agent to handle some smaller tasks while the principal still has capacity and can decide whether to revoke the POA and grant it to someone else. If they grant a springing durable POA to someone untrustworthy, this individual could exploit their power while the principal is incapacitated and by the time the principal regains capacity and attempts to undo the damage the agent has done, it may prove incredibly difficult.
All powers of attorney have advantages and disadvantages. All of them require that the principal places a significant amount of trust in another person. Determining which kind of POA to grant will depend on many factors, including why the principal wants to give the agent authority and what authority they want to give. There is no one-size-fits-all answer to the kind of POA someone should use.
While there is no legal requirement to work with an attorney to grant a power of attorney, a lawyer may be able to review the individual’s circumstances and offer advice as to which kind of POA may be most appropriate for their unique circumstances. A springing durable power of attorney is rarely recommended, but an attorney may be able to assist an individual in determining whether their case is one of the rare instances where it would be applicable.
Whether you are granting one or more powers of attorney as part of creating your estate plan or are doing so for other reasons, ensuring that you have granted the right POAs for your circumstances can be critical to their effective use. An Ohio estate planning attorney can review your circumstances, the specific tasks you wish to assign to your agent, and the circumstances under which you want your agent to exercise the authority you are granting, and recommend the appropriate powers of attorney for your needs. A springing durable power of attorney may or may not be right for your case, but a compassionate attorney with Rhodium Law, LLC may be able to identify what you need and help you prepare it so that your peace of mind is assured. Call (216) 699-8145 to schedule your consultation and learn more about your options for power of attorney.
