A power of attorney is one of the most common estate planning tools used today. It is a flexible legal instrument that can be customized to fit every client’s unique needs. This customization includes the ability to create either a general or specific power of attorney, depending on the purpose of the instrument. Two equally common specific powers of attorney are for finances and healthcare. When is a power of attorney effective? That will depend on the purpose of the document and the circumstances.
Power of Attorney for Finances
A durable power of attorney for finances is an inexpensive and dependable method for planning to allow someone to manage your finances, should you ever become incapacitated, or unable to make decisions for yourself. This type of planning not only benefits you, but it can be a great relief for your family as well. Without a financial power of attorney, your family will be required to participate in court proceedings, in order to ask the court for authority to control and manage your financial affairs. This can be costly and time-consuming.
When a financial power of attorney becomes effective
Another important benefit of a power of attorney’s flexibility is that you can determine when it becomes effective. A financial power of attorney can be created so that it becomes effective as soon as you sign it. For example, spouses commonly create a financial power of attorney for each other, so that if one of them is unable to handle a financial matter for any reason, the other spouse can immediately step in.
On the other hand, you can specify in your power of attorney that it will not go into effect until a doctor certifies that you are becoming incapacitated. This type of power of attorney is often referred to as a “springing” power of attorney. This type of power of attorney will allow you to maintain control of your affairs until you become incapacitated. At that time, the instrument would “spring” into effect. In most states, a power of attorney will automatically terminate if you become incapacitated. In those states, you must specify that the power of attorney is “durable,” otherwise, the document may never take effect, or will terminate when you need it most.
Power of Attorney for Health Care
A durable power of attorney for health care is another common estate planning tool. It is very similar to a power of attorney for finances. The document allows you to appoint someone to be your health care agent, to make necessary health care decision for you and ensure that you receive the type of medical treatment you wish to receive.
When a power of attorney for health care becomes effective
With a health care power of attorney, the document becomes effective when your doctor determines that you no longer possess the capacity to make your own health care decisions. What does it mean to lack capacity? Either you can no longer understand the nature of your medical condition or the consequences of the health care options available to you, or you can no longer communicate your own wishes, verbally, in writing or through gestures.
This means that if you are sick or injured, to the degree that you cannot communicate your health care wishes in any way, your power of attorney will spring into effect immediately. On the other hand, if there is a question about your ability to understand and communicate clearly, your doctor will be required to decide whether to follow the power of attorney. In states where you can draft your power of attorney for health care to become effective immediately, doing so will prevent the need to involve a doctor.
If you have questions regarding power of attorney, or any other estate planning needs, please contact the Schomer Law Group either online or by calling us at (310) 337-7696.