What’s with the “Springing” Power of Attorney? Let’s Decode!

Okay, so you’ve heard the term “springing” power of attorney tossed around, and you’re wondering what in the world it means. Don’t worry; I’m here to unravel the mystery and break it down for you in plain, everyday lingo. So, grab your favorite snack and/or beverage, relax, and let’s dive in!

Imagine this: You’re cruising through life, doing your thing, when suddenly something unexpected happens. It could be an accident, illness, or just life throwing a curveball your way. In such moments, handling your affairs might become a tad tricky. That’s where a power of attorney (POA) comes into play.

Now, there are two main flavors of POA: immediate and springing. Think of them like different flavors of ice cream—both taste good, but with their own unique twist.

Let’s start with the scoop on the immediate POA. Picture this as the “right here, right now” option. With an immediate POA, the authority kicks in as soon as the document is signed, sealed, and delivered. Your chosen agent can step up to bat and make decisions on your behalf without any wait time. So, in the event that you become incapacitated, there are no hoops for anyone to jump through to prove that you can’t properly make financial decisions for yourself.

Now, onto the springing POA—this one’s a bit more like a surprise party. It stays dormant until a specific triggering event occurs. It’s like having a superhero power waiting to be unleashed when needed most. So, when life throws you that unexpected curveball, bam! Your designated agent springs into action to handle your affairs. Often times, the triggering event is your incapacity as determined by one or more licensed physicians.

So, what’s the big diff between the two? Well, an immediate POA is like having your agent on standby 24/7, ready to jump into action whenever needed. Meanwhile, a springing POA keeps your agent in the background until the moment arises when they’re needed most. BUT, with a springing power of attorney your agent will have to jump through some hoops in order to have the authority to help you when you need it.

And here’s the kicker: Whether your POA is immediate or springing, it doesn’t mean handing over the keys to your kingdom. Nope, your authority as the principal remains intact. Think of it more like having a trusted sidekick who can step in and lend a hand when you need it most. The problem is that this can be a curse rather than a blessing in the event that you become incapacitated and still have access to your finances.

Now, you might be wondering, “What about trust? Can’t I just set up a trust and call it a day?” An excellent question, my friend! Here’s the scoop: A revocable living trust is like a VIP lounge for your assets. When you create that kind of trust, you appoint a trustee to manage it (which in most people’s case, they are their own Trustee until they become incapacitated or die). But here’s the kicker: Once you’re incapacitated, the trustee takes the reins, and you step out of the decision-making spotlight.

In other words, a trust takes things a step further than a POA. It’s like passing the baton to someone else to handle your assets while you take a backseat. So, if you want to make sure that in the event of incapacity you cannot take actions with your assets that you wouldn’t take in your right mind, a trust might be your jam.

But hey, just because you have a trust doesn’t mean you don’t need a POA. Not all financial decisions have to do with an asset per se, and not all assets will necessarily go into your trust (more on this in a later article).

So, there you have it—the lowdown on the springing power of attorney and its immediate counterpart, as well as a bonus comparison to the incapacity protections in a trust. Whether you’re all about being prepared for the unexpected or prefer keeping your assets under lock and key until needed, there’s a solution out there for you.

And remember, when it comes to navigating the legal waters of POAs and trusts, it never hurts to consult with a legal pro. After all, when it comes to protecting your interests, it’s better to be safe than sorry.

Until next time, keep being the superhero of your own life, whether you’re springing into action or relaxing on the sidelines. And give us a shout if you need help with your estate planning. We would love to sit down with you, review your situation, and discuss how we can help based on your circumstances.