After choosing an agent for your Durable Power of Attorney for Finances, you must also consider the type. There are two types of Durable Powers of Attorney for Finances to consider:

1. The type that takes effect immediately. The Durable Power of Attorney for Finances takes effect immediately after signing the document.
2. Otherwise known as a Springing Power of Attorney, this type takes effect only when and if you become incapacitated.

Moreover, each type functions differently and your choice depends on how you feel about your selected agent. Therefore, if you selected a reliable agent according to the article Considerations for Choosing an Agent for Your Durable Power of Attorney for Finances, it will be a painless decision.

Considerations for Durable Power of Attorney for Finances to Take Effect Immediately

In most common estates, making the Durable Power of Attorney for Finances effective immediately is typical. Usually, the following conditions exist in most common estates to render this option a sensible choice: 

• The immediate need for your agent to help with finances.

• Having trust in your agent to use the authority given only when necessary.

After signing the document, your agent can use the document immediately and regularly, even if you become incapacitated.

Considerations for Durable Power of Attorney for Finances to Take Effect Only When Incapacitated.

If you are uncomfortable giving control of your finances to anyone while healthy, consider choosing the Springing Power of Attorney. The Springing Power of Attorney is durable and becomes active only when incapacitated. Although this choice seems logical, there are some drawbacks. Since the Springing Power of Attorney doesn’t take effect until a written statement from the attending doctor confirms that you are incapacitated, the following drawbacks may occur:

• Your agent may need to handle a time consuming and complicated process to obtain a written statement from a doctor.

• There are HIPAA regulations to consider. Therefore, a doctor may not write a statement without a valid HIPAA release form.

• Institutions can still question your health, even with written statements.

As a result, these drawbacks can cause a serious delay in the handling of your finances. So, if you choose this option, hire an attorney to handle the Durable Power of Attorney for Finances. The attorney will ensure that the document will contain all the legal language to make the document effective. Additionally, the attorney will include a valid HIPAA release form.

Final Thoughts on the Durable Power of Attorney for Finances

The type of document you select is your decision. However, if you have a common estate and you have complete trust in your agent, then making your Durable Power of Attorney for Finances effective immediately is the sensible choice. Even if you are uncomfortable with leaving control of your finances to your agent, you can still restrict the authority of your agent. Additionally, you can restrict when the authority becomes effective. So, if you have a common estate, avoid forcing your agent to deal with the drawbacks of a Springing Power of Attorney.

Was this article helpful? Do you understand the differences between the two types of Durable Powers of Attorney? Share your comments and questions in the comment box below.  

Reference

Plan Your Estate– Plan Your Estate provides excellent guidance and building estate plans, including any type of Durable Powers of Attorney.