There are multiple pieces to any comprehensive Minnesota estate plan and it can sometimes be difficult to keep the importance of each in mind.
One such especially critical component, a power of attorney, deserves a bit of discussion. Within the larger topic of powers of attorney is the specific issue of whether the documents should be immediately effective or instead spring loaded, allowing them to arise only when they are needed. For more information about powers of attorney and their springiness (or lack thereof), keep reading.
What is a power of attorney?
A power of attorney is an especially important legal document that takes one of two different forms: a property power of attorney and a health care power of attorney (sometimes called a health care proxy). Property powers of attorney are used to designate someone who will be able to make important financial decisions when you are unable to do so. Similarly, health care powers of attorney authorize another person to make crucial medical decisions when you are otherwise unable.
When is it used?
A power of attorney is designed to be used only in those circumstances where a person becomes disabled, either permanently or temporarily, and is unable to make sound decisions on their own. The power of attorney works to legally assign authority to another person to act in your place, creating an agent to handle your legal matters, whether financial or medical.
What’s a spring?
An especially tricky issue involving powers of attorney is whether they should be allowed to spring. What does “spring” refer to in the context of estate planning documents? It means whether the power of attorney is made to be effective immediately after being executed or if it is instead designed to only spring to life later, after the occurrence of a triggering event (the person becoming disabled or incapacitated).
Benefits of immediate effect
The benefit of having your power of attorney go into effect immediately is that it can sometimes be costly to deal with delay. After all, in emergencies there may be a need to make quick decisions, both financial and medical, and if it is unclear who has authority, confusion can arise. Another benefit to powers of attorney taking immediate effect is that disability can sometimes take on different meanings.
If there’s a dispute about the extent of a person’s disability, this can drag what was supposed to be the simple use of a power of attorney into a complicated legal dispute. Finally, if you are naming a spouse or trusted child as a power of attorney it can be a real benefit to have that person be able to help out with issues while you are still fully functional. Relying on a spouse or child to pay bills or sign documents or handle legal matters can ease burdens, something that could not happen if the power of attorney only became effective upon disability.
Benefits of the spring
So what’s the benefit of having a power of attorney? The biggest upside is that it avoids the possibility of abuse. For example, creating a power of attorney that is effective immediately could allow a child to begin pulling money out of a parent’s bank account or permit a spouse to commit you to agreements you may not have approved of. Creating a springing power of attorney means that this power will only be transferred when it is needed.
An experienced Minnesota estate planning lawyer can help walk you through the complicated process of establishing a workable estate plan. For more information on estate planning in Minnesota, along with a variety of other topics, contact Joseph M. Flanders of Flanders Law Firm at (612) 424-0398.
Source: “Powers of Attorney: To Spring or Not to Spring?,” by Kim Kamin, published at WealthManagement.com.
