Often when you see an estate or Medicaid planning attorney, the attorney will include a “springing” power of attorney as part of your Will or Trust package. This is a power of attorney that takes effect at the time of your incapacity or “springs” into effectiveness when needed. Another name for such a power of attorney is a power of attorney to take effect at a future time. The purpose of this document is to allow you to decide who should handle your financial and other affairs IF AND WHEN you become incapacitated. The incapacity, or triggering event, is defined in the power of attorney, and a third party – either a doctor or a lawyer – is the party who triggers the effectiveness. It is not necessary that the doctor or lawyer be named; the document can just say “a doctor treating me at the time” or “an attorney duly admitted to practice law before the Courts of the State of New York”.
The benefits of such a document, especially for someone with a progressive illness like Alzheimer’s Disease or Parkinson’s Disease or any other progressive illness that will eventually rob the person of their ability to make decisions and handle their affairs cannot be emphasized enough – without this document, it will be necessary for that person’s spouse or children to bring a guardianship proceeding for them, an expensive court proceeding which basically accomplishes the same thing – it appoints someone to make financial decisions and manage your property. Unfortunately, if you choose the wrong party, though the effect can be devastating.
Before we get into the pitfalls of such a document, let me say that the law has been continuously updated in favor of these documents, and I am a big proponent of them. The purpose of this article is to make you consider all your options when preparing one.
It is important to be well-informed before signing any legal document, but especially before signing one that gives a person the power to impoverish you. As I found in one of my cases, a springing power of attorney in the hands of a selfish child can lead to disastrous result for an elderly parent. They can literally remove all property from your name and access it before your death, even if those funds were meant to be used to care for you in your old age.
Here are few things to be aware of: 1. YOU PICK WHO YOU TRUST: If you have any doubt as to the honesty and scrupulousness of your child – DO NOT APPOINT THEM. Remember, in-law will often insinuate themselves into the picture when money is involved so consider the child’s spouse when deciding whether or not to appoint that child. DON’T appoint a child out of guilt or because you “feel bad”. If you have any reservations, err on the side of caution. Many attorney’s will take this responsibility on, but be sure to negotiate the fees for acting on your behalf before you sign.
- APPOINT A MONITOR OR MULTIPLE AGENTS: Checks and balances are always a good idea. If you have 2 children appoint them both, especially if they don’t get along. If you have three children, appoint 2 who are on opposite sides. You can also appoint a neutral third party as your monitor to ensure that the children are doing what is best for you not what is best for them. I have seen countless incidences where the children did not pay for care because they were reluctant so spend their inheritance. Remember there is no inheritance until you are deceased – and your money should be used for your care until then.