When Mary’s mom, Irene, went into memory care, Mary needed to find a way to pay for her mother’s treatment. Everything seemed in order: Irene had money in her 401(k) and she had given Mary power of attorney in order to manage her affairs in case she could no longer do so herself—the exact situation she now found herself in. The only problem: Irene had drawn up what’s called a springing power of attorney, a type of POA that only goes into effect when certain conditions are met. In this case, the conditions required two doctors to say that Irene was incapacitated…which was easier said than done.
In the end, thanks to the help of her estate planning attorney, Mary got two doctors to confirm her mother’s incapacitation, and was able to use funds from her mother’s 401(k) to pay for her care. But, it wasn’t easy. Mary could have saved her and her family from a huge headache (and a lot of worry) if she had drawn up a more common type of POA—the kind that goes into effect immediately, rather than a springing power of attorney. The problem is that most people do not understand how these various types of POAs work, which—as you can see—can lead to a lot of unnecessary trouble.
Understanding Powers of Attorney
When many people think of a POA, they think of themselves giving their power away to another person. In this way of thinking, a power of attorney diminishes your control over your own life. This is a misconception. A POA is not a diminishment of your authority, but an extension of it. If you sign a POA that takes effect immediately, you are simply putting a mechanism in place to account for the unknown— that way, you and your family do not find yourselves scrambling during a time of crisis.
A springing power of attorney, on the other hand, “springs” into effect when certain conditions are met. These conditions usually involve one, or—in many cases—two, doctors declaring the individual as being “incapacitated.” The problem here is that “incapacitated” is not a medical term but a legal one. Doctors deal in diagnosis and prognosis, and will often feel uncomfortable signing off on a legal document that is related to a non-medical judgment. This is what happened in Mary and Irene’s case. Irene’s doctors did not feel comfortable declaring her legally “incapacitated”. Mary worked with her attorney to draft a document that doctors did feel comfortable signing off on, but it took considerable maneuvering, and delayed Mary’s ability to access her mother’s 401(k).
While many people—quite understandably—feel a little hesitant to sign a POA, and feel like they are better protecting themselves by signing a springing power of attorney instead, this decision can ultimately do more harm than good. The most important thing is to be certain about the person to whom you are granting power of attorney, and to be on the lookout for people who are trying to manipulate you. Learn which POA red flags to look for before choosing an agent, and, once you have decided to sign a POA, it is best to make it effective immediately.
Contact the Estate Planning Law Group of Georgia
At the Estate Planning Law Group of Georgia, we have many years of experience helping our clients with all aspects of the estate planning process, from drawing up a will to navigating probate to Medicaid planning. If you have any questions about setting up a power of attorney or any other part of the estate planning process, we’re here to help. Give us a call at (770) 822-2723 or fill out the form below and start resting easy today.
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