What Is the Difference? Which Is Best for You?
One of the critical components of an effective and comprehensive estate plan is a power of attorney. Your power of attorney is designed to go into effect during your lifetime, granting a designated person or entity the power to make certain decisions on your behalf. There are a number of key questions with respect to a power of attorney. What powers does it convey? When does it go into effect? How can it be terminated?
As a general rule, a power of attorney can be as broad or as limited as you specify in the document. You can give another person the right to make all legal, medical and financial decisions, of you can limit it to only one of those categories.
You can also create a power of attorney that goes into effect immediately after you sign it, or that only goes into effect if some stated condition is met. A durable power of attorney customarily is in force once you sign it. A springing power of attorney goes into effect at some future date, typically because of your inability to make your own decisions. Situations where a springing power may arise include mental incapacity or medical procedures that require anesthesia.
With a durable power of attorney, once you’ve signed the document, it stays in effect until you affirmatively terminate it. Accordingly, if you are mentally competent when you sign the durable power of attorney, but subsequently experience mental health challenges, it will stay in effect. With a springing power of attorney, it won’t go into effect until the stated condition is met, but it can also be automatically terminated if the condition is no longer applicable.
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