Dear Jonathan: I am an elderly gentleman who is not married and has no children. Because I have become increasingly aware of my own mortality, I have decided to engage in estate planning for the first time in my life. Interestingly, I am more concerned with those documents whose purpose is to protect me during my lifetime, i.e., financial and health care durable power of attorneys, than I am with those documents that direct where my estate goes when I die, i.e., a will and trust. More specifically, I understand the importance and the need of having a financial and health care durable power of attorneys, but I am not the most trusting person in the world and admittedly a bit of a control freak, and I don’t want anyone acting for me unless I no longer have the mental faculties to act for myself. Is it possible that these documents can be drafted in such a way?
Jonathan Says: Yes. The health care durable power of attorney, by its nature, is not effective until you are no longer able to act for yourself, i.e., you are mentally incapacitated. A financial durable power of attorney, on the other hand, can be drafted to either be effective immediately upon execution even though your mental faculties are still intact, or only upon your disability. Consequently, you will want to make sure that when this power of attorney is drafted, it is prepared so that it is only effective upon your disability. This type of power of attorney is known as a “springing” power of attorney because it is only effective or only springs into action upon your becoming disabled and you can no longer act for yourself.
Because this type of power of attorney only becomes effective upon your disability, it will need to have language which sets forth what type of evidence your agent named in the document will need to obtain to show that you are disabled. A determination of disability is typically done either by a court determination or by the written certification of one or more licensed physicians.
Although using a springing durable power of attorney specifically addresses your concern that your agent is prohibited from acting on your behalf until you have been declared disabled, that is also its major disadvantage because your agent cannot act for you until you have been declared disabled. Consequently, if you are in fact disabled but you have not yet been certified as such by one or more physicians or determined to be disabled by a court and a financial matter of yours needs immediate attention, your agent’s hands will be tied until you have in fact been determined to be disabled by a court or the requisite number of licensed physicians.
I recommend that you meet with an estate planning attorney to initiate the estate planning process, at which time you can explain your concerns regarding the financial durable power of attorney. That attorney can then explain to you the pros and cons of preparing both the “springing” and “non-springing” durable power of attorneys. This will allow you to make an educated decision as to how you want to go forward in the preparation of that power of attorney.
Good luck.
Jonathan J. David is a shareholder in the law firm of Foster, Swift, Collins & Smith, P.C., in Grand Rapids, Mich.
