Durable Power of Attorney for finances - When does it take effect

For the durable power of attorney for finances, there are two different kinds that you can choose.

  • One that takes effect immediately
  • One that doesn’t become effective until you are certified to be incapacitated by someone else

You can choose either of above options depending on when you would like your attorney-in-fact to start handling finances tasks on behalf of you.

If you feel like someone to take over your financial task immediately, then you would need to make your legal document effective as soon as you sign on it. Then immediately upon your signing, your attorney-in-fact should be able to begin working on your financial matters and help you out. He or she can keep working on it until you become incapacitated later.

However, you might feel that your attorney-in-fact for finance matters who knows about financial power of attorney, should take over the task at a later time when you are absolutely incapacitated. In such case, you will have two options to choose from. If you have a strong trust in the ability of your attorney-in-fact that he or she will use the authority on behalf of you only when it is definitely necessary, then you can make your durable power of attorney effective right away. Then your attorney-in-fact for finances will have full power and authority to act on behalf of you, but not until he or she decides that you are no longer able to handle your task yourself.

The second option is to make a springing power of attorney that won’t take effect until your named person in the document declares in writing that you are not capable of managing your financial matters yourself. You can use this option when you feel uncomfortable with making your document effective immediately for any reasons.

Creating a springing power of attorney is not easy and straightforward. Many times it becomes inconvenient for all parties involved. Your attorney-in-fact needs to go through the process of getting declaration of incapacity in writing, which will mostly time consuming and easily becomes complicated at each phase of proof reading process. Another case would be that even if your designated attorney-in-fact obtained the necessary legal statements from you, some institutions may be reluctant to recognize and accept a springing power of attorney due to its sensitivity. A financial institution like bank probably would be interested in knowing the fact that you really became incapacitated and may ask the proof in written document from certified personnel. All these hassles the entire process and disrupt the prompt action of your attorney-in-fact handling your financial matters.

So it would be preferable for you to create the document effective immediately if you have a strong trust with your attorney-in-fact for finances. Usually it would be the case because once you made up your mind of designating someone as your attorney-in-fact, it means that there should have already been some kind of basic trust between your relationships. But of course, the ultimate decision is upon your hands and you should take a careful consideration when you choose the option.

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