Power of attorney is a cornerstone of any complete estate plan. Power of attorney allows another person to manage your finances (and potentially other legal matters) in the event that illness or injury incapacitates you.
When creating a power of attorney document, you will need it to decide if you want to grant “durable” power of attorney to your chosen agent and if you want to control when it goes into effect with a “springing” power of attorney.
“Durable” power of attorney
If you elect to make power of attorney durable, this means that the power is always there, even if you recover from incapacitation. If you elect to make your power of attorney non-durable, this means that the power evaporates once your agent wields it.
Assume that you are in a car accident and are medically incapacitated. Your agent then assumes the right to act on your behalf. If the power of attorney is not durable, then the next time something incapacitates you, your chosen agent will not be able to re-assume control of your finances. You must create a new power of attorney agreement. On the other hand, with durable power of attorney, the agreement still exists and the agent can still act on your behalf.
“Springing” power of attorney
In the majority of cases, power of attorney goes into effect immediately after you sign the paperwork. However, if you are specifically naming an agent to act when something incapacitates you, then you do not want it to go into effect immediately. Here, you would create a “springing” power of attorney. This means that until something incapacitates you, your agent does not get the power.