A springing power of attorney activates under certain conditions, enabling a designated agent to act with the authority of the person who drafted the document (i.e., the principal). Most often, a springing power of attorney is set to activate when the principal has been medically incapacitated, as determined by two qualified physicians.
Someone who has springing power of attorney could be given the ability to conduct financial transactions on behalf of the principal, make medical decisions, or both. The extent of their capabilities is defined by the springing power of attorney document. Since the principal has a wide range of options available for customizing their springing power of attorney, they should strongly consider conferring with an experienced Albuquerque attorney to determine the optimal arrangements.
New Mexico Financial Law can provide you with a lawyer who can meet with you to discuss creating a springing power of attorney. Your lawyer can listen to your goals, reveal all your options, and recommend arrangements that best fit your targeted outcomes.
Reach out to our Albuquerque law firm to discuss springing power of attorney and schedule a confidential, no-obligation consultation when you call 505-503-1637 or contact us online.
You can always look online to complete springing power of attorney documents that would be valid in Albuquerque. However, these documents are created to apply to general situations, and they are often deceptively simple in that they confer sweeping powers with just a few checks of the pen. There is a limited ability to customize these documents, and no way to truly personalize them to reflect the personal wishes and unique life situation of the principal.
Working with an experienced attorney in Albuquerque can ensure that any document you create is highly customized and tailored to your unique goals, life factors, and concerns. Your lawyer can draft up a one-of-a-kind springing power of attorney document that perfectly suits your objectives while hedging against the risks you are most worried about.
At New Mexico Financial Law, our Albuquerque attorneys can also help you consider all available options for a springing power of attorney. A primary goal is to help you anticipate and avoid common mistakes. For example, if you have provided springing financial power of attorney to someone, we can help you consider any additional documentation your financial institutions might need to authorize them to conduct a transaction on your behalf.
In addition, we can help you define specific purposes for each action your agent can take. You can limit their ability to access funds from a retirement account, for example, only to situations in which a primary checking account goes below 15% of a target threshold. This type of guidance helps your agent make decisions that align with how you would want your finances managed during times of incapacity — while also providing grounds for the revocation of your agent’s status if they directly contradict your instructions.
Any springing power of attorney should be created with your overall estate plan in mind. If you have a trust, an advance directive for healthcare, or a will, you should understand what capabilities and guidance you are giving to your agent and how those could affect your other plans.
An Albuquerque lawyer can help you assess the total condition of your estate and review your strategic plan to determine if your springing powers of attorney documents align with your long-term goals. We want to ensure that you feel confident that your wishes are well documented, legally enforceable, and able to produce the outcomes you want.
A “power of attorney” is a document that authorizes a party (known as the agent or attorney-in-fact) to make decisions and conduct transactions on behalf of another party (known as the principal).
When creating their power of attorney, the principal will usually carefully select the types of decisions or transactions the agent is allowed to make. They will also determine when, exactly, the agent has the authority to engage in these activities.
Without any specific activation period or time limit mentioned on a power of attorney document created in Albuquerque, the assumption is that the power of attorney activates immediately and lasts until it is revoked. If the principal authorizes their agent to act on their behalf even while they are mentally incapacitated, this is referred to as a “durable” power of attorney.
Optionally, the principal can choose to delay the activation of their power of attorney until a scenario they describe has come to pass. Usually, the described scenario is that the principal has become medically incapacitated. Because the power of attorney activates without requiring the principal’s specific authorization, it is said to “spring” into existence, hence the term springing power of attorney.
There are two general categories of springing power of attorney: medical and financial.
Without any specification as to what abilities an agent has, the principal grants them with the authority to take nearly any action that the principal could take themself, with limited exceptions (see NM Stat § 45-5B-201). This essentially unlimited power is referred to as a “general” power of attorney.
Usually, though, the principal will elect to limit the agent’s abilities in certain ways. Using the language of their springing power of attorney document, the principal can limit the powers of the agent through any of the following means:
The principal is able to use any of the scope-limiting methods described above within their springing power of attorney. By using multiple methods — or all five — they can effectively create a “patchwork” of permissions that serve as guardrails against the agent’s unlimited and unchecked authority.
Creating these guardrails with precision — and the foresight to anticipate common complications — is a major task. This task can be handled more easily and capably with the assistance of an experienced attorney.
By referring to an Albuquerque lawyer, you can understand where it makes the most sense to limit your agent’s authority and where it makes sense to give them broader permissions. You can also provide precise instructions, where needed, to ensure that your agent has the information and context they need to take the actions that you normally would, if put in the same situation.
This careful preparation reduces the risks of your agent overstepping their bounds, making the wrong decision, or feeling like they don’t have the information they need to take all the actions you would want them to.
One goal of a springing power of attorney is to give individuals the information and authority they need to step up during specific scenarios. In these cases, the principal may be unable to request the agent’s assistance themself. Other times, the principal may simply wish for the agent to immediately begin acting without requiring prompting, avoiding delays that could cause problems for the principal or their finances.
Medical incapacitation is the most common type of designated scenario that would activate a springing power of attorney. However, the principal can also describe other scenarios in addition to (or in lieu of) incapacitation, such as:
In most cases, a springing power of attorney is only active for the duration of the condition that caused the powers to activate in the first place.
If, for example, an agent is authorized to make medical decisions because the principal has gone under sedation before surgery, the agent’s abilities may be revoked once the principal regains consciousness. Similarly, if the agent is authorized to conduct a transaction for the principal’s family or business because they cannot be contacted, the agent’s abilities may lapse once the principal gets back in touch with the appropriate individuals.
The principal has the ability to customize the duration in which the springing power of attorney would remain active, too. They can specify that the powers are active “for a minimum of five days,” for example, or they can specify that the powers terminate the moment a spouse is available to step in and act in the principal’s stead.
While a springing power of attorney sounds like it could be safer than a power of attorney that remains active all the time, the truth is that springing arrangements can introduce challenges and complications.
Foremost, there can be delays or confusion when it comes time to activate the springing power of attorney in the way that was intended. Since these powers usually aren’t active until a determination of incapacity has been made, an agent would be required to have a certificate from a qualified physician to satisfactorily prove incapacity.
This process of certifying incapacity could introduce delays, harming the agent’s ability to step in and act quickly in response to a pressing need. Worse, the physician may make a determination of only partial incapacity. Or, they may be unable to draw conclusions if the principal seems to be in a gray area in terms of their mental faculties. If the principal is not fully incompetent, they may even speak out against the agent’s authority, essentially blocking the outcome that they had carefully arranged in foresight.
Some principals may be wary of granting someone authority to act as their attorney-in-fact on a day-to-day basis. If this is the case, though, the principal should select a different agent that they can trust implicitly. After all, if they are wary of a person taking advantage of them while they are conscious, then there is an even greater risk of malfeasance if they are incapacitated and unable to stop their agent’s actions.
Instead of a springing power of attorney, consider issuing a durable power of attorney and providing strict criteria that would allow someone to remove the agent if they stray outside their expected duties.
Alternatively, the principal could set up a trust that contains essential assets and appoint a trustee to manage it. This trustee is able to seamlessly handle all trust transactions without the need to determine incapacity. Beneficiaries of the trust have the authority to monitor and challenge the trustee’s actions, as well, which can make it easier to halt certain activities or remove the trustee outright. In addition, while a power of attorney terminates the moment a principal dies, the trustee can continue managing the trust after the principal’s death, which offers advantages for estate planning.
The right springing power of attorney can give you and your family peace of mind. The wrong one could create confusion, delays, or even the risk of mismanagement.
Talk to our experienced team at New Mexico Financial Law for guidance on making the best springing power of attorney possible. Our Albuquerque law firm has assisted many families with making preparations for worst-case scenarios, and we want to help you, too.
Call us today at 505-503-1637 or contact us online to schedule a confidential case review with no obligation, and start planning for a future where nothing can stand in the way of your goals.
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