A New Mexico springing power of attorney activates when a certain condition has been met, authorizing an agent to act on behalf of the person giving power of attorney (called the principal).
Usually, the condition established for the power of attorney to “spring” into effect is the incapacitation of the principal. However, the principal can indicate other reasons that would cause the power of attorney to activate.
A New Mexico springing power of attorney sounds appealing, on paper, but the truth is that there can be complications and delays in activating them. If you strongly prefer this type of power of attorney arrangement, be sure to consult with a New Mexico lawyer to ensure the language used is specific, enforceable, and able to prevent common problems that can result.
Schedule an appointment to discuss springing power of attorney — including if you already have such an arrangement in place — when you reach out to our experienced New Mexico lawyers. Call 505-503-1637 or contact us online to book a no-risk, confidential appointment today.
The most important thing to know about a springing power of attorney is exactly how, why, and when it is most likely to activate.
By talking with a lawyer, you can better anticipate how your springing power of attorney will behave in a real-world situation. You may be surprised to find out the level of effort required to verify that the “springing” condition has been met.
It is especially difficult to determine if someone has lost the capacity to manage their own finances — except, of course, after it is too late and major damage has already been done.
Our New Mexico lawyers can review your springing power of attorney document to determine what would be required for it to activate. We can then help you modify your arrangement — or create a new one — to give your arrangement the best chance of producing the outcomes you want to achieve.
A springing power of attorney is created by completing a document that spells out the arrangement in clear terms. The document should identify the principal and their preferred agent or agents. It should then describe the powers granted to the agent when acting on the principal’s behalf.
Most powers of attorney come into effect immediately, so the document should also specify a time or condition that would cause the agreement to activate.
The most common reason for a springing power of attorney to activate is that the principal has been certified as incapacitated by two appropriate medical authorities. However, you can also select other conditions, such as a specific date or an inability to perform certain tasks reliably.
After the document is completed with all the necessary details, the principal signs the document and dates it. The signing should take place in front of a notary public, who can acknowledge that the signature is genuine and apply their official seal (see NM Stat § 45-5B-105).
To determine incapacity — the most common reason a springing power of attorney would activate — a physician, psychologist, or other medical expert has to furnish their professional opinion.
New Mexico law (NM Stat § 45-5B-109) provides that a “physician or licensed psychologist” can certify incapacity after determining that the principal has exhibited “gross mismanagement, as evidenced by recent behavior, of the individual’s income and resources or the individual’s medical inability to manage the individual’s income and resources that has led, or is likely in the near future to lead, to financial vulnerability.”
The above statute only applies for determining springing powers of attorney when the triggering event is incapacity. Otherwise, establishing incapacity for other purposes generally requires an adult guardianship proceeding. An adult guardianship is a complex, expensive, and often humiliating legal process. The process can be humiliating if, for instance, you are suing your grandmother to establish she is incapacitated and she is fighting that determination.
A springing power of attorney, that makes incapacity the triggering event, would be of little use if a guardianship proceeding had to be brought to determine incapacity. That is why a lower standard and process is recognized. The principal is welcome to set their own activation conditions, including the selection of an appropriate person to evaluate their capacity. They can specify that they want their own long-term doctor to certify their condition, or they can require that the certification be performed by a neutral third party.
The principal is also welcome to set their own criteria for incapacity. They can, for example, state that their definition of incapacity means they are unable to reliably name specific relatives or recount important details about their finances.
As a matter of fact, the condition that activates the springing power of attorney does not have to be related to capacity. The power could activate whenever the principal is on vacation, for example, or is otherwise unable to conduct the activities they normally would.
Some springing powers of attorney only activate for a specific time and purpose, such as the purchase of a property or the sale of a business interest while the principal is abroad.
Consider the options for “springing” your power of attorney with an experienced lawyer in light of your goals and your concerns. A lawyer can help you create a springing power of attorney that achieves everything you want it to while minimizing the risks you are most concerned about.
A springing power of attorney can be ideal for certain situations. However, families and individuals should know about the possible situations they could face when the power is expected to activate, but can’t.
Many times, principals will struggle with memory and cognition issues but not be entirely aware of it. They may disagree with others’ assessments. They may obstinately tell their family members “I’m fine! There’s nothing to worry about!”
In the meantime, there is a growing risk that they could fall victim to scams or other financial pitfalls. Consider that one FBI assessment documented a 71% increase in losses suffered by older adults as a result of fraud from 2022 to 2023, leading to a staggering $3.4 billion in total losses.
Often, by the time the principal admits they’ve lost capacity, it’s too late.
Mental abilities can fluctuate, especially at an advanced age. The principal may be fine most days of the week. But then they’ll have “bad days.” On these bad days, they can struggle to remember things or keep up with their responsibilities.
Varying capacity can cause difficulties when it comes time to evaluate them. There is a chance that the evaluating professional could catch them on a “good day” and, based on the results of testing, refuse to certify that they meet the definition of incapacity.
Many institutions require pre-authorization for a power of attorney arrangement. Getting this authorization usually requires the principal to have capacity at the time they submit the appropriate documentation.
Consider that one family encountered major trouble when trying to have an agent access their principal’s accounts. The agent was acting on behalf of her 85 year-old mother, who had dementia. When the agent tried to access her mother’s accounts using her durable financial power of attorney, two major financial institutions refused.
The mother’s main retirement account could not be accessed because the institution providing it required different paperwork to be filled out. The principal was supposed to have submitted a separate power of attorney authorization form — before she had become incapacitated.
Fortunately, the problem was resolved after additional materials had been submitted. However, the scenario illustrates how unexpected issues can come up if someone waits to exercise power of attorney until the principal is incapacitated.
To reduce the risk of this type of situation happening, review all activities the agent needs to perform with the help of an experienced New Mexico lawyer. You can then research if additional authorization or other paperwork is needed to access accounts and perform other activities as intended.
It can take several days or weeks for the appropriate authority to evaluate and certify the principal’s condition. There may also be delays in releasing the appropriate paperwork.
Also, consider that there may be issues releasing paperwork to the appropriate parties since springing power of attorney does not activate until the certification is complete. This issue can create a frustrating catch-22, preventing the agent from accessing the paperwork they need to get authorized as an agent.
If a springing power of attorney does not specifically permit the agent to access the needed medical records, then the provider could legally be barred from sharing them. The Health Insurance and Portability Act (HIPAA) can lead to hefty fines and other actions if providers fail to comply. They may be wary, then, of sharing information needed to certify the principal’s condition, especially if the agent’s springing power of attorney technically has not yet been activated.
Depending on the process laid out in the springing power of attorney document, it may be possible for multiple parties to render differing opinions on the status of the principal. They may disagree that the principal has lost capacity, or they may use completely different evaluation methods that make it difficult to come to an agreement.
Matters can get more tense if there are family members debating the need to test the principal in the first place. They may object to certain tests, dispute the results, or request second opinions.
All of these issues could prevent or delay the determination of the principal’s condition, which is needed to activate the springing power of attorney.
Consider a scenario where an agent is someone who is not around the principal on a regular basis. Then, suppose that the principal encounters some medical or mental health difficulty that leads to their mental condition being evaluated.
That evaluation may determine that the principal no longer has the capacity to manage their own affairs, but what then? If providers or other parties aren’t given the needed instructions, it is possible that the person that’s supposed to assume springing power of attorney is never notified.
To prevent this risk, make sure that the agent is included in the principal’s emergency contact information. Other family members and loved ones should have the contact information of the agent, as well. They should have instructions to reach out to the agent when an emergency happens or a condition arises that causes the springing power of attorney to activate.
If you are concerned about the challenges presented by a springing power of attorney — or simply want to know about all of your options — then there are a few alternatives to consider.
First, you can provide someone with durable power of attorney. This power can still activate at a later date or in a specific situation, but that condition does not have to be the total incapacity of the principal.
Instead, the principal can determine a different set of criteria. They can voluntarily activate the springing power of attorney, for example. They can also require a simple cognitive test that can be performed by a non-medical professional, such as a trusted family member or colleague.
There is also the option to have a durable power of attorney activate immediately and remain active indefinitely.
Under New Mexico statutes, all powers of attorney are presumed to be durable (NM Stat § 45-5B-104). Also, unless the power of attorney document states otherwise, the agent assumes their authority immediately (NM Stat § 45-5B-109).
With the default options, someone could already have power of attorney and simply not use their powers. The principal (or another trusted party) can protect against unintended use by not giving the agent the power of attorney document until their help is needed. Without the document, the agent cannot consent to the responsibilities given to them.
While this arrangement may seem risky, it is often the default, especially in situations where a family member serves as an agent on behalf of older relatives.
Speak to a New Mexico lawyer about any concerns you have to see if you can limit the powers of an agent or come to some other arrangement — one that can mitigate risks while still avoiding the challenges described above.
New Mexico Financial & Family Law has deep experience managing estates, creating powers of attorney, and performing other essential legal services on behalf of our clients.
We understand the fears and worries that can naturally emerge in situations involving power of attorney. Our goal is to thoroughly explain all aspects of the law and lay out every logical option, helping you select the perfect path forward given your goals and primary concerns.
When you want to learn more, reach out for guidance from a proven New Mexico attorney team. Call 505-503-1637 or contact us online to book your confidential consultation appointment today.
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