When someone wants to prepare for their possible incapacity without giving someone else permanent access to their finances, they can use a springing power of attorney. Like a regular power of attorney, a springing power of attorney authorizes an agent to handle certain legal and financial tasks on behalf of the person who issues it. Unlike other arrangements, a springing power of attorney only activates under a pre-set condition, which is usually the creator’s incapacitation.
Springing powers of attorney are recommended for some situations. They are the norm for a healthcare power of attorney, for instance. But they may not be desirable in all scenarios. Consider that someone must determine if you are incapacitated before the document activates. This requirement could introduce delays — or even conflict.
If you are considering whether you would want to create a springing power of attorney, reach out to New Mexico Financial Law. An experienced Santa Fe lawyer can help you review your options and create the right power of attorney arrangements for your unique needs. Schedule a confidential, no-obligation consultation with our law firm today when you call us at (505) 503-1637 or contact us online.
A power of attorney is a legal document that gives another party the authority to handle someone’s affairs. The person who creates the document is called the “principal,” and the person who receives authority is called the “agent.”
There are two main types of springing powers of attorney:
When creating their springing power of attorney, the principal can describe the powers they want their agent to have. They can also specify when the document activates and when it terminates. Usually, the activation condition for a springing power of attorney is the incapacitation of the principal. However, the principal can also set other conditions, including the ability to define their incapacitation differently than the statutory definition.
Some other typical qualities a springing power of attorney may have are described in greater detail below.
Most springing powers of attorney are durable, and they are usually created as a way to specifically help out family members and the principal when they have become incapacitated.
Durable powers of attorney remain active even when the principal has lost the mental capability to monitor, handle, or understand their own affairs. This mental state is referred to as “incapacitation.”
A non-durable power of attorney, on the other hand, revokes the agent’s authority once the principal has been declared incapacitated.
Without a durable financial power of attorney, your loved ones would likely need to obtain an order from a Santa Fe court to have someone appointed as your guardian and/or conservator.
This process can take many weeks, and it requires the input of a health care specialist who can definitively conclude that you have been incapacitated, according to the strictest legal definition. The end result is that your family’s ability to access your finances could be delayed by weeks, and they will have incurred significant expenses because of the need to hire legal and medical professionals.
Durable powers of attorney are usually recommended for estate planning in Santa Fe. Incapacitation can have the effect of blocking out your loved ones from your accounts during a critical time. They may need to access your finances to pay for your medical care costs, retrieve money to pay bills, or cover your household’s basic living expenses.
Springing powers of attorney get their name because they only “spring” into effect when an activation condition has been met. Until that time, the person who will become their agent cannot exercise any of their authority until the “springing” condition has come to pass.
Per state law (NM Stat § 45-5B-109), a Santa Fe power of attorney is considered active the moment it is signed and executed by the principal — unless they specifically state that its activation is delayed. If the principal chooses to delay the document’s activation, they can set a specific date, timeframe, or condition that causes it to activate.
The most common activation condition used is the incapacitation of the principal. However, the principal can also describe another triggering event that would cause their springing power of attorney to come into effect.
For example, the principal can have it automatically activate when they leave the United States for more than 7 consecutive days. Or, they could have it activate as soon as they are hospitalized, regardless of their mental capacity.
Principals should always be careful to describe the activation condition for a springing power of attorney in a clear, detailed way. They can consult with a Santa Fe estate planning lawyer to get assistance with using the appropriate language and structuring the document so that it can provide the desired benefits.
To develop a complete estate plan, individuals may want to consider creating both a financial and a medical power of attorney in Santa Fe. The latter document becomes important when you have a medical condition that makes it impossible for you to communicate your healthcare wishes in a clear, coherent way.
An incapacitating medical condition can involve loss of consciousness, a traumatic brain injury, or a debilitated mental state. The principal may also be too weak or sick to fully understand what is going on, let alone communicate.
A springing power of attorney for healthcare can activate under such circumstances. Usually, the principal must be evaluated by at least two medical professionals, one of whom can be their primary doctor. After these professionals determine that the principal is incapacitated, the agent gains the authority to handle care decisions, review medical files, and consent to treatment plans on the principal’s behalf.
The principal can guide the agent and their care teams by writing down their instructions for care in advance, a document that is sometimes called a living will. This document forms the basis of an advance healthcare directive, along with their medical power of attorney and primary physician designation.
You can discuss your options for preparing for incapacity or disability with a lawyer who has experience with estate planning in Santa Fe. They can go over your options for your advance healthcare directive and help you decide on the arrangements that best fit your values, objectives, and wishes for care.
When creating a springing power of attorney, you have the option to use the statutory definition of incapacity, or you can decide upon your own activating condition.
The legal requirements in New Mexico for declaring someone incapacitated differ depending on the type of power of attorney used.
“Incapacity” for a financial power of attorney is defined as an “inability of an individual to manage the individual’s estate or financial affairs, or both” (NM Stat § 45-5B-102). The law further states that the individual may be unable to manage their own affairs for the following reasons:
The principal can nominate someone who can declare that they have been officially incapacitated. Otherwise, a physician, licensed psychologist, lawyer, judge, or “an appropriate government official” can make the determination for them (NM Stat § 45-5B-109).
As mentioned above, the principal is also free to define their incapacitation in their own way. Or, they can set a different triggering condition that may not technically be incapacitation, but that they feel is sufficient to warrant the use of an agent.
State law (NM Stat § 24-7A-1) defines capacity in the healthcare sense as “an individual’s ability to understand and appreciate the nature and consequences of proposed health care […] and communicate an informed health-care decision.”
To demonstrate this level of understanding, a patient must be able to grasp the possible benefits and risks of a proposed care plan, including their likely prognosis and the pros/cons of any available alternatives.
Before an agent can take over care decisions for a patient, two qualified healthcare professionals must evaluate the patient’s mental state (NM Stat § 24-7A-11). One of these professionals should be the patient’s primary care practitioner, as designated in the patient’s advance directive form. The other should be someone who is familiar with the condition the patient is suffering from and who is therefore qualified to make an assessment of the patient’s functional impairments.
A springing power of attorney or advance healthcare directive can be created at any time while the principal still has capacity. They must communicate their wishes in a document that makes it clear who their selected agent is, what powers the agent will have, and what conditions would cause the powers to activate.
The principal must then sign the document, and they are encouraged by state law (NM Stat § 45-5B-105) to have it notarized. Notarized legal documents are “self-proving,” meaning that witnesses or other evidence are not needed to prove that the signature is genuine.
Unless the principal specifies that the activation of the POA is delayed, it is effective immediately. Accordingly, if they want to create a springing power of attorney, they should take care to state that it is not effective until a specifically described condition, such as their incapacitation, has been met.
A principal can revoke their springing power of attorney or advance healthcare directive at any time while they have the capacity to do so. They should revoke the document in writing, sign it, and have it notarized, as before. They can also physically damage or destroy the original document, although they should follow up this “revocatory act” with a written revocation.
The principal should take care to notify the agent that their authority has been terminated. Otherwise, the agent may be able to continue performing their duties if they genuinely did not know that the power of attorney was revoked (NM Stat § 45-5B-110).
The principal should also notify any banks, medical providers, and other institutions about their revocation of the original power of attorney.
A principal can also specify other conditions that would cause their power of attorney to automatically revoke. For example, they can state that the designation of a new agent automatically removes the authority of previously declared agents.
In some cases, a law firm may advise against creating a springing power of attorney. Their activation typically requires an evaluation of the principal’s capacity from a medical or legal professional, which introduces delays.
After all, the principal and agent relationship should be one of trust. And if you cannot trust someone to manage your affairs while you have capacity, you may not want to give them control of critical financial or medical decisions while you are incapacitated.
On the other hand, a springing power of attorney may be the best choice for certain families and situations. You can consult with an experienced estate planning lawyer in Santa Fe to go over your options and select the right arrangement for your unique situation and goals.
New Mexico financial law can help you with deciding on how to approach power of attorney, your advance healthcare directive, and other estate planning or elder law considerations.
You can learn about your options by speaking to a lawyer during a confidential case review. Call (505) 503-1637 to schedule your no-obligation consultation today.
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