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Durable and springing powers of attorney are related but distinct concepts. A durable power of attorney typically takes effect as soon as you sign it and remains in effect in the event of incapacitation, ending only at your death. A springing power of attorney, meanwhile, only takes effect upon a triggering condition, typically your incapacitation. Here’s what to know about each of them, and how they compare.
A financial advisor can help you determine which estate planning documents fit your situation and how they work alongside the rest of your plan.
What Is Power of Attorney?
Power of attorney is a grant of legal authority that allows an agent to act on your behalf in legal, medical and financial matters. Within their scope of authority, your agent’s decisions are as binding as if you had made them. This means a power of attorney agent can take actions such as filing your taxes, signing binding contracts, making medical decisions, withdrawing money from your bank accounts or taking out loans in your name.
Your agent can only act within the scope of their authority, however, and you define this authority in the document that grants them power of attorney. It’s essential to do this with care. In some states, a power of attorney that does not specify a scope of authority may be interpreted as a general power of attorney, which gives your agent broad authority to act over most areas of your life.
Power of attorney is a highly state- and jurisdiction-specific area of the law. This means that every jurisdiction has its own rules for how power of attorney works and the exact scope of this grant. For example, not every state recognizes a springing power of attorney. In other states, the scope of a durable power of attorney can vary broadly.
For this reason, it’s essential to consult a legal and financial professional before putting any power of attorney documents in place.
What Is a Durable Power of Attorney?
A durable power of attorney is a form of power of attorney that continues after your incapacitation.
With a non-durable power of attorney, a power of attorney grant ends if the principal becomes incapacitated. This is, in part, to protect the incapacitated principal, who cannot revoke or modify the power of attorney if they disagree with their agent’s decisions.
A durable power of attorney overrides this limitation. This grant lasts until the principal either dies or revokes the power of attorney. In the event you are incapacitated, the power of attorney will continue uninterrupted. This allows your agent to continue acting on your behalf while you cannot, which can be particularly important if you anticipate any time-sensitive financial, legal or medical matters.
Unless you specify otherwise, a durable power of attorney takes effect immediately when you sign the power of attorney document. This will immediately grant your agent authority, which will remain in effect until you revoke it.
What Is a Springing Power of Attorney?
Springing power of attorney, in contrast, does not take effect immediately. Instead, it takes effect (“springs” into effect) based on specific conditions. You specify those conditions when you write the power of attorney grant. Until they are met, your agent has no authority to act on your behalf.
Most people use a springing power of attorney in case of incapacitation. In that situation, your agent will assume power of attorney if you are ever medically or legally incapacitated, after which point they can act on your behalf. This is particularly useful for medical directives, as your agent can then make decisions on your behalf if you are unable to do so.
If you use a springing power of attorney, it’s important to describe your conditions with specificity. Failing to do so can lead to conflict when you are least able to manage it.
For example, say that you only name “incapacitation” as your condition. This can be a variable, disputed concept that can range from complete unconsciousness to a medicated state. Doctors are often reluctant to declare a patient medically incapacitated except in extreme circumstances, such as when someone is unconscious and/or in immediate medical distress. This ambiguity can lead to disputes over who has the authority to act on your behalf during a medical event.
It’s also worth noting that not all states recognize springing powers of attorney. Some jurisdictions have moved away from them, so it’s important to confirm whether this option is available where you live.
It is common to make this grant a durable springing power of attorney. This is a power of attorney that takes effect once certain conditions are met, such as your incapacitation, and it remains in effect until you revoke it. This allows your agent to continue acting on your behalf without facing challenges about the ongoing validity of their authority.
Durable vs. Springing Power of Attorney
Durable power of attorney has the advantage of certainty. Until you revoke this document, your agent will be able to act on your behalf regardless of external circumstances. This can be particularly useful if you are unexpectedly absent or suddenly incapacitated. In those situations, your agent will be able to manage any financial, legal or medical affairs immediately, with no dispute over their authority.
That is also the disadvantage of durable power of attorney, though. Your agent will have the authority to act indefinitely, until you revoke the document. This makes it only appropriate for someone you trust completely, such as a spouse, close family member or trusted attorney.
Springing power of attorney, in contrast, has the advantage of limiting that authority. You can reserve your grant of authority for necessary circumstances. Typically, this means you can reserve your power of attorney for emergencies, such as in the event that incapacitation leaves you unable to act for yourself.
However, a springing power of attorney has the disadvantage of uncertainty. If you are capable, you can confirm your agent’s authority. But if you are incapacitated or absent, it can take time and, in some cases, a court order to confirm your agent’s authority. This can create conflict when speed matters most.
How to Choose Your Agent
The person you name as your agent will have significant authority over your financial, legal or medical affairs. As such, it’s worth giving careful thought to the decision.
Family members are the most common choice, particularly spouses or adult children. They tend to know your preferences and values, which can matter when quick decisions are necessary. However, not every family member will be the right fit. The role requires someone who is organized, available and comfortable handling financial and legal matters under pressure.
A professional fiduciary, such as a trust company or attorney, is another option. Professional agents bring experience and objectivity, which can be useful in complex financial situations or when family dynamics make it difficult to choose one person over another. The trade-off is cost, since professional fiduciaries charge for their services. They will also have a less personal understanding of your wishes.
Whoever you choose, it’s also important to name a successor agent. If your first choice is unable or unwilling to serve when the time comes, a named successor avoids the need for court involvement to appoint someone.
Before signing anything, have a direct conversation with the person you plan to name. Make sure they understand what the role involves, what authority they would have and what your expectations are.
How Power of Attorney Fits with Other Estate Planning Documents
A power of attorney doesn’t operate in isolation. It typically works alongside other documents like a living trust, healthcare directive or living will. A healthcare directive covers medical decisions specifically. Meanwhile, a living trust can address the management and distribution of assets. Understanding how these documents work together can help avoid gaps or conflicts in your plan.
It’s also important to understand how revocation works. Revoking a power of attorney generally requires written notice to your agent and to any institutions, such as banks or healthcare providers, that have been relying on it. Simply destroying the document may not be enough to formally end the grant.
Bottom Line
A durable power of attorney is a grant of authority that lasts indefinitely, ending only when you revoke the document or upon your death. A springing power of attorney, meanwhile, is a grant of authority that does not take effect immediately but only applies once certain conditions are met. Both are common tools for making long-term plans, medical directives and living wills.
Power of Attorney Tips
- If you set up a power of attorney and then want to make changes, this guide explains how to do it.
- A financial advisor can help you build a comprehensive retirement plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area. Then, you can have a free introductory call with your advisor matches to decide who is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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