Power of attorney documents are used in a variety ways and can differ in authority and duration. One of the most common types of power of attorney is a General Durable Power of Attorney. This is a document that is most commonly found in a person’s estate plan. This document usually comes in two flavors when it comes to the authority given to an agent: 1) Immediate and 2) Springing.
Immediate: An Immediate General Durable Power of Attorney allows a person, known as an Agent, to step into another person’s financial shoes. These financial shoes belong to the person creating the power of attorney. When the creator, also called a Principal, signs an Immediate General Durable Power of Attorney, authority is immediately given to the agent to access, manage and use any assets, accounts, real property or enter contracts the Principal may own or be a party to. The Agent must use the Principal’s assets for the Principal’s benefit at all times.
Springing: A Springing General Durable Power of Attorney is similar to the Immediate General Durable Power of Attorney in that the Agent can make any financial decision that the Principal could make themselves under normal circumstances. However, unlike the Immediate General Durable Power of Attorney, the agent can only exercise this financial authority if some event happens to the Principal. This triggering event is where the Principal is incapacitated in some way that leaves them unable to manage their financial affairs. When this happens the Agent’s authority springs to life. This authority is established usually by two medical doctors making a determination of incapacity of the Principal or a court making a finding that the Principal is no longer capable of managing their financial affairs.
Regardless of which type of General Durable Power of Attorney a person has, these power of attorney documents are important to allow a principal who may be incapacitated to allow the agent to step in and pay for things such as the mortgage, car payment, utilities, medical bills and other costs and expenses that may come up. Without an agent in place there is the risk of foreclosure of real property, re-possession of automobiles, late fees and accumulating interest on credit accounts. The General Durable Power of Attorney document is an essential part of any estate plan. If you have any questions about estate planning in Arizona, or about Powers of Attorney, contact Dana Law Firm at 480-515-3716.
Written by Mesa, Arizona Estate Planning Attorney Scott Jensen