POWERS OF ATTORNEY: SPRINGING VS. NONSPRINGING

Estate planning typically focuses on what happens to your assets when you die. But it’s equally important (some might say more important) to have a plan for making critical financial and medical decisions if you’re unable to make those decisions yourself.

That’s where the durable power of attorney (DPOA) comes in. A DPOA appoints a trusted representative (the “agent”) who can make medical or financial decisions on your behalf in the event an accident or illness renders you unconscious or mentally incapacitated. By statute, a Durable Power of Attorney contains language that makes clear that it is "not affected by the principal's subsequent disability or incapacity, or by the lapse of time." Typically, separate POAs are executed for health care and property. In Michigan, a Power of attorney for health care is usually referred to as a Designation of Patient Advocate. Without both types of Powers of Attorney, your loved ones might be required to petition a court for guardianship or conservatorship for you, a costly and public process that can delay urgent decisions. (Depending on the state in which you live, the health care POA document may also be known as a “medical power of attorney” or “health care proxy.”)

In Michigan, a question that people often struggle with is whether a DPOA for financial matters should be springing or nonspringing.

To spring or not to spring

A springing DPOA is effective on the occurrence of specified conditions; a nonspringing, or “durable,” POA is effective immediately. Typically, springing powers would take effect if you were to become mentally incapacitated, comatose or otherwise unable to act for yourself.

A nonspringing DPOA offers two advantages:

  • It allows your agent to act on your behalf for your convenience, not just when you’re incapacitated. For example, if you’re traveling out of the country for an extended period of time, your agent under a DPOA for financial matters could pay bills and handle other financial matters for you in your absence.
  • It avoids the need for a determination that you’ve become incapacitated, which can result in delays, disputes or even litigation. This allows your agent to act quickly in an emergency, making critical medical decisions or handling urgent financial matters without having to wait, for example, for one or more treating physicians to examine you and certify that you’re incapacitated.

A potential disadvantage to a nonspringing DPOA — and a common reason people opt for a springing DPOA — is the concern that the agent may be tempted to commit fraud or otherwise abuse his or her authority. But consider this: If you don’t trust your agent enough to give him or her a DPOA that takes effect immediately, how does delaying its effect until you’re incapacitated solve the problem? Arguably, the risk of fraud or abuse would be even greater at that time because you’d be unable to monitor what the agent is doing.

In Michigan, by statutory mandate, the Designation of Patient Advocate is a springing power of attorney. According to the applicable statute:

Except as provided under subsection (3), the authority under a patient advocate designation is exercisable by a patient advocate only when the patient is unable to participate in medical treatment or, as applicable, mental health treatment decisions. The patient's attending physician and another physician or licensed psychologist shall determine upon examination of the patient whether the patient is unable to participate in medical treatment decisions, shall put the determination in writing, shall make the determination part of the patient's medical record, and shall review the determination not less than annually.

What to do?

Given the advantages of a nonspringing DPOA, and the potential delays associated with a springing DPOA, a nonspringing DPOA is generally preferable. Just make sure the person you name as an agent is someone you trust unconditionally.

Contact us with any questions regarding DPOAs.