You may be thinking about designating a power of attorney who can handle your financial affairs for you in the event that you become incapacitated. This can be to your family’s benefit as well as your own; your family will know who is responsible for making financial decisions, and you have the power to limit the authority of your designee, sometimes also called an attorney-in-fact.
However, when creating a financial power of attorney, it is important to pay attention to when it goes into effect and when it ends. In every case, a power of attorney ends when you die. At that point, your financial affairs become the responsibility of an executor that you name in your will. If you do not have a will, the court appoints an administrator to manage the estate.
Otherwise, according to FindLaw, there are two important considerations you need to make when creating a power of attorney: whether to make it springing and/or durable. A springing power of attorney is one that only goes into effect when you become incapacitated. In other words, you create the power of attorney now, but your attorney-in-fact does not assume authority until you are no longer able to make your own financial decisions for whatever reason.
A durable power of attorney is one that remains in place even after the condition that necessitated it, i.e., your incapacitation, resolves. For example, if you created a power of attorney that was not durable and you recovered from your incapacitation, your attorney-in-fact would no longer have decision-making authority under any circumstances. If you wanted the same designee to manage your affairs if you became incapacitated again, you would need to create a new power of attorney. A durable power of attorney removes this necessity.
A potential downside to a durable power of attorney is that it goes into effect the moment you sign it. However, it is possible to have a power of attorney that is both springing and durable, so that it is only in effect when you are not in a state to make your own decisions.
