Just like a health care power of attorney, financial powers of attorney can be either immediately effective or “springing.” A financial POA that is springing is only effective once a doctor determines that the principal has become mentally or physically incapacitated. This can protect you from giving too much power away while you are still able to do things for yourself, but can create a big hassle for your family in the event that you do become incapacitated. On the other hand, a financial POA that is immediately effective will grant financial authority to the attorney-in-fact automatically upon the signing of the document. In this case your family will not have the aggravation of running around to doctors trying to prove that the power of attorney should be effective.
It is also important to specify that your financial power of attorney is “durable.” In many states a power of attorney will automatically terminate upon incapacitation if it is not specified that it is durable. It would be especially counterproductive to mistakenly create a power of attorney that is springing and not durable. This power of attorney would, essentially, never be effective.
Powers of attorney, both financial and health care, terminate upon death. That means that you cannot give your attorney-in-fact authority to handle things after your death, such as paying your debts, making funeral or burial arrangements, or transferring your property to the people who inherit it. If you want someone to have authority to do these things, create a will and name an executor to handle your affairs.
Are there any other ways my POA can be terminated?
Yes. Your durable financial power of attorney will also end if:
You revoke it. As long as you are mentally competent, you can revoke a durable power of attorney at any time.
You get a divorce. In some states, if your spouse is your attorney-in-fact and you divorce, your ex-spouse’s authority is automatically terminated. In other states, if you want to end the authority, you have to revoke your existing power of attorney. In any case, it’s wise to make a new power of attorney as soon as you file for divorce.
A court invalidates your POA. A court may declare your document invalid if it concludes that you were not mentally competent when you signed it, or that you were the victim of fraud.
Your attorney-in-fact is unavailable. To avoid this problem, you can name an alternate attorney-in-fact in your POA.