Estate Planning

Financial Powers of Attorney

To Spring or Not to Spring a Durable Power of Attorney

by Rania Combs

Every adult residing in Texas should have a Texas durable power of attorney.

What is a Durable Power of Attorney?

A durable power of attorney is a document that will allow you to appoint someone you trust to engage in specified business, financial and legal transactions on your behalf. It is called “durable” because it does not terminate if you become incapacitated.

If you become incapacitated and do not have a durable power of attorney, a guardianship may be necessary to allow someone to manage your financial affairs.

When Does it go Into Effect?

Powers of attorney can become effective immediately or can spring into effect when you become incapacitated. In the case of a springing durable power of attorney, you can define the disability that would cause the durable power of attorney to take effect. If you do not define the disability, you will be considered disabled if a physician certifies in writing that you are incapable of managing your financial affairs.

The powers granted to the agent in a durable power of attorney are broad and sweeping. Agents who are not trustworthy could wreak havoc on your finances. Your agents could sell your property and drain your bank accounts; therefore, it is very important that you trust the person you appoint.

The Problem with a Springing Power of Attorney

Because durable powers of attorney are so powerful, clients are often concerned about the risks of granting their agent the power to act immediately. I generally recommend that my clients grant their agents the power to act immediately for the following reasons:

  1. If powers of attorney spring into effect only upon your incapacity, the agent would have to get an affidavit from a physician saying that you are mentally incapable of handling your financial affairs before being able to act. Having to jump through these hoops may cause delays and may also prevent the agent from helping you until have been officially diagnosed as disabled or incapacitated.
  2. There are numerous situations when it can be helpful for your agent to handle your financial matters before you become incapacitated. For example:
    • Spouses can handle banking transactions for one another if one of them is ill or out of town.
    • An adult child who could contact your credit card company to address possible fraud on your account or ask questions about a bill you received.
    • An adult child you’ve appointed as your agent could cancel a credit card for you.
  3. Another reason I recommend granting an agent the power to act immediately is because financial institutions are less reluctant to accept powers of attorney drafted in that way. Banks and other financial institutions are more reluctant to accept springing powers of attorney because they are concerned about whether the triggering event has actually occurred. This can sometimes cause friction that could have been avoided if the power of attorney became effective immediately.

Tips for Minimizing Abuse

The best way to minimize the risk for abuse is to choose your agent wisely. The person you select as your power of attorney should be someone who you trust implicitly to do what is in your best interest. Remember that your agent could cause more damage when you lack capacity than when you are capable of managing your own financial affairs. So if the thought of giving that person immediate authority makes you uncomfortable, then chances are you should reconsider your choice.

As an added layer of protection, you should keep your power of attorney in a safe place, and simply tell your agent where the document is located. Your agent will not be able to act without having the document in hand; however, if you become incapacitated, your agent would be able to retrieve the power of attorney and act immediately without any hurdles.

Keeping it in a safe place rather than giving it to your agent would also allow you to revoke it easily. It’s always a good idea to reconsider your choices periodically. If the person you name as your agent has become estranged or acted in an untrustworthy manner, you should revoke your power of attorney and appoint someone new.

For more information about revoking a power of attorney, read: How Do I Revoke a Durable Power of Attorney in Texas.

This article was originally published on March 2, 2015, and updated on June 10, 2021.

About Rania

Rania graduated magna cum laude from South Texas College of Law Houston and is the founder of Rania Combs Law, PLLC. She has been licensed to practice law since 1994 and enjoys helping clients in Texas and North Carolina create estate plans that give them peace of mind.

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