![]() In some circumstances, questions over whether the Principal is incapacitated may lead to a period of time between the date in which the Principal actually becomes unable to manage his or her financial affairs and the date in which the Agent is able to act under the springing DPOA. On the other hand, note that it is often difficult to define what it means to be “incapacitated” or to prove that the Principal is incapacitated. Arguably, a springing durable power of attorney may make more sense for this reason, as it could be used as a “safety net” that gives the Agent the power to act only in case of an emergency. One downside to an immediately-effective DPOA is that it gives the Agent powers over the Principal’s financial affairs (subject to the Agent’s fiduciary duties and any limitations within the DPOA), even if the Principal does not have a current need for the Agent to have those powers. Should a DPOA be effective immediately or springing? A DPOA that only becomes effective upon the occurrence of a specific event or date is known as a “springing” DPOA because the powers granted to the Agent “spring” out of the specified event. Alternatively, the terms of a DPOA may be drafted so as to override this default provision and cause the DPOA to be effective only upon a specific date or upon the occurrence of a specific event, such as the onset of an incapacity. Under South Carolina law, a DPOA is effective immediately upon its execution by default. Is a DPOA only effective in the event of an incapacity? ![]() Since incapacities often occur close to the end of one’s life, a DPOA can effectively bridge the gap between the onset of the Principal’s incapacity and the Principal’s death. Otherwise, you would have to rely on a court to appoint a guardian or conservator to handle your affairs if you were to become incapacitated-a process that can be very slow, tedious, and expensive. It is important to address these issues by having a DPOA in place prior to your incapacity. ![]() Whether you are in a coma after a car accident, or your mental ability is simply deteriorating due to old age, a DPOA can help to ensure that your business and financial affairs are taken care of, even if you cannot personally oversee those parts of your life. ![]() Why is a Durable Power of Attorney useful? Under the South Carolina Uniform Power of Attorney Act, a POA is “durable” by default, unless the terms of the document provide otherwise. “Special” or “limited” POAs can be so narrow as to apply only to a single transaction or specific type of transaction, whereas a “general” POA will allow the Agent to engage in most transactions that the Principal could engage in (with some exceptions, as discussed below with respect to gifting).Ī “durable” POA (“DPOA”) is effective even if the Principal is incapacitated, which makes it an effective estate planning tool. If you were to become incapacitated tomorrow, who would pay your bills? Who would run your business or manage your other financial affairs? What is a Durable Power of Attorney?Ī “power of attorney” (“POA”), sometimes referred to as a “financial power of attorney,” is a document with which one individual (the “Principal”) appoints another individual or individuals (the “Agent” or “Agents”) to act on the Principal’s behalf with regards to the Principal’s financial affairs. However, an incapacity would affect aspects of your life beyond just your healthcare and medical decisions. In a previous blog post, we discussed how a Health Care Power of Attorney can be used to give someone the power to make medical decisions on your behalf if you are unable to make such decisions for yourself.
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