The power that springs into action
January 1, 2021
I try to avoid using Latin, since so few people understand it and I’m not in the business of confusing people. But as we lean toward the tape in this marathon run that 2020 has been, the words “annus horribilis” – horrible year – seem appropriate.
Yes, I know, we have seen worse. 536 when a volcanic eruption ruined crops and caused massive starvation. 1665 when the Bubonic Plague swept through Europe. 1918 when people were dying from the Spanish Flu and trench warfare. 1996 when the Spice Girls became popular. I’m sure you can think of other examples.
There have been silver linings in this recent unpleasantness. One I have noticed is that people have been more likely to get their affairs in order, and as an estate planner that warms my heart. But major changes also kindle new disputes. In my little world, the debates over powers of attorney have taken on a new twist.
It isn’t disputed that a power of attorney is a necessity; everyone should have one. The dispute, among estate planners, is whether it should be a “springing” power of attorney, or an “open” power of attorney.
Let me explain the terms. A power of attorney is a document you sign, in front of a notary, that allows somebody else to act on your behalf. Sometimes these are very specific documents. For instance, you might have one that allows someone to sign off on the sale of your home, because you’re moving out of town. But more often, these are “general”, because if you become incompetent (say, from dementia or a stroke) it would be better to have somebody you have chosen handle your finances, instead of having a judge make that decision after a nasty conservatorship hearing.
A “springing” power of attorney is one that only comes into effect when you actually become incompetent. In Alaska, that means two doctors have to sign sworn statements saying they have each examined you, and you are not able to manage your own affairs. An “open” power of attorney, on the other hand, can be used at any time; it is “effective on the date of signature”.
My old friend Scott Sterling used to be the head of the Elder Fraud Division in Alaska, and he was very skeptical of open powers of attorney. He saw them being used by unscrupulous people to rob elderly folks blind. I have found that many of my clients are leery about signing a document which someone could use to access their assets while they’re still competent, so I typically use a springing power when doing estate planning, unless the client is already struggling with dementia or similar issues.
(Just in case I wasn’t clear, it is highly illegal to misuse a power of attorney to steal someone’s assets, even if it’s your family member, and it can land you in prison. Just ask Mark Avery, in his prison cell.)
But when the pandemic hit, those springing powers of attorney ran into an unexpected obstacle: the agents couldn’t get the doctors to sign off. Those doctors who were able to go into the coronavirus wards were incredibly busy and largely inaccessible. On top of that, these were supposed to be sworn statements by the doctors (the law said so) and people couldn’t get a notary anywhere near the wards.
So a lot of people were in medically-induced comas, or otherwise in extremis (sorry for another Latin phrase), but the named agent couldn’t use the power of attorney because they couldn’t get the sworn statement from the doctors.
So, what is the answer? I’m still working on that. Hopefully by this spring, the year of the COVID-19 will be just a bad memory, things will be more-or-less back to normal, and springing powers of attorney will again be the norm. At least we can hope so. It would be nice to get back to the status quo.
Oops sorry, that was another Latin phrase. Mea culpa.
Kenneth Kirk is an Anchorage estate planning attorney. Nothing in this article should be taken as legal advice for a specific situation. For legal advice, consult an attorney who can take all the facts into account. And have an Annus Mirabilis in 2021.