THE THREE FORMS OF POWERS OF ATTORNEYS

There are three forms of Powers of Attorney, viz., "Nondurable," "Durable," and "Springing" Powers of Attorney. A "Nondurable" Power of Attorney takes effect immediately. It remains in effect until it's revoked by the principal, or until the principal becomes mentally incompetent or dies. It is often used for a specific transaction, like the closing on the sale of a residence, or the handling of the principal's financial affairs while the principal is traveling outside the country. A "Durable" Power of Attorney enables the agent to act for the principal even after the principal is not mentally competent or physically able to make decisions. The "Durable" Power of Attorney may be used immediately, and is effective until it is revoked by the principal, or until the principal's death. A "Springing" Power of Attorney becomes effective at a future time. That is, it "springs up" upon the happening of a specific event chosen by the principal, and spelled out in the Power of Attorney. Often that "springing" event is the illness or disability of the principal. It will frequently provide that the principal's physician will determine whether the principal is competent to handle his or her financial affairs. A "Springing" Power of Attorney remains in effect until the principal's death, or until revoked by a court. Now under the new law, there is a “springing event” to all Powers of Attorney as the date on which an agent's signature is acknowledged is the effective date of the Power of Attorney as to that agent; if two or more agents are designated to act together, the power of attorney takes effect when all the agents so designated have signed the power of attorney with their signatures acknowledged. NY G.O.L. § 5-1501B subd. 3 (a). Of course, if the Power of Attorney is a “Springing Power of Attorney (“to take effect upon the occurrence of a date or contingency”), the occurrence of the contingency is also required. NY G.O.L. § 5-1501B subd. 3 (b). Both "Durable" and "Springing" Powers of Attorney are frequently used to plan for a principal's future incapacity or disability and loss of competence resulting, for example, from Alzheimer's Disease or a catastrophic accident. And by appointing an agent under a "Durable" or "Springing" Power of Attorney, the principal is setting up a procedure for the management of his or her financial affairs in the event of incompetency or disability. Which is better for the principal?