When I played high school basketball, being 5’8”, I wasn’t exactly the tallest guy on the team. So I didn’t start, but the coach would insert me into the game at crucial moments because I could handle the ball well and had a decent outside shot.
My proudest moment was when I actually hit a game winner with time running out. As an aside, my parents, who attended nearly every game – missed seeing it. Not because they weren’t there – rather, they were out in the corridor talking with a friend when it happened.
Although I was a second-stringer, I played plenty and had a good time. While coming off the bench in high school basketball might be okay, having a durable power of attorney that is effective only if the “first string” isn’t available simply won’t work.
You may recall that durable power of attorney documents grant an individual the right to act for you. They can write checks, pay bills, sign property deeds, enter into contracts and enforce rights among other things. Many clients believe that they can name someone to act for them – whether it is a spouse, an adult child or a good friend, but then have someone else in reserve in case that person becomes sick, dies or is otherwise unavailable.
A durable power of attorney that isn’t effective until a precondition has been satisfied is known as a “springing” durable power of attorney. In other words, it “springs” into action upon an event – usually the incapacity or failure of someone else who also holds a durable power of attorney.
Florida law didn’t used to allow such powers. All of the durable power of attorneys had to be effective the minute you signed them. That law changed in October of 2012, and now you can have a springing power.
But I won’t create them for my clients.
Why? Because they’re largely ineffective. While the law allows them, using them in practice is an entirely different matter. The reason is due to the liability that banks, brokerage firms and others who are asked to act on the durable power of attorney are afraid of their liability.
Consider that John grants a durable power of attorney to his wife, Jane. He has a “second string” durable power of attorney to his son, Bill. But Bill’s durable power of attorney is not effective unless Jane is unable or unwilling to act on her power.
John becomes disabled. Assume at that time that Jane is in the early stages of dementia. So Bill decides that he better act. Bill takes his durable power of attorney document down to his father’s brokerage firm and says “Please put me on his account as a signer. Here I have a valid durable power of attorney that my father signed granting me the powers to interact with you, decide on trades, investments, and withdrawals.”
The clerk at the investment firm wrinkles her nose as she reads the durable power of attorney that Bill presented. “This document says that it is only effective if Jane can’t act. Who’s Jane?”
“Jane is my mother,” Bill answers. “She has dementia and can’t act. So it’s up to me now.”
“How do we know that Jane has dementia and can’t act? We aren’t supposed to take your direction unless she is unable to direct us,” the clerk responds.
“I suppose that I can get you a physician’s statement,” Bill says, getting slightly agitated now.
“Please get us supporting evidence. I’ll share that with our legal department and get back to you.” The clerk says, waiving Bill off.
You can guess what happens next. The legal department drags their feet or simply won’t act. They are afraid that Bill is going to raid the account for his own benefit and that Jane will one day walk into the office, object to their actions and possibly take legal action.
It’s a quagmire.
The answer is to grant concurrent durable power of attorneys. What I do in my office is have John grant one power to Jane and a separate power to Bill, neither of which is dependent upon the other’s ability or inability to act.
Sometimes clients object, wondering if Jane and Bill don’t see eye-to-eye and go in different directions. While this is a possibility, I suggest to my clients that if they don’t believe that the individuals whom they are granting these all-encompassing and dangerous powers to can’t be trusted to work together in the client’s best interest, then perhaps they should rethink who they are naming.
The alternative is to only give Jane a power and not Bill. Only give Bill the power when Jane can’t act. But if John is already incapable of granting a new durable power of attorney at the time that Jane can’t act, then he won’t have anyone to act.
In high school basketball you can only play five guys at a time, and they are expected to work as a team. It’s not unreasonable to select your team carefully and “coach them up” how you want them to act should they need to.
©2015 Craig R. Hersch