Sunday, November 30, 2014

Now and Later: Power of Attorney Authority in Iowa

When I was younger, I used to love Now and Later candy, despite the "workout" it gave my mouth/teeth.  You can enjoy the candy as a hard candy, and continue to enjoy it later when it is soft and chewy. It was like having having a different piece of candy, all in one piece.

When I discuss a power of attorney document with a client, one of the questions that I go through is whether they want the authority to be a springing power or an immediate power.  For example, do you want the person you identify to have authority to act on your behalf only when your doctor says you don't have sufficient capacity? Or, alternatively, do you want that person to have authority immediately, regardless of your capacity level?

For many clients (and for many attorneys) the initial thought/answer is 'why would you give someone power over your assets when you don't need any help?'  Here are my three responses:

1.  You may have sufficient capacity, but you aren't around.  Some examples work best.  You are on vacation in a remote location where you don't have access to modern communications.  Lake in northern Canada.  Cruise.  Mars.  You get the idea.
2.  Good Days - Bad Days.  With many forms of dementia, it is a gradual deterioration and not a "black and white" diagnosis.  Thus, when you are at a doctor's office, it may be a better day and your doctor may not be willing to cooperate in determining whether you are incapacitated or not, even though your family members are observing your struggles on the bad days.
3.  Convenience.  Sometimes it may just be easier to have someone sign documents on your behalf because you can't get away; or you are traveling for work.
4.  Trust Issue.  For me, this is the clincher/closer.  If you trust someone to act on your behalf when you are incapacitated, surely you would trust them to act in your best interest when you have your full capacities?  More importantly, if you don't trust this person for any reason, then we really need to look closer at your nominee.

Iowa recently enacted the Uniform Power of Attorney Act this past summer, which incorporated the prevailing preference by the members of the Uniform Law Commission, making the authority an immediate power (i.e., regardless of capacity) as the default provision.  If the document is silent, the statute provides the power is an immediate power.  You can still make the authority a "springing" power by a specific inclusion in the document.

The immediate power gives you the ability to use the powerful authority not only now when you have your capacity, but also later if you don't have your capacity.  You really can't beat that flexibility, in my opinion, although that brings up some discussion points for another post about the potential for abuse.  

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