Retirement & Financial Planning Report

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There are good reasons to make a designation of power of attorney to make important decisions on your behalf if you become incapacitated. However, take care to anticipate potential problems even then.

A general power of attorney ceases to be effective when the principal becomes incompetent. A durable power of attorney, on the other hand, will remain in effect.


Many states permit powers of attorney to be “springing.” Such powers are executed today but don’t become effective until later, when some specified event occurs. For example, the power might “spring” into effect when the principal’s physician attests–in writing–that the principal has become incapacitated.

Some attorneys don’t recommend springing powers, though, because they just add one more layer of uncertainty at a time when clarity will be needed. In practice, some doctors won’t want to go on record that someone is incapacitated, because of the potential liability involved. Situations where the principal goes in and out of incapacity also raise question about the application of a springing power.

After you have a power of attorney drawn up, signed, and witnessed, you should file copies of that document with the financial institutions where you do business. You want to be sure your bank or brokerage firm will accept your power of attorney. If there’s a problem, and you find out in advance, you can work with the institution to get a document that will be honored.

The problem may be that the financial institution is reluctant to allow your son Bob, for example, to make decisions for your account unless there is an absolute certainty that Bob has the right to act. Many financial institutions have their own power of attorney forms that they prefer to be used.

Although a power of attorney technically lasts forever, in the real world if the document appears stale, a financial institution may question it.

Therefore, you should renew a power of attorney every five years or so. If there has been a change in your circumstances you may want to modify the document, as well.

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2022 Federal Employees Handbook