What Is the Test for Diminished Capacity That Is Used For a Power of Attorney to Take Over?

By Teo Spengler

A durable power of attorney is a legal document prepared by a competent adult -- the "principal" -- who wants to name a trusted person to act for her when she cannot or does not wish to act for herself. Some powers of attorney, termed springing, only become effective when the principal is incapacitated. Since no clear test exists to determine incapacity, springing powers of attorney are increasingly out of favor.

A durable power of attorney is a legal document prepared by a competent adult -- the "principal" -- who wants to name a trusted person to act for her when she cannot or does not wish to act for herself. Some powers of attorney, termed springing, only become effective when the principal is incapacitated. Since no clear test exists to determine incapacity, springing powers of attorney are increasingly out of favor.

Powers of Attorney

A power of attorney is a document any competent adult can use to appoint an agent to act on her behalf. Although the procedure and rules vary among jurisdictions, many states offer fill-in power-of-attorney forms, and similar products are available from online legal service providers. Essentially, you must use the form to identify the person you are choosing as an agent and to describe the scope of the authority you are conferring.

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Types

Most powers of attorney confer authority to make financial decisions or medical care decisions. Some do both, although the practice is forbidden in some states and the American Bar Association recommends against it. While a normal power of attorney is only valid as long as the principal is mentally competent, a durable power of attorney continues in force after the principal becomes mentally incapacitated, and a springing power of attorney becomes effective only if the principal becomes mentally incompetent.

Mentally Incompetent

Determining when a principal is mentally incompetent can be difficult. If a principal falls into a coma, all are in accord as that she is no longer mentally competent to make her own decisions. The call is more difficult in cases of dementia -- it's hard to determine exactly at what point the person is no longer competent. It's also difficult in cases in which the principal's mental alertness fluctuates, such as a poorly controlled mental illness. No standard test for competency exists. Sometimes language in the power of attorney specifies the test; for example, the document may provide that a springing power of attorney will be effective at such time as a determination of the principal's incapacity is made by the principal's doctor. Otherwise, in disputed matters, the decision is generally left to the court who relies on both medical and lay testimony.

Problems With Springing Powers

Banks and financial institutions don't like springing powers of attorney, since a determination of competence can be difficult and the subject of extended litigation. Recognizing these issues, some states discourage springing powers of attorney and they are now forbidden under the Uniform Power of Attorney Act, enacted by 13 states and introduced in several more as of 2013. The states enacting the uniform act do not invalidate those springing powers of attorney made before enactment; instead, the legislation makes them effective when the principal's primary care physician signs an affidavit stating that the principal lacks capacity to manage his property.

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References

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North Dakota Power of Attorney Laws

In North Dakota, you have the option of creating a power of attorney, or POA, to give another person the authority to act on your behalf when it comes to financial matters. These financial matters could include anything from that can access your bank accounts, who can pay bills or who can purchase or sell property. Under North Dakota law, the authority you grant may be as broad or as specific as you like, and you always have the option of revoking this authority at any time.

Durable Power of Attorney for Kentucky

A durable power of attorney is a power of attorney that becomes or remains valid when the principal goes unconscious, becomes mentally incompetent or loses the ability to communicate. It is normally used when the principal is a seriously ill patient, to allow the agent to make medical or financial decisions on behalf of the principal.

Possible Power of Attorney Complications

A power of attorney can be an effective way to delegate responsibility for managing your finances and making health-related decisions when you are no longer able or willing to make these decisions yourself. However, complications can arise from the time the POA is executed up until the point that all duties have been performed by the person you appoint.

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