The rule under common law is that a POA is extinguished upon the incapacity of the principal. There is, however, an important exception to this rule: the durable POA. There are two types of durable POA, the general durable and springing durable, and each has distinctive features. The general durable POA takes effect immediately upon signing and stays in force even should the principal becomes incapacitated. Yet typically the principal has no need for the attorney in fact to take actions immediately upon execution, but rather only upon the principal’s incapacity – overkill in a sense. Incapacity may never occur, but nevertheless the attorney in fact’s power to act exists from inception. The need for a trustworthy attorney in fact cannot be understated, yet with proper care in selection, such a risk may be rather low. In any event, should the principal in fact become incapacitated, the general durable POA simply remains in full force.
Conversely, the springing POA comes into force only upon the principal’s incapacity. The “pro” is that there is no period of risk during which a misguided attorney in fact can act prior to incapacity. However, it is critical that the POA set forth the process by which the incapacity will be established such as by written certification by an attending physician or the opinion of “my family physician Dr. Johns or a physician in her practice.” Whatever the process, an extra step is required in comparison to a general POA. On the off-chance that incapacity cannot be proven, the attorney in fact would need to seek court intervention giving rise to unwanted delay and cost. This risk is probably rather low, but it still needs to be considered.
NB: Disability is defined pursuant to N.J.S.A. 46:2B-8, when the principal is “unable to manage his property and affairs effectively for reasons such as mental illness, mental deficiency, physical illness or disability, advanced age, chronic use of drugs, chronic intoxication, confinement detention by a foreign power, or disappearance.”
