When Does a POA for Property Take Effect?

A Power of Attorney (POA) for property can be used for different purposes and so, it can take effect at different times. If can be difficult for people to know when the attorney named in the POA document (the person given legal decision-making authority) is allowed to start using the document.

Sometimes, a POA for property is used for convenience while a person has capacity and simply wants another person  (the “attorney” named in the POA document) to handle financial transactions for them. This could happen if the person is going out of town, or has limited physical mobility, and simply wants the attorney to act as their agent or do their bidding.

Sometimes, a POA for property is used after a person has lost capacity to make their own financial decisions. Then, the attorney named in the POA document becomes the substitute decision-maker.

POAs for property are often drafted to take effect upon signing. This allows for the use of the document immediately, including while a person still has capacity. A clause in the POA document will literally state, “This power of attorney document takes effect immediately upon signing.” Typically, these POA documents are drafted as “continuing” powers of attorney, meaning they take effect immediately while a person has capacity and will continue in effect  later if the person loses capacity.

It is also possible for a POA for property to be drafted to take effect only upon a specific event or on a specific date.

For example, the POA for property document could state that it takes effect only once a person loses capacity to make financial decisions. If so, then there should be a clause in the POA document that specifies a mechanism for determining when the person has lost capacity. Otherwise, the attorney for property (and others scrutinizing the attorney’s decisions) won’t know whether the attorney has authority yet to use the POA document. Typically, capacity to manage one’s property is determined by one or more doctor’s opinions, or by one or more formal capacity assessments.

A POA for property can also be drafted to take effect at a specific time, such as on an exact date or during a defined period. For example, a POA document could state that it takes effect only once a person leaves for their trip to Florida, or only after May 31, 2022.