Bitcoin Durable POA Timing Activation Gaps

Durable Power of Attorney Activation Gaps

This memo is published by CustodyStress, an independent Bitcoin custody stress test that produces reference documents for individuals, families, and professionals.

The Immediate vs Springing Distinction

A durable power of attorney grants an agent authority to act on the principal's behalf. Bitcoin durable POA timing describes when this authority activates for bitcoin custody access. Some POAs activate immediately. Others activate only upon incapacity. Determining when incapacity exists creates ambiguity that affects when agents can access bitcoin holdings.

The principal becomes partially impaired. They can still communicate but make poor decisions. They remember some information but forget other critical details. The POA exists. Whether the agent has authority to act depends on activation language and incapacity assessment. For bitcoin custody requiring precise passwords and procedures, this timing ambiguity creates operational problems.

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The Immediate vs Springing Distinction

Immediate POAs grant authority from signing. The agent can act at any time regardless of the principal's capacity. Springing POAs activate only when specified conditions occur, typically the principal's incapacity. Bitcoin durable POA timing differs dramatically between these types.

Immediate POAs create ongoing agent authority. The principal retains bitcoin custody. The agent also has legal authority to access that custody. For traditional bank accounts, this dual authority rarely creates problems. Banks honor either signature. Bitcoin custody creates confusion. Does the agent access holdings the principal still actively manages? When does agent action become appropriate versus inappropriate?

Springing POAs delay agent authority until incapacity triggers. The principal manages bitcoin while capable. The agent waits. Determining exactly when incapacity occurred and authority activated becomes the critical question for bitcoin durable POA timing.

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The Incapacity Determination Problem

Springing POAs define incapacity through language like "unable to manage financial affairs" or "as determined by two physicians." These definitions work reasonably well for traditional banking. A person either can or cannot sign checks, give instructions to brokers, or communicate with bank representatives.

Bitcoin custody creates granular incapacity. The principal might remember passwords but not seed phrase locations. They might retain ability to approve transactions but lose judgment about which transactions are safe. They could have capacity to communicate but not capacity to execute multi-step technical procedures correctly. Bitcoin durable POA timing must determine when partial impairment crosses into legal incapacity.

Physicians can assess medical incapacity. They struggle to assess bitcoin custody capability. The doctor evaluates cognitive function generally. They do not test whether the principal can still recover a wallet or verify transaction addresses. Medical determinations of incapacity might not align with operational definitions of bitcoin management capability.

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The Ambiguous Period

Between clear capacity and clear incapacity lies an ambiguous period where the principal functions partially. They have good days and bad days. Sometimes they manage bitcoin successfully. Other times they make errors. Bitcoin durable POA timing during this ambiguous period creates uncertainty about agent authority.

The agent observes the principal struggling. Activating POA authority seems prudent. The principal insists they remain capable. They become angry at suggestions they need help. The POA language requires incapacity. Does decline visible to family constitute legal incapacity or just natural aging?

Acting too early risks violating the principal's autonomy and potentially exceeding legal authority. Waiting too long allows the principal to make costly mistakes or lose access to bitcoin through forgotten passwords. Bitcoin durable POA timing forces agents to navigate this dilemma without clear signals about when authority legally begins.

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The Documentation Activation Challenge

Some POAs require written certification of incapacity. Two doctors must sign statements. These documents take time to obtain. The principal's capacity is declining now. By the time the agent gathers required certifications, the principal might have forgotten critical bitcoin access information. Bitcoin durable POA timing mechanisms designed to protect against premature activation create delays during which operative information is lost.

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The Principal Resistance Factor

Principals often resist acknowledging their own incapacity. The POA grants authority when incapacity exists. The principal denies incapacity exists. This denial is sometimes a symptom of the very incapacity that triggers agent authority. Bitcoin durable POA timing becomes contested between an agent who believes authority has activated and a principal who disagrees.

The principal changes passwords after noticing the agent attempted access. They hide custody materials. They call banks and exchanges to revoke agent access even though the agent has legal authority. Bitcoin durable POA timing conflicts create situations where legal authority and operational control diverge. The agent has the POA. The principal has the passwords.

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The Agent Capability Assumption

POAs assume agents can execute authority once it activates. For traditional financial tasks, this assumption holds. The agent can write checks, make deposits, or give investment instructions. Bitcoin durable POA timing assumes the agent can manage bitcoin custody once authority exists. Many agents lack this technical capability.

Authority activates. The agent legally controls the principal's bitcoin. The agent does not know how to access wallets, verify transactions, or secure seed phrases. Bitcoin durable POA timing creates a window where legal authority exists but operational capability does not. The agent must learn custody management at exactly the moment they become responsible for it.

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The Institutional Recognition Problem

Banks and brokerages have established procedures for accepting POAs. They verify documents. They require specific forms. They update account authorizations. Bitcoin held at exchanges might follow similar processes. Self-custodied bitcoin has no institution to present POAs to. Bitcoin durable POA timing for self-custody means authority exists but no entity recognizes or implements it.

The agent has POA authority. They need the principal's passwords. The principal is incapacitated but refuses to disclose passwords. No institutional authority forces disclosure. The POA grants legal right to access but provides no mechanism to obtain the technical means of access. Authority and capability remain disconnected.

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The Revocability During Decline

Durable POAs remain in effect during incapacity but can be revoked while the principal retains capacity. During the ambiguous period where capacity is declining but not gone, principals sometimes revoke POAs in moments of clarity or paranoia. Bitcoin durable POA timing creates scenarios where principals revoke authority after agents have begun custody transition activities.

The principal grants POA. Capacity declines. The agent begins documenting bitcoin custody to prepare for full transition. The principal has a lucid period and becomes angry that the agent is "meddling." The principal revokes the POA. Days later, capacity declines again. The revocation happened during minimal capacity but was legally valid. The agent loses authority exactly when it becomes most needed.

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The Multiple Agent Coordination

Some principals name multiple agents with joint authority or successor authority. The POA specifies that two agents must act together. Bitcoin durable POA timing for multiple agents requires determining not just when authority activated but which agents currently hold authority and whether they can coordinate.

The POA names a spouse as primary agent and an adult child as successor. Incapacity determination depends on who is doing the determining. The spouse believes the principal remains capable. The child believes incapacity has occurred. Bitcoin durable POA timing becomes contested between family members with different assessments and potentially different interests.

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The Gradual vs Sudden Onset

Sudden incapacity from stroke or accident creates clear timing. The principal was capable yesterday. They are incapacitated today. Bitcoin durable POA timing activation is relatively unambiguous. Gradual decline from dementia or chronic illness creates no clear dividing line. Yesterday blends into today. When exactly did authority activate?

Retroactive determinations become necessary. The agent begins acting. Later, questions arise about when they gained authority. Did they exceed authority by acting before incapacity occurred? Did they neglect duty by waiting too long? Bitcoin durable POA timing for gradual decline cannot be pinpointed to a specific moment. Authority activated at some point during a months-long progression.

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The Liability Exposure Window

Agents face liability for acting without authority or failing to act when authority exists. Bitcoin durable POA timing ambiguity creates liability exposure in both directions. Acting before activation risks accusations of exceeding authority. Waiting until after activation is certain risks accusations of neglect if the principal makes damaging errors during delay.

The agent accesses bitcoin custody believing incapacity has activated authority. Family members disagree. They claim the principal was still capable. The agent exceeded authority. The agent's actions with bitcoin might be legally problematic even if practically necessary. Bitcoin durable POA timing disputes create potential liability that agents discover only after taking action.

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The Information Access Asymmetry

Determining whether to activate authority requires information about the principal's capacity. Family members see some evidence. Doctors see other evidence. The principal presents differently in different settings. The agent might observe serious incapacity at home while the principal appears relatively capable in medical appointments.

Bitcoin durable POA timing decisions depend on which information sources are considered authoritative. The principal successfully discusses bitcoin with their financial advisor, suggesting capacity. At home, they cannot remember passwords or follow procedures, suggesting incapacity. The agent must decide which observations trigger activation even though evidence points in conflicting directions.

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The Practical vs Legal Timing Gap

Practical need for agent action might precede legal activation. The principal is declining but not yet legally incapacitated. They are making bitcoin custody errors that create real losses. The agent sees the need to act but lacks legal authority. Bitcoin durable POA timing forces the agent to choose between acting without authority to prevent immediate harm or respecting legal timing while damage occurs.

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Outcome

Bitcoin durable POA timing creates ambiguity about when agent authority activates for bitcoin custody access. Springing POAs require incapacity determination. Partial impairment creates ambiguous periods where the principal functions sometimes but not reliably. Medical incapacity assessments do not test bitcoin custody capability specifically.

Principals resist acknowledging incapacity. Documentation requirements delay activation while capacity continues declining. Agents gain legal authority without technical capability to exercise it. Revocability during declining capacity creates situations where principals remove agent authority during periods of minimal capacity.

Gradual cognitive decline creates no clear activation moment. Retroactive determinations must assign authority to some point during progression. Liability exposure exists both for acting too early and waiting too long. Bitcoin durable POA timing requires navigating legal, medical, and operational definitions of capacity that do not align neatly for technical custody requirements.

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System Context

Examining Bitcoin Custody Under Stress

Bitcoin Power of Attorney Digital Assets

Bitcoin Power of Attorney Requirements

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