Bitcoin Springing POA Problem

Springing Power of Attorney Activation Barriers

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

Incapacity Definition and Determination Timing

A bitcoin holder executes a springing power of attorney. The document grants authority to an agent only upon the principal's incapacity. Until incapacity occurs and is certified, the agent has no authority. This structure protects the principal's autonomy while providing for eventual delegation. The principal retains full control unless and until they cannot exercise it.

Bitcoin springing poa problem emerges when custody needs immediate action but power of attorney activation requires incapacity determination procedures that take time to complete. The gap between when bitcoin access becomes necessary and when the agent's authority activates creates periods when neither the principal nor the agent can act effectively. Custody requirements do not wait for legal certification to conclude.

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Incapacity Definition and Determination Timing

Springing POAs define incapacity triggering activation. A common provision states the POA springs into effect when two physicians certify the principal is incapacitated. The principal suffers a stroke. They are clearly unable to manage affairs. But obtaining two physician certifications takes days or weeks. During this period, the principal cannot act and the agent has no authority yet.

Medical professionals may hesitate to certify incapacity. Physicians understand the legal implications. They want to be certain before providing certification. This caution serves the principal's interests generally. It also delays activation when immediate action is needed. The physician treating the principal after sudden incapacity needs time to evaluate whether impairment is permanent or temporary before certifying.

Some POAs require specific medical specialists to certify. The document might require certification by the principal's regular physician plus one other doctor. The regular physician is unavailable or no longer practices. Finding acceptable certifying physicians extends the activation timeline. Meanwhile, bitcoin custody decisions are time-sensitive.

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Borderline Capacity Scenarios

Incapacity is not always clear-cut. The principal has progressing dementia. Some days they are lucid. Other days they are confused. Physicians disagree about whether certification is appropriate. One physician believes the principal retains sufficient capacity. Another believes incapacity exists. Without both certifications, the POA does not spring. The principal hovers in a gray zone where they cannot reliably manage custody but the springing POA has not activated.

Temporary incapacity creates certification hesitation. The principal is hospitalized with delirium. The condition might resolve in days or weeks. Physicians are reluctant to certify permanent incapacity for a potentially temporary condition. The springing POA language does not distinguish temporary from permanent incapacity. It requires certification of incapacity without specifying duration. This ambiguity delays activation when the timeframe is uncertain.

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Principal Resistance to Certification

Some principals resist having their incapacity certified even when impaired. They understand that certification activates the POA and removes their control. Pride, fear, or impaired judgment leads them to refuse physician evaluation. The agent cannot force evaluation without authority. They need POA activation to compel examination. But activation requires examination. This creates a procedural loop when the principal blocks the trigger mechanism.

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Immediate Custody Needs During Activation Gap

Exchange accounts require periodic login to prevent dormancy or security freezes. The principal becomes incapacitated. The account will lock if not accessed within two weeks. The certification process is underway but incomplete. The agent cannot log in without authority. The account locks before the springing POA activates. After activation, the agent must unlock the account which requires additional time and procedures beyond simple access.

Some custody arrangements require regular maintenance. Multisignature wallets need all key holders to remain available. The principal is one key holder. They become incapacitated. Another key holder needs to be replaced due to their own unavailability. This requires the principal's participation or the agent's authority. Neither can act during the activation gap. The custody structure degrades while certification procedures progress.

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Third-Party Acceptance Before Activation

Even after obtaining certifications, third parties must accept the springing POA. An exchange questions whether the certifications satisfy the POA's terms. Their legal department reviews the documents. This review takes additional time. The agent has activated authority but cannot exercise it until the third party accepts the documentation. Exchanges designed for account holders struggle to process springing POA activations that do not fit their standard procedures.

Some third parties require updated certifications. The initial certifications were obtained two months ago. The exchange wants certifications dated within 30 days. The agent must obtain new certifications showing continuing incapacity. This extends the timeline further. Each third party may have different certification recency requirements.

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Multiple Jurisdiction Complications

The principal resides in one state. The agent resides in another. The POA was executed in a third state. Incapacity occurs while the principal is traveling in a fourth state. Which state's law governs activation requirements? Different states have different standards for physician certification. The springing POA document does not specify governing law. The agent must navigate multiple potential legal frameworks while trying to obtain appropriate certifications.

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Agent Authority Uncertainty During Gray Period

The agent receives physician certifications. The POA is now arguably activated. But the principal has moments of lucidity. During a lucid moment, the principal contradicts the agent's decisions. Which authority controls? The medical certifications state incapacity. The principal's current lucid behavior suggests capacity. The agent faces uncertainty about whether they can override the principal's objections based on certifications describing general incapacity despite specific current lucidity.

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Revocation Potential Before Full Activation

The principal has fluctuating capacity. Certifications are obtained. Before the agent can act, the principal has a lucid period and revokes the POA. This revocation might be valid if the principal had capacity at that moment. The agent's authority disappeared before they could exercise it. The principal's capacity fluctuates back to incapacity. New certifications and potentially a new POA become necessary. The cycle could repeat if capacity continues to fluctuate.

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Emergency Situations and Prior Authorization

The principal becomes suddenly incapacitated due to accident or stroke. Emergency custody decisions are needed immediately. The springing POA provides no authority until certification occurs. Certification cannot occur immediately after sudden onset. The agent wants to act in the principal's interest but has no legal authority. Acting without authority creates potential liability. Not acting may result in custody losses. The agent faces an impossible choice during the activation gap.

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Documentation Proving Activation

After obtaining certifications, the agent must prove to third parties that activation occurred. The POA document plus physician certifications together demonstrate activation. Some third parties question the physician credentials. They want to verify that certifying physicians are licensed and practicing. This verification adds delay. The agent cannot simply present documents and act. Each third party conducts its own verification process extending the timeline from activation to actual authority exercise.

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Costs and Logistics of Certification

Obtaining physician certifications creates costs. Physicians charge for providing legal certifications. The process requires medical appointments. If the principal is hospitalized far from home, coordinating physician certifications involves travel or working with unfamiliar medical providers. The agent must pay these costs from their own funds initially. Whether they are reimbursed depends on ultimately accessing the principal's accounts which cannot occur until activation completes.

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Conflicting Certifications

Two physicians provide certifications as required. A third physician who also examined the principal disagrees and provides a contrary opinion. The springing POA requires two certifications. It does not address what happens when a third physician disputes those certifications. Third parties seeing conflicting medical opinions may refuse to accept activation. The agent must resolve the medical disagreement before activation is accepted.

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Delayed Discovery of Incapacity

The principal lives alone. Incapacity occurs gradually. Family does not realize the extent of impairment until a crisis emerges. By the time the agent learns that activation is needed, the principal has been incapacitated for months. Bitcoin custody issues accumulated during this period. Activation occurs but addresses only current issues. The accumulated past issues remain unresolved and may have compounded.

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Self-Certification Provisions

Some springing POAs allow the principal to certify their own incapacity. The document states the POA activates when the principal provides written notice that they are incapacitated. This avoids physician certification delays. It also creates new problems. An incapacitated principal may not recognize their own incapacity. Cognitive impairment prevents the insight needed for self-certification. The provision designed to ease activation becomes unusable in the scenarios where activation is most needed.

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Agent Qualifications and Technical Competence

The springing POA names an agent without considering bitcoin custody competence. The agent is a trusted family member or attorney. When activation occurs, they have legal authority but no technical knowledge. They must manage bitcoin custody they do not understand during the stress of the principal's incapacity. The activation gap gave no time for the agent to develop necessary competence before authority activated.

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Comparison to Durable POA Immediate Authority

Durable powers of attorney grant immediate authority. The agent can act from execution. No incapacity determination is required. This eliminates the activation gap. It also grants authority when the principal has capacity potentially creating conflicts. Principals choose springing POAs specifically to avoid this conflict. The choice creates the activation gap as a trade-off for preserving autonomy during capacity.

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Assessment

Bitcoin springing poa problem creates timing gaps when incapacity certification procedures take time while bitcoin custody needs immediate action. Physician certification requirements introduce delays for medical evaluation and documentation. Borderline capacity scenarios generate disagreement about whether certification is appropriate. Temporary incapacity creates hesitation to certify permanent condition. Principal resistance to evaluation blocks the trigger mechanism.

Immediate custody needs during activation gaps include exchange account maintenance and multisignature key holder replacement. Third-party acceptance processes extend timelines beyond certification. Multiple jurisdiction questions complicate determining which legal standards apply. Agent authority uncertainty emerges when principal shows fluctuating capacity. Revocation potential exists when lucid periods interrupt activation.

Emergency situations requiring immediate action find no authority exists yet. Documentation proving activation to third parties requires verification processes. Certification costs and logistics burden agents before they have access to principal funds. Conflicting medical opinions prevent activation acceptance. Delayed discovery of incapacity creates accumulated unresolved issues. Self-certification provisions become unusable when cognitive impairment prevents insight. Understanding these dynamics explains how bitcoin springing poa activation procedures sized for deliberate capacity transition create gaps when immediate bitcoin custody action is required before certification processes complete.

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System Context

Examining Bitcoin Custody Under Stress

Does Power of Attorney Cover Bitcoin

Bitcoin Statutory POA Form

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