If you’ve ever spent five minutes in an estate planning law office, you’ve undoubtedly heard mention of a durable power of attorney, or POA. Here’s a closer look at these important legal documents that should be a part of any estate plan and why acting now can save a lot of stress and hurt feelings later.
A durable power of attorney allows a principal – usually an elderly parent – to name an agent to oversee financial, legal and health responsibilities. An agent is typically a relative or close friend. There are two types of powers of attorney, a health care power of attorney (sometimes referred to as a health care proxy) and a financial power of attorney.
Power of Attorney for Healthcare
These documents put into place, in a legally bound manner, your wishes concerning your healthcare. Not only that, but it also includes the name of your chosen agent. Remember, this person must be willing to accept the responsibility for making any kind of medical decisions if your own wishes aren’t clearly communicated ahead of time. In other words, that person might oversee the process that you’ve outlined in the power of attorney, but he may also be asked to make a medical decision on your behalf for a specific illness or accident that’s not covered in the document.
Remember, too, that your family can’t complete any type of Medicaid planning if you’ve not included a power of attorney for your healthcare needs. They would be required go to court and have a judge appoint a guardian.
Because of the privacy laws, specifically the Health Insurance Portability and Accountability Act, medical professionals are barred from speaking to your spouse or family members unless you’ve included a signed consent form in your estate plan and ideally, your medical files.
Power of Attorney for Finances
As you might guess, this document is similar to the healthcare POA, but focuses on financial decisions. The person named will basically take over the financial decision making process – either immediately or should you become unable to make the decisions for yourself.
Both of these are absolutely important since, depending on the estate planning laws in place, your family might not be able to make the decisions for you. They may not be able to pay your bills and they may be prevented from hearing what a doctor has to say regarding your current health status.
Now or Then
A power of attorney can be drawn so that your named agents take over the responsibilities immediately or only if you become incapacitated. Obviously, you should put these documents into place sooner rather than later. An elderly person must be of sound mind with no dementia or Alzheimer’s diagnoses, otherwise, he may be deemed unable to appoint anyone.
Finally, remember that you can design your power of attorney in a very specific manner. The whole purpose of a power of attorney is to ensure your wishes are honored. If you’re a family member who’s concerned about an elderly parent or loved one, broaching the subject can be upsetting or awkward. It’s important to explain to your loved one that’s it’s less about taking over their lives, but rather, to ensure their bases are covered so that they remain in control.
- Words to the Wise: Five Estate Planning Suggestions - March 1, 2021
- Updating Your Plan: Beneficiary Designations - February 26, 2021
- Four Inheritance Planning Tips for Blended Families - February 17, 2021