What if an unexpected accident or sudden illness — or just the normal effects of aging — were to leave you unable to tell your doctors what kind of medical treatment you want, or if this event makes it impossible for you to manage your financial affairs?
We naturally don’t want to think about these things, but that’s a dangerous approach to take, no matter how frightening it is to contemplate. Your medical and financial powers can make life easier for you and your family for the inevitable times when bad things happen.
What Is a Power of Attorney?
A power of attorney is a legal document that gives someone who you choose and trust, the power to act in your place for certain financial and/or medical decisions. In case you become mentally or physically incapacitated, you’ll want to already have what are known as “durable” powers of attorney for medical care and finances, in place and signed. A durable power of attorney simply means that the document stays in effect if you become incapacitated and unable to handle matters on your own.
With a valid and properly executed power of attorney, the person you name will be legally permitted to take care of important matters for you — for example, paying your bills, managing your investments, or directing your medical care — if you aren’t able to make those decisions for yourself.
Taking the time to create these documents is well worth the small effort it will take. If you haven’t made durable powers of attorney and something happens to you, your loved ones may have to go to court to get the authority to handle your affairs.
To cover all of the issues that matter to you, I recommend, and you will need, two separate documents: one (a durable medical power of attorney) that addresses health care issues and another (a durable financial power of attorney) to take care of your finances. I include these with all will and trust packages I prepare for my clients.
Medical Power of Attorney
A medical power of attorney is one type of health care directive — that is, a document that set out your wishes for health care if you are ever too ill or injured to speak for yourself.
When you make a medical power of attorney — more commonly called a “durable power of attorney for health care” — you name a trusted person to oversee your medical care and make health care decisions for you if you are unable to do so.
This person will work with your doctors and health care providers to make sure you get the specific kind of medical care you wish to receive. When arranging your care, your agent is legally bound to follow your treatment preferences to the extent that he or she knows about them.
To make your wishes clear, we will prepare a second type of health care directive — a “living will” — to provide written health care instructions to your agent and health care providers.
Financial Power of Attorney
A financial power of attorney is a power of attorney you prepare that gives someone the authority to handle financial transactions on your behalf. Some financial powers of attorney are very simple and used for single transactions, such as closing a real estate deal. But the power of attorney we’re discussing here is comprehensive; it’s designed to let someone else manage all of your financial affairs for you if you become incapacitated. It’s called a “durable power of attorney for finances.”
When you execute a durable power of attorney for finances, you are giving a trusted person as much authority over your finances as you like (and how much is entirely up to you). The person you name is usually called your “agent” or “attorney-in-fact,” though s/he doesn’t have to be an attorney.
Your agent can handle routine tasks such as sorting through your mail and depositing your Social Security checks, as well as more complex jobs like watching over your retirement accounts and other investments, or filing your tax returns. Your agent doesn’t have to be a financial expert; just someone you trust completely who has common sense. If necessary, your agent can hire professionals (paying them out of your assets) to help them keep your finances in order.