Watching a loved one decline is hard enough, but it can quickly become a nightmare if that loved one hasn’t established powers of attorney for healthcare and finances before they face an incapacity.
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You may notice your parents having difficulty as they age or worry about a loved one with mental or physical challenges. Your loved ones must choose who they want to make decisions for them if and when they become incapacitated while they are still of sound mind. These people, called agents, act on your loved one’s behalf when your loved one can’t. There are two key areas where a person needs to establish a power of attorney (POA) in someone they trust: health care and finances.
Understanding a Health Care Power of Attorney
A health care power of attorney (or medical power of attorney) gives someone the power to make medical decisions for you in an emergency. Depending on the state you live in, the person you grant a durable power of attorney for health care is your “agent,” “proxy,” or “attorney-in-fact.”
You may have made your medical decisions in a health care directive or living will, but such documents never address every circumstance. Your health care agent is in charge of making decisions not covered by your health care directive.
Your health care agent must follow the terms of your health care declaration. If you don’t have specific wishes in a living will or health care declaration, the typical powers for this person include:
- Offering or denying consent for medical treatments (so long as it agrees with everything in your living will)
- Going to court over whether to receive or withhold medical treatment
- Choosing your caregivers, health care providers, and medical facilities
- Deciding how your body is handled after death, often including organ donation
- Accessing your medical records
- Permitting visitation of friends and family members
In granting the POA, you can give a person complete decision-making authority or limit them to specific tasks. Be careful when limiting such power, however, since the primary reason to have such a person is that your living will cannot cover every possibility. If you want specificity, it is better to do that in your living will, which your agent cannot override.
Most states require that you be an adult (typically 18) and competent when creating the document. The POA document takes effect when your doctor declares that you lack the “capacity” to make your own health care decisions. The health care POA document is generally only extinguished upon your death, revocation by you or a court, or upon divorce if your agent is your ex-spouse.
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Understanding a Power of Attorney for Finances
A financial power of attorney gives someone the power to manage your finances if you become incapacitated and cannot make those decisions yourself. This person’s official title depends on your state but is often referred to as your “agent” or “attorney-in-fact.”
More precisely, the financial POA is a legal document that grants someone legal authority to act on your behalf for financial matters. Just as with the health care power of attorney, you can limit your financial agent’s power, granting as much or as little control over your financial assets as you think is appropriate. When deciding limits, consider the kind of tasks you want your agent to perform and the financial decisions you want them to make, such as:
- Paying your bills, including your taxes and medical expenses
- Accessing your bank accounts
- Investing on your behalf
- Collecting any retirement benefits
- Managing, transferring, and selling your assets
- Buying, selling, or managing personal property and real estate
- Buying insurance for you
- Operating your small business
- Hiring someone to represent you
- Filing for social security benefits or Medicaid
Your agent is a fiduciary and must act in your best interests. One area of potential conflict is regarding medical expense payments. If your financial agent and medical agent are different people and disagree on medical care, the financial agent can make receiving medical care difficult.
To create a POA for finances, you name your agent and list the powers you want to grant your agent. The document must be signed, witnessed, and notarized by an adult. If your agent manages real estate assets, some state laws require you to put the document on file in the local land records office. Finally, the financial POA is generally only extinguished upon your death, revocation by you or a court, or upon divorce if your agent is your ex-spouse.
How Can I Help?
Carefully Ask Loved Ones To Establish Powers of Attorney
Getting loved ones to plan for emergencies is understandably difficult. Few people like to think about being so hurt or incapacitated that they can no longer make decisions for themselves. As a result, you must be especially careful about approaching the subject. Here are some tips:
- Do not force the issue – if someone feels forced or coerced, they may react negatively or suspect you have an ulterior motive.
- Understand that most people naturally fear death or severe incapacitation and revisit the conversation later if there is resistance to the idea.
- Explain that assigning POAs is a normal part of estate planning and will empower them by ensuring their agents will honor their wishes.
- Explain how these documents help everyone, as they will not only empower the person involved but also reduce anxiety and stress for friends and family.
Discuss Potential Power of Attorney Agents
Your health care POA and financial POA may be the same person or different people. While they must be legal adults, they do not need to have special qualifications or be related to you. Here are several factors to consider when choosing your POAs:
- Does your family trust the person, or will your agent’s control lead to issues in probate court?
- Is the potential POA a beneficiary of your will, and could that cause a conflict of interest?
- Does the potential medical POA live nearby, in case they need to be at the hospital?
- Is it likely that the potential POA is unable or unwilling to serve?
Your factors for choosing a health care agent may differ from those when choosing a financial power of attorney. Consider what is specific to your situation and write down what is most important. An alternative is a general power of attorney if you want someone with broad powers over all financial and health care decisions.
How Can We Get a Power of Attorney Document?
Once your loved one agrees that a power of attorney is helpful for their situation, you can do it yourself with state-specific power of attorney forms or use an estate planning attorney or elder law attorney.
Your loved one signs the document before witnesses and a notary to be legally binding. Depending on the state, you may need multiple witnesses. You can help with this process by gathering witnesses or finding a finding a notary. Many banks offer free notary services.
Once finalized and signed, deliver the POAs to the agents. Some power of attorney documents are filed with a state or local court. You can help by getting these documents where they need to be.
What if It Is Too Late?
If your loved one cannot make their own decisions, perhaps due to being a minor or already being incapacitated, they may not be able to appoint a POA. In that case, you might pursue a guardianship or conservatorship through a court that appoints someone to act for your loved one.
However, if your loved one is declining but still mentally competent, they can appoint agents for their financial affairs and health care decisions.