Watching a loved one decline is hard enough by itself, but the process can become a nightmare if that loved one hasn't set up powers of attorney for healthcare and finances. It's imperative that family members and loved ones make decisions while they are healthy about whom they want to make decisions for them if and when they become incapacitated. There are two key areas where a person needs to establish a power of attorney in someone they trust: healthcare and finances.
Power of Attorney for Healthcare
The power of attorney for healthcare is given to the person you want to make medical decisions for you in an emergency. Even though you may have set out your wishes in your healthcare declaration, such documents can never cover every circumstance, and the person who has a durable power of attorney for healthcare is the person who makes decisions not covered by your healthcare directive. Keep in mind that the person with a power of attorney for healthcare can never contradict the terms of your healthcare declaration. Depending on the state you live in, the person you grant a durable power of attorney for healthcare will typically be called your "agent," "proxy," or "attorney-in-fact". The typical rights for this person include:
In granting the power of attorney, you can give a person complete authority to make all decisions, or limit them significantly to make only specific decisions. Be careful when greatly limiting such power, however, since the primary reason to have such a person is because your living will cannot cover every possibility. If you want specificity, it is better to do that in your living will, which the person with a durable power of attorney can't override anyways.
In order to create a power of attorney for healthcare, most states only require that you be an adult (typically 18) and be competent when you create the document. This document takes effect when your doctor declares that you lack the "capacity" to make your own health care decisions. The power of attorney for healthcare is generally only extinguished upon your death, revocation by you or a court, or upon divorce if the power of attorney was granted to the ex-spouse.
Power of Attorney for Finances
The power of attorney for finances is given to allow someone else to manage your finances in the event that you become incapacitated and are unable to make those decisions yourself. More precisely, the financial power of attorney is a document that grants someone legal authority to act on your behalf for financial issues. This person's official title depends on the state you live in, but is often referred to as your agent or as an attorney-in-fact. Just as with the power of attorney for healthcare, you can set the limits of your financial agent's power, granting as much or as little power as you think is appropriate. When deciding whether to set limits, consider the kind of tasks your agent will likely be asked to perform:
Your agent cannot do whatever he or she wants to do, but must act in your best interests. One area of potential conflict to keep in mind is in regards to paying for medical expenses. If your financial and medical agent aren't the same person or disagree on medical care, the financial agent can make receiving medical care difficult.
To create a power of attorney for finances, most states offer simple forms to fill out. Although most states don't require that you use these forms, it is always a good idea to do so. Generally, the document must be signed, witnessed and notarized by an adult. If your agent will have to deal with real estate assets, some states require you to put the document on file in the local land records office. In addition, many banks have their own forms, and while not strictly necessary, it will make the process much easier if your bank knows who your financial agent is. Finally, the power of attorney for finances is generally only extinguished upon your death, revocation by you or a court, or upon divorce.
Carefully Ask Loved Ones to Establish Powers of Attorney
Getting loved ones to plan for emergencies is understandably difficult. Few people like to consider the possibility that they may be so hurt or incapacitated that they are unable to make decisions for themselves anymore. As a result, you need to be especially careful about how you ask the people you care about to establish the necessary powers of attorney: