Powers of Attorney and Advanced Medical Directives
While many people associate estate planning primarily with the distribution of assets after death, a key aspect of effective planning involves preparing for potential illness or incapacity. A comprehensive estate plan should include the creation of powers of attorney and advance directives. These documents ensure that trusted individuals are designated to make important decisions on an individual’s behalf in the event of unforeseen incapacity or cognitive decline.
Without properly executed powers of attorney and advance directives, if an individual becomes incapacitated due to injury or illness, their loved ones may be forced to go through the court system to have a legal guardian or conservator appointed to act on their behalf. This process can be expensive, time-consuming, and emotionally challenging for both the individual and their family.
Some of the recommended planning documents include the following:
1. General Durable Power of Attorney. This document authorizes an individual (an “agent” or “attorney-in-fact”) to make financial decisions on behalf of another person. This includes tasks such as managing finances, paying bills, and filing taxes. The document can be designed to take effect immediately (“standing”), or it can be activated only upon the determination of incapacity, as confirmed in writing by a physician (“springing”).
“Standing” documents are generally advisable in situations where someone wants their agent to act immediately and without delay, or if they need ongoing assistance with managing financial matters.
“Springing” documents are generally recommended if someone wants to limit their agent’s authority, are concerned about an agent potentially overstepping their bounds, or prefers to maintain full control of their affairs until absolutely necessary for someone else to step in to act on their behalf. A challenge with springing powers of attorney can sometimes include whether the maker’s physician is willing to definitively state that the party no longer has capacity to manage their own financial affairs. Without that medical opinion, the instrument will not go into effect.
2. Medical Power of Attorney. This document grants someone (an “agent”) to make medical decisions on behalf of an individual, only when that individual is unable to make those decisions themselves. This document ensures that a trusted agent has broad authority to make medical decisions on an individual’s behalf, while allowing that individual to specify instructions regarding treatment, organ donation, and end-of-life care.
3. Living Will. This document outlines an individual’s wishes regarding life support and artificial nutrition and hydration, in the event they are in a permanent coma or irreversible vegetative state with no meaningful chance of recovery. It helps alleviate stress and hardship on loved ones by providing clear guidance to health care providers in the event that an individual is unable to communicate.
4. HIPAA Release. This document authorizes healthcare providers to release an individual’s protected health information to appointed persons, such as an agent under a power of attorney, in order to facilitate critical healthcare decision making. It ensures that privacy is respected while allowing necessary information to be disclosed to trusted parties for specific purposes.
The best time to plan for illness or incapacity is now, while someone is in good health. By planning ahead and putting powers of attorney and advanced directives in place, it ensures control over management of financial affairs and healthcare decisions in the event that someone can no longer make decisions for themselves. Setting up these documents ahead of time helps avoid unnecessary stress, confusion, and complications for loved ones down the road.
Contact me to review your existing documents or to prepare new powers of attorney and advanced directives for you and your family.
