In addition to your will and any trust documents that you execute, a thorough estate plan should include a Durable Power of Attorney along with a Medical Power of Attorney and Living Will.
In the event that you become incapacitated and are unable to make financial decisions or manage your financial assets on your own, a Power of Attorney is a document that allows you to empower someone (e.g., an attorney-in-fact or an agent) to act on your behalf in managing your day-to-day financial and/or personal affairs.
If the Power of Attorney contains language describing it as “durable,” the document enables the attorney-in-fact or agent to act for you in the event you become incapacitated and are unable to manage your financial assets.
In appointing an attorney-in-fact, you should choose a trustworthy individual who is prepared to be involved with your financial and personal matters. Some things to keep in mind when deciding on whom to choose:
Specific powers granted to your agent are enumerated in the Durable Power that you execute. State law may prescribe the powers that are permitted, and you may choose to allow broad or more limited powers. These powers may include:
More broad powers that you could consider authorizing your attorney to oversee:
You may grant a Durable Power of Attorney that is effective immediately or becomes effective at some time in the future (e.g., a specific date or event, such as your incapacity). A Power of Attorney that becomes effective only upon your incapacity is often referred to as a “springing” Power of Attorney – in that it springs into effect when you become disabled and unable to act for yourself.
Your Durable Power of Attorney becomes void at your death and the authority given to your attorney-in-fact ends. You generally have the power, either under state law or as provided in the document, to revoke your Durable Power of Attorney at any time.
A Healthcare Directive provides your general healthcare instructions to your doctor or treating physician if you become incapacitated and are unable to make healthcare decisions for yourself.
A Healthcare Power of Attorney (or Healthcare Proxy) is a document in which you name an agent (e.g. attorney-in-fact) to make healthcare decisions on your behalf, if you are unable to make them.
The individual you choose will be instrumental in making medical decisions for you. Generally, the person selected to act for you should either be a family member or close friend who is familiar with and will respect your wishes.
A Living Will or Healthcare Directive may be revoked, as either provided under state law or under the provisions of the document. To avoid any confusion as to whether the document remains in effect, you may wish to execute a written revocation, and have the copies of the revoked Living Will/Healthcare Directive collected and destroyed.
The Health Insurance Portability and Accountability Act (HIPAA) of 1996 is a privacy law, which generally states that healthcare providers may talk to you and no one else about your diagnosis and care unless you tell them otherwise.
As a result, unless you state otherwise, HIPAA may prevent your healthcare providers from sharing sufficient information with your healthcare agent under your Living Will or Healthcare Directive to make medical and care giving decisions on your behalf. You can, however, insert language into your Living Will or Healthcare Directive permitting your physicians to discuss your medical condition with your healthcare agent.
It is up to you and your lawyer to decide how your affairs are to be managed. However, a quality Durable Power of Attorney can be a valuable asset.
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