The Power of a Power of Attorney
We just finished up an extremely unique year. 2020 is one for the record books. COVID-19 has made us all take stock and think about what is important in our lives. We sheltered in place and we made time for family meals or walks in the neighborhood. Perhaps we caught up on the stack of books on the nightstand or the home improvement projects that were neglected. There has been sadness and disappointment as our children have isolated from their friends, and families have made the most of “zoom” holidays. How the next few months, and even this year, plays out is beyond our control. What is in our control is what we can do to plan for any uncertainty that may come with COVID-19 or any other illness or incapacity.
In the case of an illness or incapacity, who will help you navigate your healthcare? Who will be able to access your financial accounts and make financial decisions if you lack capacity or are physically unable to do so? Properly executed disability planning documents will allow you to have a contingency in place. Absent properly executed powers of attorney, your family may have to petition the court to appoint a guardian to make important medical and financial decisions on your behalf.
Disability planning consists of a set of legal documents granting an individual, or agent, in the event of incapacity, the authority while you are alive to make important medical and financial decisions. There are four documents, in addition to your will or trust, that every person should consider when completing their estate plan—Durable Power of Attorney, Health Care Power of Attorney, Living Will, and a HIPAA Authorization.
A Durable Power of Attorney gives an agent the authority to conduct financial transactions on your behalf if you are unable to do so yourself. These transactions can be as simple as opening and closing bank accounts to more complicated matters such as buying or selling real estate or gifting assets to preserve them from long term care costs. Where you and your spouse own an account jointly, your spouse will likely have access to that account. However, your spouse cannot sign for you or access accounts owned by you individually, such as life insurance, or IRA’s and 401(k) retirement accounts. If you do not have capacity to take care of financial matters, an agent, or power of attorney, should be designated. The person designated can be a spouse, a family member, or a close friend, but should always be someone you trust to act in your best interest.
A HIPAA Authorization is used to designate named individuals as authorized recipients of your medical information. Healthcare Power of Attorneys and Living Wills address your medical decisions and wishes.
A Healthcare Power of Attorney allows an agent of your choice to make decisions on your behalf, including, but not limited to admission to healthcare facilities, feeding tubes and artificial hydration, do not resuscitate orders, and the stopping and starting of medical treatment. While you have capacity and can voice your wishes, you make the decisions about your health care. In a moment of incapacity when you cannot articulate your wishes, the agent designated in this document will step in. A Living Will states that if a doctor declares you are in a permanent vegetative state, have an incurable condition, or terminal illness, it is your wish to die naturally without any artificial means to keep you alive. The Living Will designates your wish, and the agent designated in the Health Care Power of Attorney will carry out your wishes. Again, it is important that your agents act in your best interest. It is equally important to make your wishes known to your agents.
It is important to have properly drafted powers of attorney and accompanying disability documents to make your wishes known and to keep these decisions away from court involvement if at all possible. Properly drafted disability documents will give your family piece of mind by designating your wishes in writing and granting authority to individuals of your choice, who can provide you with help and care when you are unable to care for yourself.