General Power of Attorney
Living Will & Health Care Proxies

General Power of Attorney

We all age and cannot avoid the natural consequences such as the loss of mental clarity that ultimately come with it. Besides aging, we are also subject to health crises that may leave us unable to handle the business of life such as paying bills, managing investments or making key financial decisions. Assigning someone trustworthy a power of attorney allows that person, as “agent” or “attorney in fact,” to manage your financial affairs if you are unable to do so. Your agent is empowered by law to sign your name and is obligated to be your fiduciary to act in your best financial interest at all times and in accordance with your wishes.

There are different kinds of powers of attorney, but in estate planning there are two essential types you should know. The first is the “springing power of attorney,” which only goes into effect under circumstances that you specify, the most typical being when you become incapacitated. Often that means your agent cannot act until he or she provides doctors’ letters and sometimes court orders to prove you are incapable of making decisions for yourself. The second is the “durable power of attorney.” It is effective immediately, and your agent does not need to prove your incapacity in order to sign your name.

An attorney can help you decide which form makes the best sense for your circumstance. In any case, take care in choosing your agent. That person should be competent, trustworthy, willing to take on the burden of your affairs and financially secure. If you choose a relative or friend as your agent, you probably won’t have to pay them. But if you name a bank, lawyer or other outside party, you will have to negotiate compensation, which can range from hourly fees to a percentage of your assets paid annually. If you do become incapacitated without having assigned power of attorney, the court will step in to appoint a guardian. This process might cost your family well over $1,000, not including the cost of the guardian’s annual court visits to report on your situation. Plus, the person chosen may not be someone you would have picked.

Living Will & Health Care Proxies

A living will (also known as an advance medical directive) is a statement of your wishes for the kind of life-sustaining medical intervention you want, or don’t want, in the event that you become terminally ill and unable to communicate. Most states have living will statutes that define when a living will goes into effect (for example, when a person has less than six months to live). State law may also restrict the medical interventions to which such directives apply. Your condition and the terms of your directive also will be subject to interpretation. Different institutions and doctors may come to different conclusions. As a result, in some instances a living will may not be followed. Nevertheless, a patient’s wishes are taken very seriously, and an advance medical directive is one of the best ways to have a say in your medical care when you can’t express yourself otherwise.

You increase your chances of enforcing your directive when you have a health-care agent advocating on your behalf. You can name such an agent by way of a health-care proxy, or by assigning what is called a medical power of attorney. You sign a legal document in which you empower someone you trust to make medical decisions on your behalf in the event that you can’t do so for yourself. A health-care proxy applies to all instances when you’re incapacitated, not just if you’re terminally ill. Choose your health-care agent carefully. That person should be able to do three key things: understand important medical information regarding your treatment, handle the stress of making tough decisions, and keep your best interests and wishes in mind when making those decisions.