Powers of Attorney: Financial and Medical
Many people think you only need one type of Power of Attorney for all situations. However, one Power of Attorney might not cover all possible scenarios. What if an illness or injury left you unable to tell the doctors what kind of treatment you would like and unable to pay your hospital bills? Will a medical Power of Attorney be sufficient for both situations? The answer is no. There are two types of Powers of Attorney that everyone should have: a financial Power of Attorney and a medical Power of Attorney.
In both documents, you appoint a person to act as representative on your behalf, known as your “attorney-in-fact." If you become incapacitated (like in the scenario mentioned above), you will need a durable Power of Attorney.
Durable Powers of Attorney remain effective even if you become incapacitated and unable to handle matters on your own. With a valid Durable Financial Power of Attorney, the person you name in your document will have the legal ability to take care of important matters for you like paying bills.
However, if you want health care matters taken care of also, then you should create two Powers of Attorney: one financial and one medical.
A financial Power of Attorney gives the person you name in your document the authority to handle financial transactions. There are different types of Powers of Attorney, but the durable Power of Attorney lets someone manage all your financial affairs throughout your lifetime.
The attorney-in-fact can take care of a variety of tasks from depositing checks for you to handling retirement accounts to filing your tax return. Your attorney-in-fact does not need to be a financial expert, just someone you trust. The attorney-in-fact can always hire a professional to help them out if needed.
A medical Power of Attorney is a type of health care directive that states who will be in charge of your health care decisions in case you are ever too ill or injured to speak for yourself.
In a durable medical Power of Attorney, you name a trusted person to serve as your representative in health care decisions. He or she will work with your doctors and health care advisers to make sure you get the health care that’s best for you. The attorney-in-fact is legally bound to follow your treatment preferences as set out in the document or as conveyed verbally by you.
Why can’t you have one Power of Attorney for financial and medical matters? Technically, you can. However, this is not the way our clients usually choose to structure their Powers of Attorney.
Having separate documents will keep things simpler for your attorney-in-fact and others. For example, your health care Power of Attorney may have personal information that your financial advisers do not need to know. Or conversely, your financial Power of Attorney may have details about your finances that are unnecessary for your health care advisers to know. Also, you might want one person in charge of your finances and a different person in charge of health care decisions.
If you don't already have financial and medical Powers of Attorney in place, make an appointment with one of our experienced attorneys. We can also update your documents if they are outdated. Having these documents will help you be prepared if an emergency happens.