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Powers of Attorney Explained: Financial & Healthcare

Estate Planning

Powers of Attorney Explained

by Justin Brewer, Associate Attorney

A power of attorney, or POA, is a legal document that allows you to grant another person the authority to make decisions on your behalf. This person, commonly referred to as your “agent,” will make decisions and take actions as if they were you in the case you are not able to make those decisions yourself. POAs are an important part of planning for your future. What happens if you are incapacitated, and can’t make healthcare decisions for yourself? Who will make life-ending or life-prolonging decisions if you cannot? What if you can no longer manage your business or financial affairs on your own? POAs can resolve all of these questions, and give you peace of mind.

There are several types of POAs that you can create, but the two main categories include financial and health care. These give your agent specific authority to act on your behalf for financial decisions, or make healthcare choices, if you are incapacitated.

Financial POA

A Financial POA gives your chosen agent the authority to make financial decisions on your behalf. These can range from paying bills and expenses, or making deposits and withdrawals with your bank, to buying and selling real estate or other property. Your agent for finances will be able to sign documents and make choices as if they were you, on your behalf.

While generic financial POAs give broad authority to your agent, you can tailor your POA to meet your needs. For example, you can allow your agent to pay your bills and write checks, but prevent them from selling your property or buying new property.

Healthcare POA

A healthcare POA gives your agent the authority to make healthcare decisions for you. This can include medical treatments, medications, surgery, or in the worst-case scenario, end-of-life care. Hospitals typically want their patients to have a healthcare POA, so they know who to go to for decisions if you cannot make them for yourself. A healthcare POA agent can access your medical records for you, and will be allowed to seamlessly visit you if you are hospitalized.

Your agent under the healthcare power of attorney will only be able to act on your behalf if you are deemed incapacitated by doctors, and are unable to communicate your wishes. Healthcare POAs are an integral component of your long-term planning and should be included in any estate plan you come up with.

Living Will

Related to a healthcare POA is the living will. A living will is a document where you can leave specific instructions for your care in serious medical situations. For example, if you suffer a serious accident that leaves you reliant on a feeding tube and breathing machine, what would you want the doctors to do? With a living will, you can make these choices ahead of time, and your doctors will follow them. Like healthcare powers of attorney, doctors will only turn to a living will if you are unable to communicate your wishes.

“Durable” vs. “Springing”

Have you heard of either “durable” or “springing” POAs? These terms refer to when and how long a POA is effective. Durable POAs are effective the moment you sign them, and continue to be effective when you become incapacitated. When a POA doesn’t grant your agent authority until you are incapacitated, or until some other condition is met, the power of attorney is called a springing POA.

When determining what type of power of attorney you need, you should think about when you want your agent to be able to act on your behalf. Do you need someone to help with your finances now? Or are you planning for the worst, and only need a POA agent if you are incapacitated?

Ultimately, POAs are a crucial part of your short- and long-term estate planning. They are customizable, and allow you to rest easy, knowing that even if you can’t make your own decisions, the people you trust will be able to.

Ready to create a POA or Living Will? The attorneys at Russell Law Offices, S.C. are experienced and ready to help you create a plan that works for you and your needs. Call for a consultation today!

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