The person who will make choices for your end-of-life healthcare and the person who will handle your finances may not always be the same person. In fact, you might want to consider having different people handle each one.
A power of attorney is a legal document that gives another person legal authority to act on your behalf.
When you create such a document, you are called the principal and the person to whom you give this authority is called your agent. A power of attorney may give your agent power over all your affairs, or it may be limited, only giving your agent permission to handle a specifically defined task. If a power of attorney is made ‘durable,’ it continues in effect even if you become incapacitated. By changing the language in the document, you can also specify that the durable power of attorney not take effect ‘unless’
you become incapacitated.
Typical estate plans involve two types of power of attorney: a durable power of attorney for finances and a durable power of attorney for health care. A durable power of attorney for finances gives someone authority to manage your financial affairs if you become incapacitated, while a durable power of attorney for health care gives someone permission to make medical decisions for you if you become incapacitated.
Sometimes you may hear this document referred to as a Health Care Proxy.
Similarly, a living will is a legal document in which you state your wishes about certain kinds of medical treatments and life-prolonging procedures. The document takes effect if you can’t communicate your own healthcare decisions. In the State of California, the living will and the durable power of attorney for health care are combined into one document called an Advance Health Care Directive (AHCD).
Of course, it is critical to give serious thought to putting a durable power of attorney for finances and an Advance Health Care Directive in place as part of your estate plan.
Do you really want the same person to be your attorney-in-fact for both finances, and healthcare decisions? The answer may be ‘Yes’ if you only have one relative or friend you trust, and if that relative or friend lives near you. However, if you have choices in this matter, you should consider who would best handle your money, and who would best handle your healthcare.
For example, perhaps your brother Bill has accounting experience and would be the best person to handle your financial matters, whereas, perhaps your sister Susan used to work in a hospital, and would be the best person to handle your healthcare decisions. Also, remember that your attorney-in-fact does not always have to be a relative.
For the AHCD, you’ll probably want a person who lives near you, or is at least able and willing to travel to the hospital to be with you if needed, even for an extended period of time. The person handling your finances, however, may be able to do so while living elsewhere such as another state, although you may still prefer someone who lives close to you for convenience sake. This is because in addition to paying your bills and handling insurance claims, the person handling your finances may also need to sell your home or make other complicated financial management decisions that require close proximity to your financial institutions.
Although the decision to choose appropriate representatives for finances and healthcare is not one to postpone or take lightly, the good thing is that you can change these documents at any time, as long as you’re still legally competent to do so. Often it is best to consider reviewing your power of attorney for finances and AHCD about once a year to make sure you’re still comfortable with your decisions.
For help with these important matters, consider getting in touch with the San Diego estate planning lawyers at the Law Office of Scott C. Soady.