There may be a time in your life when you are unable to make
your own financial or healthcare decisions because of extreme
illness, disability, incompetence, or even on extended vacation.
At these times, it is important that someone you trust is
legally empowered to make these decisions on your behalf.
Attorney-in-Fact
The person you name will have the title Attorney-in-Fact.
Depending on what the POA (Power of Attorney) dictates, the
Attorney-in-Fact may be able to:
- Pay your bills
- Do your taxes
- Make significant gifts to your family members
- Sell your house
- Manage your stock portfolio
You will need to choose your Attorney-in-Fact carefully and
ask an attorney to prepare the POA so that your Attorney-in-Fact
is empowered to do what (and not more than) you need them
to.
What is a Durable Power of Attorney?
If you are planning to travel for an extended period of time,
you might choose a trusted friend or family member to pay
your bills and do your taxes while you are away. That kind
of POA is specific and limited.
A durable POA gives broad authority to the Attorney-in-Fact
and retains its power even if, or especially if, you become
ill or incompetent.
A POA that is not durable becomes invalid just when you may
need it most: when you become disabled or incompetent.
When Does a Durable Power of Attorney Take Effect?
A durable POA takes effect immediately. You do not need to
be ill or incompetent for your Attorney-in-Fact to be able
to make decisions for you.
You might prefer a springing POA that gives authority to
the Attorney-in-Fact only in the event of your illness. Sometimes
it can be difficult to prove that you are ill enough or incompetent
enough for the springing POA to be valid.
If you really trust your chosen friend or family member,
then it is a good idea to write a durable POA to avoid the
delays and court costs involved in proving that you are ill
or incompetent enough for a springing POA to be valid.
What Makes a POA Valid?
For a POA to be valid, the principal (you) must:
- Be of sound mind when you sign the document.
- Sign the POA in the presence of at least 2 witnesses.
It is a good idea to have a POA (durable or not) prepared
by an attorney well ahead of the time it is needed.
When a financial institution accepts a POA as valid, it is
doing you a favor and taking a risk. If sizeable financial
transactions might take place, a financial institution does
not want to worry that you are going to sue them later for
honoring the POA.
For this reason, it is important for an attorney to prepare
the POA. The financial institution needs to feel confident
that the POA is valid before it will accept its authority.
What is an Advanced Medical Directive (AMD) or Healthcare
POA?
An AMD--sometimes called a Healthcare POA--gives authority
to a healthcare "agent" or "proxy" to speak on your behalf
in the event that you are unable to make your healthcare wishes
clear.
In addition to appointing a proxy, you write specific instructions
for your healthcare providers in an AMD. You can (and should)
choose a healthcare proxy and prepare an AMD when you are
healthy. Strict rules vary by state concerning who can be
your healthcare proxy and who can serve as witnesses to your
AMD.
In most states, neither your immediate family members nor
the beneficiaries of your will can serve as proxies or witnesses.
Your healthcare proxy should be given broad authority to make
any decision that you would make if you were able. If you
are at the hospital, the physicians and nurses will do all
that they can to determine what your wishes are before they
ask the healthcare proxy to speak on your behalf.
In the AMD, your healthcare wishes are in writing and give
your proxy the authority:
- To refuse treatment
- To authorize medication that might be life-threatening
- To withhold nutrition and hydration
The clearer your written directions, the easier it will be
for your proxy to act on your behalf.
What is a Living Will?
A living will defines your wishes regarding the actions that
can be taken to preserve your life when death is otherwise
imminent.
A living will is different from an Advanced Medical Directive
because an AMD makes clear your healthcare wishes whether
death is imminent or not.
At times, life-sustaining treatment might be necessary even
when your life is not immediately threatened, as in the case
of a stable but persistent coma. In this case, a living will
would be powerless because death is not imminent.
Therefore, it is advisable to prepare an AMD, complete with
directions for the healthcare providers, to address such a
situation.
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