What Is a Power of Attorney and Why Is It Important?
A power of attorney is a document authorizing an individual to make decisions on behalf of another person. You can designate a financial power of attorney to oversee your finances if needed, and a medical power of attorney to make healthcare-related decisions on your behalf in the event that you're unable to make those choices yourself.
A medical power of attorney and a financial power of attorney are typically created in separate legal documents. Both are known in legal terms as advance directives. Generally, the law addresses each type of advance directive separately which limits their authority.
Choosing people you trust to hold your medical and financial powers of attorney gives you more control over your interests and ensures your wishes are followed. Knowing the differences between these two designations will help you decide whether your should appoint the same person to hold both of these directives for you.
- Power of attorney allows one person to give legal authority to another person to act on his or her behalf.
- A financial power of attorney authorizes an individual to make financial decisions, while a medical power of attorney allows for someone to make medical decisions.
- Financial and medical powers of attorney should be separate documents and can be designated to the same person or to two different individuals.
Financial Power of Attorney
A financial power of attorney permits someone you have designated (your agent, or attorney-in-fact) to oversee your finances. Typically, it is used so the person can step in and pay your bills or handle other financial or real estate matters. It can be a designation for a financial professional acting on your behalf or you may use it to designate a trusted friend or family member to handle matters if or when you cannot physically or mentally do so yourself. In some cases it may also be used for isolated, one-off situations where it is not convenient for you to be present, such as a real estate closing in another city.
A power of attorney usually takes effect as soon as you sign it, though its powers may be "springing" which means that they don't go into effect until you are incapacitated. If it never becomes necessary, your agent may never use it. In many cases, a financial power of attorney may be designated to a professional as part of routine financial management.
In choosing a financial power of attorney, you will want to weigh whether the person is trustworthy and has enough financial acumen to handle the responsibilities. Thanks to online banking and electronic billing, the person doesn’t necessarily need to be nearby to ensure that your bills are paid promptly.
In order to create a power of attorney, the individual must be mentally competent. If your parent or other elderly relative becomes incapacitated, it will be too late to authorize power of attorney, and courts will likely need to get involved to appoint an individual to help manage the person's affairs.
Medical Power of Attorney
A medical power of attorney or healthcare proxy designates an individual to make medical decisions for you when you no longer have the capacity to do so. This may be needed temporarily (if, for example, you're under anesthesia and surgery complications arise) or for navigating a longer-term health crisis. The medical power of attorney will only go into effect when you do not have the capacity to make decisions for yourself regarding medical treatment.
A medical power of attorney will focus only on health-related decisions and will be written according to the exact specifications of the individual making the directive. As such, a medical power of attorney can include provisions for a wide range of medical actions including personal care management, hiring a personal care assistant, deciding on a medical treatment, and making decisions on medical treatments overall.
Many people have strong feelings about the kind and degree of medical treatment they want. This is why it's important to think carefully about whom to appoint; the person you choose should be someone you can expect to make decisions similar to those you would make for yourself. This person should be over 18 years old and be someone you trust with whom you can discuss your wishes frankly. You should ask the person you select if she or he feels able to take on the responsibility. Usually, you appoint only one person as your medical power of attorney, though you can name alternates for situations when that person might not be available.
Kim Trigoboff, an elder law attorney who practices in New York City, suggests that you will want to consider someone’s life experience before asking the person to take on this role. “The person must be able to make difficult choices, even ones that may end medical care," Trigoboff says. "Some loved ones might not be up to acting as the appointed healthcare agent.” You will also want to consider whether the person is close by and can meet with your doctors should the need arise.
A medical power of attorney is different from a living will, which is a document that spells out what medical care you do and don't want in the event that you're unable to communicate those preferences for yourself.
Should You Choose One Person or Two Different People?
It is possible for the medical power of attorney and financial power of attorney to be the same person. Many people do choose this route, appointing one person such as a spouse or adult child to both roles. However, medical and financial powers of attorney can be created and designated for a variety of different reasons. It may sometimes be preferable and more prudent to ask different people to take on these roles.
Selecting a different person for your financial power of attorney and your medical power of attorney may help you choose the best person for each job. If you do select different people for each role, you may want to consider how they might work together in your best interest, should the need arise. Discussing your wishes with them together and also one on one can help ensure your best interests.