Why You Need a Power of Attorney and Medical Directive

October 10, 2013  |  

Why You Need a Power of Attorney and Medical Directive

MedicareThe following story, albeit a difficult one, highlights the importance of a medical directive and a durable power of attorney.  Without these documents in place, you and your family could face personal and financial disaster at the same time.

It’s late at night and you’re waiting for your husband to arrive home from a business trip.  Suddenly the phone rings and the voice on the other end informs you that your husband was in a terrible car accident and has been rushed to the hospital.  You arrive to find several doctors awaiting permission to operate on your unconscious husband.  They ask if he has a medical directive that authorizes someone, preferably you, to make health-care decisions on your husband’s behalf.

A few days pass and your husband survives the accident, but he’s going to be laid up for several weeks or months.  Household bills need to be paid, but the primary source of income is your husband’s business and you’re not named on any of the business bank accounts.  The bank representative asks whether your husband has a durable power of attorney naming you as his agent for financial matters.

What is a durable power of attorney?

A durable power of attorney (DPOA) can help protect your property in the event you become physically unable or mentally incompetent to handle financial matters.  If no one is ready to look after your financial affairs, your property may be wasted, abused, or lost.  A DPOA allows you to authorize someone else to act on your behalf, so he or she can do things like pay everyday expenses, collect benefits, watch over your investments, and file taxes.

A DPOA may be effective immediately (this may be appropriate if you face a serious operation or illness), or it may only become effective upon the occurrence of an event, such as your incapacity (sometimes referred to as a springing power of attorney).  Caution: A springing power of attorney is not permitted in some states, so you’ll want to check with an attorney for its availability in your state.

What is a medical directive?

A medical directive lets others know what medical treatment you would want, and allows someone to make medical decisions for you, in the event you can’t express your wishes yourself.  There are two basic types of advanced medical directives–a durable power of attorney for health care and a living will–which generally vary by state.  So be sure your documents comply with the laws of your state of residence.

A durable power of attorney for health care (known as a health-care proxy in some states) allows you to appoint a representative (health-care agent) to make medical decisions for you if you are unable to do so yourself.  You can appoint almost anyone as your agent (as long as they are of legal age, usually age 18 or older).  You decide how much power your representative will or won’t have.

A living will allows you to approve or decline certain types of medical care, even if you will die as a result of that choice.  In most states, living wills take effect only under certain circumstances, such as terminal injury or illness.  Typically, a living will can be used to decline medical treatment that “serves only to postpone the moment of death.” In those states that do not authorize living wills, you may still want to have one to serve as an expression of your wishes.

Additional things to consider

When creating either a DPOA or medical directive such as a durable power of attorney for health care (HPOA), it is important that you choose an appropriate agent.  While you may select the same person to serve as agent in both documents, you are not compelled to do so.  And be sure the person you select as agent is aware of that fact.  Also, let them know where you keep these documents (you may want to give a copy of your HPOA to your agent).  As you read above, laws change from state to state which makes it important to work with an attorney specializing in estate matters.  Once you have these documents, review them periodically with your estate attorney to be sure they still accomplish what you intend them to do.

About Mark Rioboli, CFP®, CFS

Mark A. Rioboli, CFP®, CFS is Director of Wealth Management for Independence Advisors, bringing over 30 years of experience in the wealth management industry. Have a question for Mark? CLICK HERE TO ASK MARK
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