In this article, we’re going to walk you through the differences of medical and financial powers of attorney.
What Is a Power of Attorney?
The legal document known as “power of attorney” gives another person the power to act on your behalf. For example, in the unfortunate event that you become mentally incapacitated, you will need to have a medical power of attorney to make decisions for your medical care and financial power of attorney to make decisions for your finances. This is known as a “durable” power of attorney.
The Difference between “Ordinary” or “Non-Durable” and “Durable” Power of Attorneys
You may also have heard of “ordinary” or “nondurable” powers of attorney. “Ordinary” or “nondurable” powers of attorney are also legal documents that give another person the ability to act on your behalf but automatically ends if the person becomes mentally incapacitated (loses mental capacity).
Durable power of attorney is very important because if gives a loved one or trusted person of your choice the ability to make decisions & take care of important matters for you (if you are no longer able to do so). Some of these matters include, managing your money or investment portfolio, paying your bills, making decisions on your medical care and so on.
Medical Power of Attorney
As stated above, the medical power of attorney is a legal document, more of a health care directive, which outlines your preferred methods of healthcare if you cannot speak for yourself. In the document, you will appoint a loved one or trusted person to oversee and follow your wishes for medical care on your behalf. Common names for this individual may be “agent”, “health care proxy” or similar.
It’s important to know that this individual is required by law to follow your health care directive to the extent that he or she knows (what you provide in the legal medical power of attorney document). In addition, a living will can assist the agent with further instructions on your medical care direction.
Financial Power of Attorney
As stated above, the financial power of attorney is a legal document that gives a loved one or trusted person “agent” the power to handle your finances on your behalf if mentally incapacitated. There are some simple financial powers of attorney that give an individual the ability to sell property, etc. but the most comprehensive is “durable power of attorney for finances.” This gives the “agent” total authority over your finances. The trusted person can also be called an “attorney-in-fact” but they do not have to be an attorney, that’s just the title.
Why We Recommend Separate Documents for Medical Care and Finances
Technically you can cover both medical care and finances in one document but you may wish to separate them.
You may not want your financial broker or institution to have access to all your personal health information (medical issues, personal feelings, etc.). Same with medical, you may not want your health care or medical clinic to know or have all your financial information.
There may also be situations where it makes sense to have one individual in charge of your medical care and a separate person in charge of your finances. For example, if you have a family member with medical training but little business acumen, and another family member with a financial background, separating your medical and financial power of attorney can make sure the most qualified people are making the best decisions for you.
Preparing these documents is very important because in the unfortunate case where you become mentally incapacitated, a loved one or trusted person can act quickly in making sure you’re medical care and finances are taken care of. If you do not have a durable power of attorney, your loved ones or trusted person may have to get court approval to make decisions and take care of your medical care and finances care on your behalf.
Shein Phanse Adkins can assist you with preparing medical & financial power of attorney documents.