No one knows what the future has in store. The best we can do is prepare for the unexpected. That’s where powers of attorney come in handy. Understanding how each one works can help you prepare for the unexpected.
Types of Powers of Attorney
There are two types of powers of attorney. One covers healthcare and another covers finances. A power of attorney, also known as a POA, allows you to name an agent to act on your behalf when you are unable to do so.
Healthcare power of attorney
A Healthcare Power of Attorney (HPOA) involves authority to make health care decisions for you when you are unable to make decisions for yourself. Choose an agent that you trust, knows your religious and moral beliefs, and is easily able to communicate with medical staff.
Your HPOA should address the following issues in detail:
- The aggressiveness of health care you receive during chronic illness;
- Whether you want to be kept alive by ventilation or artificial nutrition if your mental capacity or quality of life is forever limited.; or
- Acceptance of medical treatments for which you have religious or other objections.
Durable power of attorney
A Durable Power of Attorney (DPOA) provides your agent with the authority to make legal and financial decisions and execute financial transactions on your behalf. Your agent can be anyone in your network or even a non-profit organization, with trust being paramount.
Without a DPOA you run the risk of experiencing legal costs and of losing direct influence over executing legal documents or making financial decisions. In this event, a conservatorship or guardianship is often established with court supervision of your agent’s activities. This complication can be avoided with a DPOA.
The following are some characteristics of a DPOA:
- Can be withdrawn or changed at any time;
- Can be broad in powers to allow decisions and execution on all financial topics;
- Can be narrow to allow powers for a single issue or for a limited time frame; and
- Can be designed to go into effect at a future date upon the occurrence of an event or your loss of capacity to act in your own interest. This is known as a Springing POA.
Powers of attorney can help loved ones navigate complex issues when the unexpected happens. Learn how they work before you need one.
Article provided by Local Government Federal Credit Union.
Contact an estate planning attorney for additional guidance.