What are Powers of Attorney?

T

he two documents we’re discussing in this article are an Advance Health Care Directive and a Durable Power of Attorney. These are two different documents that give someone else the power to make decisions for you. 

An Advance Health Care Directive (AHCD) gives someone else the right to make medical decisions for you. That sounds simple enough, but there are a few difficult questions you have to answer when you develop this document. Who do you trust to make the decisions for you; are you someone who wants anything and everything done to keep you around if you won’t have quality of life, or is there a time where it’s best to stop trying; are you going to be an organ donor; or do you have specific requests around burial or cremation? These may be some very uncomfortable questions to answer, but it’s important to document your wishes on paper so that you give your loved ones some guidance on your wishes. 

A Durable Power of Attorney (DPOA) gives someone else the right to make financial decisions for you. Essentially, it gives them the right to stand in your shoes and sign your name. This power of attorney can be structured in a variety of ways. You can give someone a limited power, say to only take care of your mortgage, and only when you’re incapacitated (called a limited, springing power); or, you can give someone very broad power to do everything you can do, starting right now (called a general, immediate power). What’s right for you depends on your situation, but most people end up with what’s called a general, springing power. That means, the person named can do anything and everything you can do, but only if you’re incapacitated. 

It’s important that you set up both of these documents as part of your estate plan for a couple of reasons. First, it prevents your loved ones from having to go through an expensive and burdensome court process to gain a conservatorship over you if you don’t have these powers set up. Another reason to set these up ahead of time is you’re telling your loved ones exactly what you would want to happen to you in the event you cannot speak for yourself. This lifts the burden off of their shoulders of ever having to second guess decisions they make for you. 

If you need help setting up your powers of attorney, or want to learn what you need as part of your broader estate plan, contact our office today to schedule your free strategy session.

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