If you have a family member who’s seriously ill, you’ve probably heard the phrase “power of attorney” at least once. No doubt it can seem confusing, especially since different types exist. Completing the wrong document can cost you time and money – both equally precious. This brief guide explains both healthcare and financial powers of attorney so you can understand how to help your loved one.
What Is Healthcare Power of Attorney?
A healthcare power of attorney lets you make decisions about your family member’s treatment. Healthcare POA means both the legal document and the person granted such authority. If you’re granted POA, that makes you the agent or healthcare proxy for your family member.
As an agent, it's your responsibility to make treatment decisions for that person. You hold a position of trust: You must understand and what you should or shouldn’t consent to on your loved one’s behalf. You’d refuse blood transfusions, for instance, if they'd violate religious beliefs. Or you may insist on life-saving measures if the person would want them.
How Does a Healthcare POA Benefit Me?
Healthcare POA benefits both patients and their families. As a patient, it lets you specify what kinds of treatment you want or don't want. If you're a healthcare proxy, it gives you the power to communicate your loved one's wishes. Physicians also have clearer guidance on how to provide care.
How Do I Set Up a Healthcare POA?
Investopedia explains that each state has its own rules for healthcare POA. In most cases, you’ll fill out a form that names your healthcare proxy plus any directives about your care. Depending on your state’s rules, you may be able to name more than one proxy. You’ll also include any special instructions – for instance, do-not-resuscitate orders or asking not to be placed on a ventilator. You may be able to complete a universal POA form, but check your state’s requirements. Some mandate usage of their own state-specific forms. You’ll also need to have the form notarized, and in some states, a witness present when it’s signed.
What Is Financial Power of Attorney?
Financial power of attorney allows someone else to make financial decisions on your behalf. Another Investopedia article describes how financial POA works. The terminology is slightly different: The person granted POA is the attorney-in-fact and the party granting it is the principal-agent.
Depending on your jurisdiction and the powers listed in the POA document, it may grant broad or limited authority. With a broad financial POA, the attorney-in-fact can manage the principal’s finances and property. It can let you write checks, make bank withdrawals, enter into certain contracts, and sign documents for the principal. If a financial POA restricts you to certain actions – for instance, making cash withdrawals – it is a limited power of attorney.
Again, every state has unique rules governing financial POA. In some states, any financial POA is considered durable. Other states require you to specify if you want the POA to be durable. It’s best to research these requirements before you draft and sign your document.
Must I Be Incapacitated To Need a POA?
Whether financial or for healthcare, most POAs become relevant when the principal can’t make these decisions – such as when the person is in a coma, cognitively impaired, and the like. However, you still may need to grant POAs if you’re awake and of sound mind. AARP’s Amanda Singleton describes assuming financial POA after her mother lost her voice due to cancer. She was awake but unable to speak. Thankfully, the POA allowed Amanda to conduct financial business for her.
Even if you’re young and healthy now, it’s wise to start thinking about healthcare and financial matters. Financial and healthcare powers of attorney let your loved ones take care of you and your money. Taking these steps now grant both you and your family peace of mind.
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