Wills and Trusts are important, in that they provide peace of mind to us that our loved ones will be taken care of financially when we pass away. However, the most overlooked (and arguably the most important) tools in estate planning are Powers of Attorney. Unlike Wills and Trusts, which primarily deal with what happens to your assets after you pass away, Powers of Attorney allow you to express preferences and name decision makers to make decisions for you while you are still living, if you are unable to make decisions on your own. These decisions will directly impact your living situation, health, and financial affairs.
Due to the COVID-19 pandemic, we are seeing an increase in guardianship actions initiated by the hospitals, because patients did not have Powers of Attorney in place prior to their admissions. For these patients, the Courts will ultimately decide who will make their medical and financial decisions. This outcome is easily avoidable with well drafted and carefully thought out Powers of Attorney.
There are two types of Power of Attorney. The first is a Power of Attorney for Health Care (HCPOA), and the second is a General Durable Power of Attorney (GDPOA). Every competent individual age 18 or older should have both types of Power of Attorney in place.
Power of Attorney for Health Care
In the HCPOA you will name a person (i.e. “agent”) who will make your health care decisions for you if ever you are unable to make decisions yourself. We strongly recommend that you name at least one backup agent in the event your first agent is unavailable. In addition, you will outline any specific healthcare wishes you may have.
The benefit of a HCPOA is that you get to make decisions about your health care while you are still competent to do so. The following are examples of special wishes clients sometimes choose to include in their HCPOA documents:
- Circumstances under which you would want treatment terminated in the event of a terminal illness.
- Circumstances under which you would want life support terminated.
- Authorization for admission to an assisted living facility or nursing home.
- Consenting to or requesting a Do Not Resuscitate (i.e. DNR or “No Code”) Order from your doctor
- Religious preferences, such as religious objections to medical procedures or a request for Last Rites.
- A list of people who should be kept updated about your medical care and treatment.
- Organ donation wishes.
Another benefit of a carefully thought out HCPOA is that it provides peace of mind to your agent. Making medical decisions for another person is difficult, especially end of life decisions. Your agent will be able to act with confidence, knowing that they are following the wishes that you already laid out for them.
Finally, a HCPOA should include, or should be drafted in conjunction with, a HIPAA authorization allowing your agent to access your medical information. This will allow your agent to make the best decisions possible for you.
General Durable Power of Attorney
Sometimes called a Financial Power of Attorney or a Power of Attorney for Finances and Property, in the GDPOA you will name an agent to manage your financial and contractual affairs on your behalf.
In addition to naming an agent, in your GDPOA you will outline specific actions that your agent can undertake on your behalf. The following are examples:
- Manage checking and savings accounts and write checks on your behalf
- Purchase life insurance for you
- Accept income on your behalf
- Purchase, mortgage, and sell real estate on your behalf
- Make elections under your retirement plans
- Sign and file your income tax returns on your behalf
- Apply and pay for health insurance on your behalf
Many, if not most, GDPOA documents allow your agent to act, even if you are still able to manage your own financial affairs. This can be helpful in the event that you traveling, hospitalized for a long period of time, or physically unable to perform some tasks, such as going to the bank. This can also be helpful for people who find managing their own finances overwhelming.
Finally, all Powers of Attorney are not created equal! Contact an attorney to ensure that your documents are well thought out and properly drafted. However, in an emergency, Wisconsin offers a simple Power of Attorney for Health Care form.
