Whether due to disability, dementia, or simply enjoying an exotic vacation, there are many ways you can end up unavailable to make critical financial or health care choices for yourself or your loved ones. If you have not documented your desires in advance, it can add extra stress for everyone, plus the outcomes may not be what anyone had in mind.

One source of confusion over when and how to protect what is yours is understanding which legal logistics apply during your lifetime, and which do not come into play until after you pass. In this article, we will cover two tools for protecting your interests while you are alive: a financial power of attorney and a healthcare advance directive.

Financial power of attorney

The Basics: A financial power of attorney (POA) is a legal document authorizing someone (your “agent”) to make financial decisions on your behalf. No matter how much authority you grant an agent, they still owe you a fiduciary level of care, which means any decisions they make for you must be based on what they believe to be in your best financial interests.

When It Applies: A POA applies while you are alive and it gives your agent the ability to act on your behalf. A power of attorney can vary by state; in our home state of Florida they:

  • Begin immediately (unless executed prior to 2011). Some states will allow for a triggering event (confirm with your attorney regarding your state of residence)
  • Remain in force during a finite time period or be ongoing
  • Apply to all your financial matters, or only to specific transactions

Common Scenarios: A financial POA can be helpful to address:

  • Capacity: Avoiding a guardianship if you become incapacitated due to illness, injury, or dementia.
  • Availability: If you are unable to be present for a financial transaction, such as if you are traveling abroad or you are otherwise occupied.
  • Convenience: If you would simply like to make it convenient for someone else to be able to make financial decisions for you – such as your spouse or a trusted sibling (in general), your parents (if you are heading off to college), or your adult children (if you are aging).

Additional Tips:

  • Again, anyone to whom you grant a POA is only your legal agent while you are alive; their authority ends the moment you pass away. Your estate’s personal representatives or trustees should take it from there.
  • Your agent(s) should have access to the documents that describe the POA you have granted them. If they cannot prove what their role is, they may not be able to act on it when needed.
  • Some banks and account custodians have their own POA forms they would prefer you use; also, they may be wary of POA paperwork that is several years old. Check with the financial institutions you frequent about their policies, and consider annually reestablishing any durable POAs to ensure they remain relevant.
  • You cannot grant a POA if you are deemed to be of unsound mind. This makes sense, since you may inadvertently name a “bad” player, or others may be able to contest the POA you have established. Do not wait until it is too late.

Healthcare advance directive

The Basics: Your healthcare advance directive can offer two types of protection:

  • Your living will provides your life-sustaining and end-of-life medical care instructions, and related healthcare preferences, in case a time comes when you cannot state them for yourself.
  • Your healthcare directive can also name healthcare representative(s), or agent(s) and grant them healthcare power of attorney. If you cannot make your own healthcare decisions, your agent can decide on your behalf, guided by your wishes set forth within the documents and your living will. Medical professionals can also more freely discuss your condition with your agent without violating HIPAA privacy rules.

When It Applies: Your healthcare advance directive only comes into play if you are alive, but unable to direct your own medical care. It can also avoid the need for a guardianship.

Common Scenarios: Accidents and illnesses can rob you of your mental capacity – temporarily or permanently. If you do not have an advance directive in place, healthcare professionals and/or key family members may have to make medical decisions for you, without knowing what you would have preferred. Also, the individual(s) you would most want to have making decisions on your behalf may not be able to do so if you have not named them as your representative(s) in your advance directive. This can be stressful if not heartbreaking for everyone involved.

Additional Tips:

  • Not only should almost everyone have an advance directive, it should be easy to get ahold of it when needed. Distribute copies to your primary physician and any of your other healthcare providers to keep on file. Give it to key family members. At Heritage, we also maintain a portal for storing clients’ essential paperwork – including advance directives.
  • IMPORTANT: Do you have children who recently turned 18? As soon as your child is an adult, healthcare providers may not be able to even discuss your child’s case with you unless you have a healthcare power of attorney.
  • Seek professional advice We hope this summary has helped clarify the role these critical protections can play in safeguarding what is yours during what we hope will be a long and prosperous lifetime. That said, professional legal counsel is usually warranted as you sort through the details. Let us know if we can put you in touch with select professionals to assist, or if we ourselves can help you sort through the logistics involved.

Heritage Investment Group provides wealth management and investment guidance to high-net-worth individuals, families, charitable foundations, and qualified plans. We provide seasoned financial guidance backed by a disciplined investment process. For over 25 years, we have built our firm on a strong foundation of family and friendships with guiding principles of ethics and integrity.