You probably have put a lot of thought and effort over the years into protecting your hard-earned money so it will be there when you need it. It only makes sense to put as much thought into selecting a trusted individual to make decisions for you if you become unable to act on your own behalf.
What is a Durable Power of Attorney?
A Durable Power of Attorney (DPOA) is a legal document that authorizes an individual to act on another’s behalf. The Principal (person executing the DPOA) grants authority to a trusted person to manage the Principal’s affairs should he or she be unable to do so.
An “Attorney-in-Fact”, which is oftentimes referred to as a “Power of Attorney” or “Agent”, should be someone who understands and shares your values and who you trust to act in your best interests.
There are two different types of DPOAs: financial and healthcare. Each gives the Agent specific authority and responsibilities.
- Financial DPOAs grant authority to manage financial interests.
- Healthcare DPOAs grant authority to make health care decisions.
How to choose a Financial Power of Attorney
A DPOA for finances authorizes a person you trust to manage your financial affairs. Some of the responsibilities of a Financial Agent include:
- Conducting banking transactions and bill payment
- Managing your real property: buying and selling your home or other real property
- Managing your investments: buying and selling stocks, bonds, and other investments
- Applying for governments benefits, including Medicaid Long-Term Care
With these responsibilities in mind, choose someone who is smart, capable, and has good judgment. Be mindful of family dynamics: does your Agent get along well with other family members? Are there existing resentments that may be aggravated if a particular individual was put in charge of your money?
How to choose a Medical Power of Attorney
A DPOA for health care authorizes a person you trust to make medical decisions if you are unable to speak for yourself. Some of the responsibilities of a Health Care Agent include:
- Working with medical staff to determine your treatment plan
- Hiring a personal care assistant
- Accessing your medical records for the purpose of making health care decisions
- Selecting or discharging care providers or institutions
Although your Health Care Agent is not required to live in the same state as you, it is a good idea to choose a Health Care Agent that is close to home and available. Your Health Care Agent is not required to have a medical background but they must be able to make difficult decisions in stressful situations. Choose someone that is capable and assertive and who understands and will follow your wishes, even if they disagree with your decision.
It is common for a Principal to name one trusted person as Attorney-in-Fact for both finances and health care. Keep in mind that these responsibilities may be stressful and time-consuming. If you have more than one capable and trustworthy person in your life, consider splitting up the responsibilities to match their particular strengths. Be sure to name backup decision-makers in case your original choice can no longer fulfill their duty.