🔒The why’s and how’s of powers of attorney

Why should you have powers of attorney for healthcare? To understand why you should have these documents, it’s first important to understand what they are and how they work. 

The durable power of attorney, which will handle your financial affairs, is the official appointment of an agent to act on your behalf if you are unable to do so yourself, enduring past your mental or physical incapacity. For example, if you are going to take a cruise around the world and going to be gone for a year, you could execute a durable power of attorney and place it on your checking account so that your son or daughter could handle your financial affairs, by writing checks to pay for your bills, while you are gone.

In the case such as a sudden incapacitating illness, like the coronavirus, you could execute a durable power of attorney but not give it to the agent you will appoint, or place it onto a bank account or other financial account until it is required. The reason why you would want to have such a document as a contingency plan is because otherwise, if you are incapacitated, the only way to appoint somebody to act on your behalf would be to go into the courts and have a either a guardian or a conservator appointed to handle your financial affairs. Not only is this lengthy and time-consuming, but it’s washing your dirty laundry in public, since necessarily it is a public record.

As to the healthcare proxy, again that is an appointment for someone to communicate to your primary care physician if you are unable to communicate to your physician yourself. This allows the primary care physician to speak with someone other than yourself, or perhaps your spouse, without violating the privacy regulations. Usually the designation of a healthcare proxy does not include any restrictions on the treatments that you can receive, which is usually described in a living will.

You can go about getting a durable power of attorney by downloading the appropriate form and filling out the name and address of the individual that you would like to designate as your agent. These forms are available through your attorney, but also through online legal form applications, such as LegalZoom. Of course, your estate planning attorney can provide you with these forms and with greater guidance on how to execute them.

When should you give the durable power of attorney to your agent and ask them to place their name onto a checking or other financial account, and to begin handling your financial affairs? You could put it on just because it is convenient to have someone else handle your financial affairs. The other option is when it's apparent you will not be able to handle your affairs on your own. Obviously by that point you will be incapacitated, so in many cases I have held durable powers of attorney for my clients in a secure vault, and it is only when the client is too ill or has too many physical or mental frailties to be able to fully manage their financial affairs that I then contact the agent, as the client's attorney, and go with them to set up the durable power of attorney on the bank account. Obviously this is a judgment call as to how trustworthy a particular individual is and whether or not your incapacity is short-term or long-term.

I usually describe to my clients, when preparing estate plans for them, that a durable power of attorney and healthcare proxy are like buying fire insurance on your home. Hopefully, you will never need to use it, but if you do need it, it will be a lifesaver.