There are different types of powers of attorney, and they are used for different sets of circumstances. For example, a general power of attorney would give an agent of your choosing the ability to act on your behalf for all different types of purposes. Let’s say that you are going to be out of the country for an extended period of time. The general power of attorney would allow your agent to handle all of your affairs.
There are also limited powers of attorney. To provide another example, suppose you want to buy a piece of property in Florida, but you are physically in California and unable to get to Florida. You could give someone who was in Florida a limited power of attorney simply to conduct this one transaction on your behalf.
These types of powers of attorney would not remain in effect if you were to become incapacitated. Incapacity planning involves the execution of durable powers of attorney. These powers of attorney are going to remain intact even if you were to become incapacitated.
When you are planning your estate you should definitely plan ahead for the possibility of incapacity, and durable powers of attorney are usually going to be part of the plan. You could name a financial decision-maker with a durable power of attorney for financial matters.
It is also possible to execute a durable power of attorney for health care. This is sometimes called a health care proxy. With this document, you empower an individual of your choosing to make your medical decisions for you if you become incapacitated.
While we’re on the subject, you should also execute a HIPAA authorization so that your health care agent can access your medical records and have a total understanding of your condition at all times.
You don’t have to name the same person to act as your health care agent and your financial decision-maker. You can name two different respective attorneys-in-fact if this is your preference.
There are those who don’t concern themselves with incapacity planning. They know that people sometimes become incapacitated, but they think that it is a relative rarity. Because of this belief, they’re willing to take their chances.
This kind of thinking can result in some negative consequences. In fact, approximately 45% of people who are at least 85 have Alzheimer’s disease. If you think you’re so healthy that you will never become incapacitated, you may want to reconsider. If you are very healthy it is likely that you will live to an advanced age, and Alzheimer’s may very much become a factor.
There is no reason to be overconfident. Put an incapacity plan in place within your broader estate plan and you can go forward with peace of mind.
- The Lessons from Lisa Marie - March 28, 2023
- Living Trust Bank Accounts and FDIC Insurance (VIDEO) - March 21, 2023
- Show Your Love by Creating an Estate Plan - March 3, 2023