Planning for Incapacity
What is a Durable Power of Attorney?
A Durable Power of Attorney is a document that empowers another individual to carry on your
financial affairs in the event you become disabled or incapacitated. Without a Durable Power of
Attorney, it may be necessary for one of your loved ones, including your wife or adult child to
petition a court to be appointed guardian or conservator in order to make decisions for you
when you are incapacitated. This guardianship process is time consuming, expensive, often
costing thousands of dollars and it can be emotionally draining for your family.
There are generally two types of durable powers of attorney: a present Durable Power of
Attorney in which the power is immediately transferred to your attorney in fact; and a springing
or future Durable Power of Attorney that only comes into effect upon your subsequent disability
as determined by your doctor. When you appoint another individual to make financial decisions
on your behalf, that individual is called an agent or attorney in fact. Most people choose their
spouse or domestic partner, a trusted family member, or friend.
Who can establish a Power of Attorney?
Generally, any individual over the age of majority and who is legally competent can establish a
Power of Attorney.
Who may act as an agent under a Power of Attorney?
In general, an agent, or attorney in fact, may be anyone who is legally competent and over the
age of majority. Most individuals select a close family member such as a spouse, sibling or
adult child, but any person such as a friend or a professional with an outstanding reputation for
honesty would be ideal. You may appoint multiple agents to serve either simultaneously or
separately. Appointing more than one agent to serve simultaneously can be problematic
because if any one of the agents is unavailable to sign, action may be delayed. Confusion and
disagreement between simultaneous agents can also lead to inaction. Therefore, it is usually
more prudent to appoint one individual as the primary agent and nominate additional individuals
to serve as alternate agents if your first choice is unwilling or unable to serve.
What is a Durable Power of Attorney for Health Care?
The law allows you to appoint someone to decide about medical treatment options if you lose
the ability to decide for yourself. You can do this by using a “Durable Power of Attorney for
Health Care” or Health Care Proxy where you designate the person or persons to make such
decisions on your behalf. You can allow your health care agent to decide about all health care
or only about certain treatments. You may also give your agent instructions that he or she has
to follow. Your agent can then make sure that health care professionals follow your wishes and
can decide how your wishes apply as your medical condition changes. Hospitals, doctors and
other health care providers must follow your agent’s decisions as if they were your own.
What is a Living Will?
A Living Will informs others of your preferred medical treatment should you become
permanently unconscious, terminally ill, or otherwise unable to make or communicate decisions
regarding treatment. In conjunction with other estate planning tools, it can bring peace of mind
and security while avoiding unnecessary expense and delay in the event of future incapacity.
What is a HIPAA Authorization?
Some medical providers have refused to release information, even to spouses and adult
children authorized by the Healthcare Power of Attorney on the grounds that the 1996 Health
Insurance Portability and Accountability Act, or HIPAA, prohibits such releases. Therefore, as
part of your incapacity planning, you should sign a HIPAA authorization form that allows the
release of medical information to your agents, successor trustees, family or any other
individuals you wish to designate.