I recently read that 6 out of 10 adults in the United States do not have an estate plan. While that number is alarming, it is also completely understandable. There is a complete misconception that estate planning solely focuses on death planning. Who wants to talk about their own demise? Not too many people. However, what many individuals forget or may not know is that estate planning covers planning during your life as well. I am often asked numerous questions about power of attorney documents and their necessity. Here are the most common questions and answers:
Q: What is a power of attorney document?
A: A power of attorney document creates a fiduciary relationship between the principal (the maker of the document) and the agent (the person appointed), so that the agent can act on behalf of the principal. The fiduciary relationship means that the agent must act with the highest standard of care while fulfilling the duties the principal has given the agent. There are two types of power of attorney documents:
– Healthcare Power of Attorney Document – This document enables an agent to make health care decisions for the principal if the principal is not able to make decisions for themselves.
– Durable Financial Power of Attorney Document – This document enables an agent to make financial and legal decisions for the principal.
Q: At what age should I get a power of attorney document?
A: Everyone over the age of eighteen should have power of attorney documents. Becoming a legal adult means that one can make decisions for themselves. It also means that spouses, parents, siblings, or adult children cannot make decisions for you, unless you give them the authority to do so. It is very important that a person prepare a power of attorney document while they have the capacity to do so. A person must be able to understand what powers they are giving away to an agent.
Q: Are all financial power of attorney documents the same?
A: No, not all power of attorney documents are the same. The State of Ohio creates a statutory power of attorney document that gives limited powers to the agent. However, if the principal does not give certain powers above and beyond the statutory powers to the agent in writing, the agent may not act for the principal in certain situations. For example, if your agent is going out of town and wants to delegate his or her power to another person, the document must explicitly say that the agent can delegate their power. It is best to consult an attorney that will know what powers should be in a power of attorney document to help assist families in caring for their loved one.
Q: When would my agent use the healthcare power of attorney document?
A: A healthcare power of attorney document is used in a variety of situations from signing appropriate waivers and consents to accessing medical records. The agent mainly uses the document when the principal cannot express their own wishes. For example, say a student in college goes on a spring break trip and gets hurt out of state. Parents will want an update on their child. With the power of attorney document in place, the parent can call the out of state hospital and receive an update. Otherwise, the hospital may refuse to speak to the parents. Another example of when an agent should step in may be when a loved one has diminishing capacity and may not understand what the doctors and nurses are asking.
Q: What happens if I do not have a power of attorney document in place?
A: If you do not have a power of attorney document in place and someone needs to act on your behalf, they will likely need to seek some sort of a guardianship over you. Guardians can serve over the person (healthcare decisions), the estate (financial decisions), or limited purposes for the ward. Creating a guardianship requires court approval and may turn into a lengthy and expensive process.
Q: When should the agent use the financial power of attorney document?
A: It is very likely that the agent can start to use the document once it has been signed. That does not mean that the principal loses their authority to act. It just means that the agent can assist if necessary at any time. The principal will always have the last say. I see principals allowing their agents to act for them when they no longer want to write out their own checks, go to the bank, or write out their bills anymore. If the agent notices a decline in the principal’s financial capacity to make sound decisions, they may want to step in and assist the principal.
Q: Who should be my agent?
A: Your agent should, first and foremost, be someone that you trust. You will be giving your agent a lot of authority to be involved in your life and daily practices. Secondly, your agent should be able to do the job. An agent listed under the financial power of attorney document should not get flustered by paying bills or doing banking transactions. Similarly, your healthcare agent should not be squeamish or unable to make firm decisions when upset.
Q: How long does the document last?
A: Both the healthcare and financial power of attorney document last a lifetime. Once created by the principal, it can last through periods of incapacity. The powers granted under power of attorney documents do end at death of the principal. In case something happens to the named agent in the documents, it is always a must that the documents name potential successor agents.
Talk with an attorney today about preparing or updating power of attorney documents for you! If interested in a free 20-minute review of your power of attorney documents with an attorney at Butcher Elder Law, please call (440) 268-8284 and mention Generations Senior Living Strongsville.