A power of attorney (POA) is a legal document authorizing a specific person to make decisions on your behalf should you become incapacitated due to an injury or illness.
Two types of POAs – financial POAs and medical POAs – serve very different purposes. Understanding the difference between them is critical to protecting yourself if something happens and you’re unable to speak or make decisions for yourself.
Below, we’ve detailed the major differences between a medical power of attorney and financial power of attorney so you can make an informed decision about whether you need one or both while creating your estate plan.
Financial Power of Attorney
A financial power of attorney allows you to designate someone to manage your finances, should you become incapacitated. Typically, the person you choose has the authorization to access your accounts and handle your financial affairs, such as paying your bills, if you’re unable to do it yourself.
You can pick a financial professional, family member, or friend to be the authorized agent of your financial POA. However, it should be someone you trust to carry out your wishes if something happens to you. It should also be a person who is capable of making knowledgeable financial decisions, so as not to negatively affect your financial standing.
How to Establish a Financial Power of Attorney
There are certain steps you can take to determine if a financial POA is right for you and to properly set one up so that it’s legally enforceable:
- Determine if you need a POA – The first and most important step is determining if establishing a financial power of attorney is necessary. You might not need one if your assets and income are in your spouse’s name or you have already created a living trust with an appointed trustee.
- Pick an authorized agent – If you decide you need a financial POA, you must pick someone to handle your financial decisions if, for some reason, you can’t. It should be a person you know is responsible and able to follow your explicit instructions to meet your needs and wishes, regardless of their personal opinions or feelings on the matter.
- Complete the necessary forms – You need to complete specific forms to set up a financial POA depending on where you live. An experienced attorney can assist you in ensuring you don’t leave out any required documentation.
- Amend your POA when necessary – There might be a time when you have to make changes to your financial power of attorney. For example, if your authorized agent passes away, you need to pick someone else and update the documents.
Medical Power of Attorney
A medical power of attorney enables you to choose someone to make medical decisions on your behalf if you can’t make decisions for yourself. Many people create a medical power of attorney if they develop a terminal illness or cognitive disease, such as Alzheimer’s.
However, anyone can have a medical POA to make sure someone has the authority to act on their behalf if a traumatic event, such as a catastrophic car crash, leaves them incapacitated.
Most adults can be the authorized agent for a medical POA. However, some states exclude you from picking specific parties, such as your doctor or a residential health care provider.
How to Establish a Medical Power of Attorney
You should consider several factors when deciding if you need a medical POA. Below are the steps you should follow to determine your needs and to establish a valid medical POA:
- Determine if a medical POA is necessary – If you want to control how medical providers handle your care if you become incapacitated, a medical power of attorney is an excellent idea. Otherwise, a doctor might use extraordinary measures to keep you alive, such as hooking you up to breathing machines and feeding tubes. If that’s not what you want, you can outline your wishes in the POA.
- Pick the right agent – The agent you choose to make medical decisions on your behalf must be at least 18 years old. They should also be responsible and willing to fulfill your wishes if you can’t voice what you want regarding your healthcare.
- Complete all forms – You need to complete multiple forms if you want to create a medical POA. You will have to sign the required documents before a notary public to make them legally binding. Some states also require witnesses to be present while you’re signing the forms to confirm you are of sound mind.
Whether you’re thinking about creating a medical power of attorney, financial power of attorney, or both, you should hire an experienced Brandon estate planning lawyer for assistance. We are here to guide you through each step of the process to ensure you follow state laws and create a valid and enforceable POA. If you are ready to get started, contact us at (813) 438-8503 to schedule an appointment.