The Importance of a Durable Power of Attorney and Healthcare Advance Directive
A durable power of attorney (DPOA) along with a healthcare advance directive are important components of a comprehensive estate plan. These legal documents are for adults of any age, as unexpected events such as accidents and illnesses can happen to anyone. These documents authorize a trusted individual, referred to as the agent or attorney-in-fact, the right to act on behalf of the person granting the power (the principal) in all financial, legal and medical matters. The DPOA agent and the healthcare advance directive agent do not have to be the same individual. There are several strong arguments for why an individual should have a durable power of attorney and a healthcare advance directive.
If the principal becomes incapacitated due to illness, injury or mental decline, these legal documents ensure that someone they trust can make decisions for them. These documents make the intent of the principal clear and help prevent arguments between family members over the actions that need to be taken. Without a DPOA and healthcare advance directive, the principal’s loved ones would have to go through a lengthy and expensive legal process in order to gain court approval to obtain the same powers. In this case, the court will appoint a guardian or conservator to make decisions for the principal, which may not align with their preferences and may create disputes within the family.
Having a detailed DPOA in place can protect the principal from financial mismanagement of their assets if they’re unable to manage them themselves. The designated agent should be given comprehensive powers to ensure that bills are paid, investments are managed, and other financial matters are addressed responsibly without interruption according to the principal’s wishes. This is especially important if long-term care is needed due to the principal’s incapacity.
Business owners should strongly consider having a durable power of attorney. The DPOA can ensure that a qualified person can step in and manage the business affairs if the owner is unable to do so. This continuity is essential for maintaining the stability and success of the business.
Parents and caregivers of minor children or other dependents should consider having a DPOA to ensure that someone they trust can make decisions on their behalf regarding their children’s care and finances if necessary.
As people age, the likelihood of incapacity due to illness or cognitive decline increases. Having a DPOA and healthcare advance directive ensures a smooth transition of decision-making authority. Since an individual needs to be of sound mind in order to grant authority, it would be wise for individuals who are currently healthy to plan for the future and create a DPOA should the need arise.
Individuals preparing to undergo a medical procedure that may result in temporary incapacity may want to designate someone to make decisions on their behalf during recovery.
A durable power of attorney does not have to apply only to someone who has become incapacitated. People who travel frequently for work or leisure, especially overseas and expats, may want to have a DPOA in place to handle their legal and financial affairs while they are away.
These legal documents can be amended as long as the principal is still competent. The principal is the only one that can change or transfer the power of attorney to someone else. The agent has the right to decline their appointment at any time, at which point the alternate agent named in the DPOA document would become the acting agent. The power of the agent ends with the death of the principal.
Overall, a durable power of attorney and a healthcare advance directive are essential components of any comprehensive estate plan. They provide protection, continuity, and peace of mind for you and your loved ones. They help ensure that your wishes are respected, and your affairs are managed according to your preferences, even if you are unable to communicate or make decisions yourself. A qualified legal professional can help you understand your specific needs and create a customized DPOA and healthcare advance directive that meets your requirements.
Dan Krstevski, CFP®