When people think about estate planning, they usually focus entirely on what happens after they pass away. But what happens if you don't die, but instead suffer a stroke, a severe brain injury, or advanced dementia?
If you are medically incapacitated, your Last Will and Testament cannot help you. Your Will only activates upon your death. While you are alive but unable to communicate, someone still has to pay your mortgage, manage your taxes, and approve your surgeries.
This is where a Power of Attorney (POA) comes in. A POA is a legal document that allows you to give someone else the authority to act on your behalf. There are two main types you need to know about: Financial and Medical.
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Get Your Will1. The Medical Power of Attorney
Also known as a Healthcare Proxy, this document allows you to name a trusted person (your "Agent") to make medical decisions for you if you cannot. If you are in a coma, this person will talk to your doctors, choose your treatment plans, and decide which facilities you are moved to.
2. The Financial Power of Attorney
A Financial POA has nothing to do with doctors. It gives someone the legal authority to handle your money while you are incapacitated. If you are in the hospital for six months, your Financial Agent can access your checking account to pay your rent, file your taxes, and keep your household running.
- They can cash checks made out to you.
- They can pay your utility bills and mortgage.
- They have a legal duty (fiduciary duty) to only act in your best interest.
3. What does "Durable" mean?
You will often hear the term "Durable Power of Attorney." This simply means the document remains valid even if you become mentally incapacitated (like developing Alzheimer's). If a POA is not "durable," it becomes void the second you lose mental capacity - which defeats the whole purpose of having one for emergencies!
4. Picking the right person
You do not have to name the same person for both jobs. You might want your spouse to make your medical decisions, but you might prefer your highly organized, accountant brother to manage your Financial POA. Choose people based on their specific strengths.
5. Stop paying hourly lawyer fees
Powers of Attorney are standard, straightforward legal documents. You do not need a law degree to understand them, and you certainly don't need to pay a lawyer $1,500 to draft them. With a high-quality DIY template, you can grant this vital legal authority in just minutes.
