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Power of Attorney documents come in two main varieties — do you have both?

by ROBERT J. GREEN/Kootenai Law Group
| October 11, 2023 1:00 AM

Power of Attorney documents are often an afterthought when someone thinks about their estate plan. Wills and Trusts are used to establish the important directions regarding what should happen to one’s assets upon death, and who should oversee carrying out those directions. However, the planning documents that deal with how things will work while you are still alive but have become incapable of making your own decisions are arguably even more important. This is because you will still be alive and still be impacted by how those decisions are made. A quality estate plan should deal with both death, and with incapacity. Power of Attorney documents are the primary way we plan for incapacity, and you should certainly have a Power of Attorney. Actually, you should have two different types of Power of Attorney documents — one for health care purposes and one for financial purposes. Let’s look at why both are necessary for all of us.

You use a Power of Attorney document to state who should be your substitute decision maker (your “Agent” or sometimes called your “Attorney-in-fact”) if you are incapacitated (unable to make your own decisions), while you are still alive. You would also state in this document the scope and limits of the discretion your Agent will have in making any decisions for you. We typically divide this surrogate decision-making authority into two separate categories and consequently into two separate documents. You should have both types.

A financial Power of Attorney Document gives your chosen Agent the legal authority to make financial decisions on your behalf, while a Health Care Power of Attorney Document gives your chosen Agent the legal authority to make health care decisions on your behalf. By having both types of Power of Attorney Documents in place, you can ensure someone of your choosing (not a Court’s) will be your stand-in decision maker if you need one.

If you become incapacitated and do not have Power of Attorney documents in place, someone (usually a spouse, adult child, or another family member) will need to apply through the court system to become your court-appointed “guardian” and “conservator” obtain the authority that a Power of Attorney document signed by you would have given to them. The guardianship and conservatorship court process is not a good alternative to putting Power of Attorney Documents in place ahead of time. The court process is generally pretty expensive and lengthy. Between court fees, attorney fees, and administrative expenses, this process usually costs several thousand dollars, takes several months, and the court fees continue annually.

The guardianship/conservatorship court process is also far less private than use of power of attorney documentation. While the records of the legal proceedings and the actual courtroom hearings are often sealed in a guardianship/conservatorship matter, there is still a lot of information about you and your life, your health, and your finances, that gets shared with multiple lawyers, the judge, a person (usually a social worker) known as a “court visitor” and potentially any other “interested person” the Judge decides should be included.

Planning for things we hope will never happen, like becoming incapacitated, is not fun. However, a qualified estate planner can make the process straightforward and relatively easy for you.

My law firm is currently offering free telephonic, electronic, or in-person consultations concerning creating or reviewing estate planning documents.

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Robert J. Green is an Elder Law, Trust, Estate, Probate, & Guardianship Attorney and the owner of Kootenai Law Group, PLLC in Coeur d’Alene. If you have questions about estate planning, probates, wills, trusts, powers of attorney, guardianships, Medicaid planning, or VA Benefit planning, contact Robert at 208-765-6555, Robert@KootenaiLaw.com, or visit www.KootenaiLaw.com.

This has been presented as general information and not as legal advice. Do not engage in legal decision-making without the advice of a competent attorney after discussion of your specific circumstances.