Financial vs. Medical Power of Attorney: An Overview
A power of attorney is an authorization that allows an individual to make decisions on behalf of a specific person. In the case of a financial and medical power of attorney an individual has the right to designate a power of attorney to make decisions for them. Choosing people you trust to hold your medical and financial powers of attorney gives you more control over your interests and ensures your wishes are followed. In looking at these two designations it can be important to know the differences, specifically when deciding whether you should appoint the same person to hold both of these directives.
Financial Power of Attorney
A financial power of attorney, permits someone you have designated (your agent) to oversee your finances. Typically it is used so the person can step in and pay your bills or handle other financial matters. It can be a designation for a financial professional acting on your behalf or it may be used when you cannot physically or mentally handle your affairs. In some cases it may also be used for isolated situations when it is not convenient for you to be present – say a real estate closing in a distant town.
A power of attorney usually takes effect as soon as you sign it. However, your agent may never use it unless it becomes necessary. In some cases, an individual may designate a general power of attorney which has multiple designations of authority over a variety of assets. A financial power of attorney and general power of attorney can be one in the same or a financial power of attorney may be included within the terms of a general power of attorney.
In many cases a financial power of attorney may be a financial management decision which is designated to a professional. In choosing a financial power of attorney you will want to weigh whether the person is trustworthy and has enough financial acumen to handle the responsibilities. The person doesn’t necessarily need to be nearby to ensure that your bills are paid promptly. Online banking and electronic billing make it possible to entrust a power of attorney to a relative, friend, or advisor most capable and diligent in taking on the responsibility. Comprehensively, handling someone’s finances does not demand the intimate knowledge of end-of-life wishes or religious beliefs that a medical power of attorney holder ought to have so you will want to make your decision accordingly. (For further reading, see Which Child’s Best for Monetary Power of Attorney?)
Medical Power of Attorney
The power to make medical decisions on your behalf is not usually included in a financial power of attorney but it can potentially be part of a general power of attorney. A medical power of attorney is a designation which clearly states you have chosen the person named to make medical decisions when you no longer have capacity to do so. This may be needed temporarily (when you’re under anaesthesia, for instance, and complications arise) or for navigating a longer term health crisis, often (but not always) related to aging. Many people have strong feelings about the kind and degree of medical treatment they want. This can influence the choice for a medical power of attorney as this person can be expected to make similar decisions you would choose for yourself. The medical power of attorney will only go into effect when you do not have the capacity to make decisions for yourself regarding medical treatment.
A medical power of attorney and a financial power of attorney are typically created in separate legal documents. Both are known in legal terms as advance directives. Generally, the law addresses each type of advance directive separately which limits the authority designated under advance directives. A medical power of attorney will focus only on medical authority and will be written according to the exact specifications of the individual making the directive. As such, a medical power of attorney can include provisions for a wide range of medical actions including personal care management, hiring a personal care assistant, deciding on a medical treatment, and making decisions on medical treatments overall.
In general, your medical power of attorney should be over 18, someone with whom you can discuss your wishes frankly, and someone you trust to support those wishes. You should ask the person you select if she or he feels able to take on the responsibility. Usually you appoint only one person as your medical power of attorney, though you can name alternates for situations when that person might not be available.
Kim Trigoboff, an elder law attorney who practices in New York City, suggests that you will want to consider someone’s life experience before asking the person to take on this role. “The person must be able to make difficult choices, even ones that may end medical care. Some loved ones might not be up to acting as the appointed healthcare agent.” You will also want to consider whether the person is close by and can meet with your doctors should the need arise. (See also: Medical Power of Attorney: Which Child to Choose?)
An Argument for Choosing Two Different People
While many people choose the same person, such as a spouse or an adult child, to hold their medical power of attorney and their financial power of attorney, it’s not a decision to make automatically. Medical vs. financial powers of attorney can be created and designated for a variety of different reasons. It may sometimes be preferable and more prudent to ask different people to take on these roles. However, it is possible for the medical power of attorney and the financial power of attorney to be the same person.
Selecting a different person for your financial power of attorney and your medical power of attorney may help you choose the best person for each job. If you do select different people for each role, you may want to consider how they might work together in your best interest, should the need arise. Furthermore, discussing your wishes with them together and also one on one can be helpful to ensure your best interests as well.
- A power of attorney is an authorization that allows an individual to make decisions on behalf of a specific person.
- A financial power of attorney is designated to make financial decisions.
- A medical power of attorney is designated to make medical decisions.
- Financial and medical powers of attorney can be designated to two different individuals or one person for both directives.