To say that this past year was hard would be a gross understatement. Hardly, if ever, have any of us lived a more tumultuous period. Fortunately, the new year brings promise of a return to normalcy and yet it is still too soon to breathe easy. As the number of Covid-19 cases continues its daily rise, so too does the anxiety of increasing medical and financial insecurity. In the first week of 2021 an additional 1.64 million people fell ill; in the same period economic indicators continued to paint a grim picture. As much as all of us need reason to take a deep sigh of relief, it’s not here–yet. Nonetheless, peace of mind can still be attained by attending to essential estate planning tasks. Two of the most important in this present moment are establishing medical and financial power of attorney.
Using Advance Directives to Pandemic Proof Your Health and Finances
Advance directives–sometimes referred to as a living will–are a class of estate planning documents which designate a trusted person (or persons) to execute medical and financial decisions on your behalf should you become unable to do so yourself. The name for these documents is medical power of attorney and financial power of attorney and their individual purposes are described below.
Medical Power of Attorney
Should you end up on a ventilator and lose the ability to communicate your own needs and care wishes, having a medical power of attorney document in place provides immense relief. This document charges a trusted loved one with ensuring you receive medical attention that aligns with your values and beliefs. It is important that when choosing a person to serve in this role you elect someone both willing to ask difficult questions and able to act with a steady hand where end-of-life treatment wishes are concerned. Common procedures addressed in your medical power of attorney include whether dialysis, breathing machines or tube feeding are desired, whether to resuscitate, and whether to donate organs and tissue after you have passed. In addition, specific treatment preferences concerning your faith or values may be included.
Financial Power of Attorney
Like the above, financial power of attorney empowers a trusted loved one (or financial professional) to attend to your financial affairs should you be unable to do so yourself. Three types of financial power of attorney exists and it is important to understand their differences.
- Conventional
This very common legal instrument is used in the event that, say, you are traveling (remember that?) and you need a person to sign a deed of sale for your house. Once signed, the conventional power of attorney takes immediate effect and it terminates either when the intended action is executed or when something awful happens resulting in your incapacitation or death. Naturally, it is important to be careful when drafting such a document to ensure the legal authority granted is limited to its intended purpose.
- Durable
A durable power of attorney is, in some sense, the counterpoint to its conventional counterpart. It takes effect when signed and stays in effect throughout a lifetime unless cancelled. A durable power of attorney can either be general, covering all financial actions, or limited. This is a crucial document to have in place should you shoulder serious worry about your own ability to manage financial affairs. When preparing a durable power of attorney, language should be included stipulating that it remains in effect even if you become incapacitated.
- Springing
A springing power attorney, unlike either of those described above, only comes into effect when a specific event occurs–most often, your incapacitation. Because it is essential that your financial affairs be managed even if you cannot do so, yourself, it is important that a springing power of attorney be very carefully drafted such that no problems arise in determining precisely when or if the triggering event has occurred.
Having both medical and financial powers of attorney in place has never been more important. The Covid-19 pandemic presents a threat to all of us, regardless of age or health. This is a tragic and frightening fact and while being prepared does not erase it, it at least eases some of the burden. Right now, everyone needs to lighten their load and one way to do so is to take proactive steps to protect yourself and your family.