By: Attorney Gina C. Ziegelbauer
This month’s question is one I hear quite a bit: “I don’t have very much stuff, so do I really need to worry about doing any planning?” The answer is still yes, and for a few reasons. A couple of the most important planning tools individuals should have in place are powers of attorney.
A “power of attorney” allows an agent (a decision-maker) to act for another person in specific or general legal or financial matters. It also refers to the actual legal document that gives that authority to the agent. A power of attorney is a planning tool for when you are still living but need help making decisions. The authority your agent has to manage your affairs ends when you die (and then other forms of authority take over, like the named representative in a funeral authorization, joint ownership, transfer by affidavit procedure, personal representative named in a Will, trustee named in a trust, etc.)
There are two types of powers of attorney: health care powers of attorney and financial powers of attorney. The power of attorney can be effective immediately upon signing, or may become effective only upon your “incapacity,” as determined by two physicians.
Healthcare Power of Attorney and Living Will. The healthcare power of attorney allows your agent to make healthcare decisions for you, usually upon your incapacity. This may include admission to a nursing home or facility and may include life or death decisions such as whether to allow life-sustaining procedures to take place if you are in a terminal condition or vegetative state. Needless to say, the decision of who to appoint is an important one and you should carefully consider who the best person is to be in the position to potentially make life and death decisions for you. You should talk to your agent about your wishes and consider a living will, also called a “Declaration to Physicians” in Wisconsin statutes. This is a separate document that expresses your wishes regarding life-sustaining procedures and feeding tubes and is an important guide to your doctors and your agent about your wishes.
On a side note, I’ve found that doctors’ offices and hospitals do try to make sure people have a health care power of attorney in place and some offer their own forms. This is especially true for older individuals or individuals with chronic health conditions. I often meet with clients who have no planning in place other than the health care power of attorney they received at their doctors’ office. If you have this in place and meet with a lawyer for other planning, you should bring a copy along to your meeting and ask any questions you have about the document.
Durable Power of Attorney for Financial Matters. This document allows your agent to make decisions and take actions related to your financial and legal affairs. It is important that it be “durable,” which means the document remains in effect if you become incapacitated. It is also important to carefully consider the terms of the document are tailored to your particular circumstances and that the powers listed in the document are sufficient to cover a wide-range of needs. This can be a lengthy document for that reason. Think of the document as a tool-box—you want as many tools available for your agent to handle your affairs for you if you become incapacitated because they will need to have the specific legal authority to take those actions. Examples include handling bank accounts, investment accounts, applying for disability benefits, filing insurance claims, selling a home, contracting for health care services, hiring a lawyer or accountant and list goes on. Your financial power of attorney may be the same person as your health care agent, but they do not have to be the same person. Someone who you trust to make healthcare decisions may not be great with money and vice versa. An estate planning lawyer should be able to walk you through the considerations in choosing your agents, and you should thinking honestly about who in your life is suited to take on those roles.
So why is it important to have these in place? There really is no concept as spousal or family consent when it comes to managing your affairs if you become incapacitated, so without powers of attorney in place, your spouse, a family member or the county may need to petition the court to appoint a guardian to be able to make decisions for you. The process of appointing a guardian takes time, can be expensive, and is certainly the last thing a spouse or family member wants to deal with following a traumatic event that left you incapacitated. By planning ahead, you are in control of your agents and can choose an agent you trust completely, who you believe will do the best job for you, and who believe will honor your wishes. A little planning can save your family thousands of dollars and a lot of headache if something happens to you and someone else needs to step in to handle your affairs.
The information in this article is general in nature, and is not intended to be legal advice.