Planning for Incapacity

What is a Durable Power of Attorney?

Who can establish a Power of Attorney?

Who may act as an agent under a Power of Attorney?

What is a Durable Power of Attorney for Health Care?

What is a Living Will?

What is a HIPAA Authorization?

A durable power of attorney allows you to carry on your financial affairs in the event that you become disabled. Unless you have a properly drafted power of attorney, it may be necessary to apply to a court to have a guardian or conservator appointed to make decisions for you when you are disabled.  This guardianship process is time-consuming, expensive, often costing thousands of dollars and emotionally draining.
 
There are generally two types of durable powers of attorney: a "present" durable power of attorney in which the power is immediately transferred to your attorney in fact; and a "springing" or future durable power of attorney that only comes into effect upon your subsequent disability as determined by your doctor.  When you appoint another individual to make financial decisions on your behalf, that individual is called an "attorney in fact". Anyone can be designated, most commonly your spouse or domestic partner, a trusted family member, or friend.  Appointing a power of attorney assures that your wishes are carried out exactly as you want them, allows you to decide who will make decisions for you, and is effective immediately upon subsequent disability.

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Generally, any individual over the age of majority and who is legally competent can establish a power of attorney.

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In general, an agent (or "attorney in fact") may be anyone who is legally competent and over the age of majority.  Most individuals select a close family member such as a spouse, sibling or adult child, but any person such as a friend or a professional with outstanding reputation for honesty would be ideal.  You may appoint multiple agents to serve either simultaneously or separately.  Appointing more than one agent to serve simultaneously can be problematic because if any one of the agents are unavailable to sign, action may be delayed.  Confusion and disagreement between simultaneous agents can be another cause of inaction.  Therefore, it is usually more prudent to appoint one individual as the primary agent and nominate additional individuals to serve as alternate agents if your first choice is unwilling or unable to serve.

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The law allows you to appoint someone you trust - for example, a family member or close friend to decide about medical treatment options if you lose the ability to decide for yourself.  You can do this by using a "Durable Power of Attorney for Health Care" or Health Care Proxy where you designate the person or persons to make such decisions on your behalf. You can allow your health care agent to decide about all health care or only about certain treatments. You may also give your agent instructions that he or she has to follow. Your agent can then make sure that health care professionals follow your wishes and can decide how your wishes apply as your medical condition changes. Hospitals, doctors and other health care providers must follow your agent's decisions as if they were your own.

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A Living Will informs others of your preferred medical treatment should you become permanently unconscious, terminally ill, or otherwise unable to make or communicate decisions regarding treatment. Almost all states have instituted living will laws to protect a patient's right to refuse medical treatment.  Even if you receive medical care in a state without living will laws this document is useful to a court trying to decide what an unconscious patient would want. In conjunction with other estate planning tools, it can bring peace of mind and security while avoiding unnecessary expense and delay in the event of future incapacity. 

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Some medical providers have refused to release information, even to spouses and adult children authorized by durable medical powers of attorney, on the grounds that the 1996 Health Insurance Portability and Accountability Act, or HIPAA, prohibits such releases.  In addition to the above documents, you should also sign a HIPAA Authorization Form that allows the release of medical information to your Agents, your Successor Trustees, your family and other people whom you designate.

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