What is the Difference Between a Financial Power of Attorney and a Healthcare Power of Attorney?
A Power of Attorney, or POA, is one important part of an overall estate plan. It allows someone else, called an agent (or attorney-in-fact), to act for you on your behalf. There are many types of POAs. If you have traded in a car for a new one at a car dealer, or closed on a home mortgage, you have likely signed a limited POA to allow the dealership or title agency to conduct some of the transaction on your behalf. In an estate planning setting, attorneys often discuss a Durable Financial Power of Attorney and a Springing Durable Power of Attorney for Healthcare. While the names are similar, the purpose and function of each is very different.
Financial Powers of Attorney
A Financial POA allows someone else to execute financial transactions for you on your behalf, and in your name. It allows the person you designate to perform certain acts, or powers, as if that person were you. The types of powers you can grant to someone else are defined under Ohio law, the Ohio Revised Code (ORC). Other powers are only available if specifically granted in the document itself. For example, an agent cannot name or change beneficiaries on your financial accounts or insurance policies unless the POA document very specifically states that you grant that power. General grants such as “my agent may do anything I may do myself,” is not enough to grant the power to add, name, or change beneficiaries. You may also choose what powers you want to grant your agent, and which ones you do not. Perhaps you want your agent to deposit checks for you, cash checks written out to you (including endorsing the checks for you) or write checks from your account, but you do not want that person to be able to open accounts at a bank for you. You can specify in the scope of the powers you wish to grant, and the limitations on that power. An agent or attorney-in-fact may ONLY use your assets for your benefit (with some exceptions if you grant them), and must act in a fiduciary capacity. That means the agent has a legal duty to do what is best for you: not for the benefit of him or herself.
A General Durable Power of Attorney says a lot of what it is in the name. General means there are multiple powers available to the agent for general purposes. This is contracted by a limited power of attorney which grants limited powers for very limited purposes. Durable means the powers granted continue even if you become incompetent or incapacitated. Your agent can still manage your affairs for you even if you are unconscious for an extended period of time, or otherwise unable to make your own financial decisions. It is possible to limit this and make the POA void or inactive if you are deemed incompetent or incapacitated, meaning your agent cannot use any of the powers you granted. A power of attorney ends at death. Your agent cannot continue to act on your behalf if they know you have died.
Usually, a POA is one of two types based on when the agent can start using the powers. A POA may be effective immediately upon your signature (in front of witnesses, or a notary), or when you become incompetent or incapacitated. If your agent can only exercise the powers you grant when you cannot exercise them yourself, the POA is called Springing. It helps to think in terms of the POA springing into action when you cannot take action yourself.
Springing Durable Power of Attorney for Healthcare
Where a Financial Power of Attorney can be crafted in any number of ways, a Healthcare POA is far more limited in the way it can be constructed. Per Ohio Law, the Healthcare POA must be Springing. It will only take effect when you are unable to make your own healthcare decisions as determined by your attending physician. It allows the person you designate to make health care decisions for you, and have access to your medical information. You can designate any competent adult as your agent under a Healthcare POA. Your agent does have some restrictions. The agent may not deny or withdraw your life-sustaining treatment unless you are in a terminal or permanently unconscious state. Your agent may not deny your nutrition or hydration unless you are in a permanently unconscious state. Ohio law also has other limitations including what action your agent may take if you are pregnant. Your attending physician determines if you are in a terminal or permanently unconscious state under Ohio law. It is important to note that if you want your physician to withdraw or withhold life-sustaining treatment, and you are not sure your Healthcare POA agent will do so, you should consider a Living Will, which will take the decision out of your agent’s hands while leaving the other powers intact.
So Why Use a Financial or Healthcare POA?
Often, people who execute a Financial POA do so for convenience. It allows someone else who is more knowledgeable, capable, or simply more available to act on your behalf. Elderly clients may want to consider a Financial POA so someone can take care of financial affairs in the case of emergencies, or diminished capacity over time. Usually, when one does become incapacitated or incompetent, executing a POA of any type is no longer an option. It is important to think ahead. People who execute a Healthcare POA recognize that a medical emergency may happen at any time. From car crashes, to heart attacks, to complications during outpatient surgery, clients want to know who is going to take care of them when they cannot. It also takes away the uncertainty for multiple family members who may not agree on what to do in a medical emergency by informing them on who should be given the say-so.
The information contained in this blog is general in nature and should not be viewed, and is not intended by the author to be viewed, as legal advice. For specific legal advice, please discuss your situation with a qualified attorney.