Often, the estate planning conversation is all about money. We talk about transferring money and property from one generation to the next and how to save as much as possible. While all that money stuff is still true, there is an even more immediate aspect of estate planning that we have to talk about: what happens before you die, if you are injured, ill, or otherwise incapacitated?
Who Gets to Make the Decisions if You are Unable to Do So Yourself?
Have you ever asked yourself this question: who gets to make the decisions if you are unable to do so yourself? In this context, we are talking about all decisions: financial, medical, legal. Do you know? If you don’t have any documents in place authorizing certain people to make these decisions on your behalf, a court will end up appointing someone for you. What if the person the court chooses isn’t who you would choose yourself? What if the court lands on the right person, but you’ve never had a conversation with them about what you want them to do?
Ok, before we get ahead of ourselves, let’s back up a minute and do definitions. There are three main documents we are talking about when we talk about decision-making and incapacity:
● Power of Attorney – this is a legal document that allows you to appoint someone to make financial and legal decisions on your behalf.
● Advance Medical Directive – in this document, you are able to select a person who can make medical decisions on your behalf if you are unable to communicate your wishes to your healthcare providers.
● HIPAA Authorization – this short but incredibly important document acts as a release that allows your healthcare providers to discuss your private medical information with a particular person.
Without these three documents in place, your family members, friends, and significant other may not be able to participate in your medical care (they may not even be allowed to get the full story about your condition from a doctor) without court intervention. And what about your financial obligations? Let’s take a deeper dive into each of these three documents.
Let’s Take Things a Little Deeper with POAs
Imagine you are in a car accident and you are temporarily unable to communicate. While you are in the hospital recuperating, who will pay your rent? Who is entitled to access your business bank accounts to pay your employees? What about taxes? What about credit card payments? The list goes on and on.
POAs are used to solve these problems by authorizing a trusted individual to step in on your behalf if you ever need a financial and legal representative. There are two kinds of POAs: springing and durable. A springing POA comes into effect when you become incapacitated. A durable POA goes into effect as soon as it is signed. There are pros and cons to each.
A durable POA is always in effect, so it allows your appointed representative to take on your financial and legal duties immediately when you are injured or become ill. However, you would really only want to use this method if you trust your appointed individual implicitly. The fact that the POA goes into effect as soon as it is signed means that your representative could, in theory, actually take control of your finances or legal decisions even if you aren’t incapacitated.
That’s where a springing POA comes in. A springing POA only goes into effect when you become incapacitated, eliminating any risk that the person you choose would take over your decision-making without you needing them to do so. But, the challenge with springing POAs is that they don’t immediately go into effect. A court would need to determine that you were, in fact, incapacitated to make the springing POA effective.
Keep Your Loved Ones in the Loop with Medical Authorizations
Let’s continue with the same scenario as above: you are in a car accident and are temporarily unable to communicate. Your long-time boyfriend or girlfriend rushes to the hospital. They want to talk to the doctor. They want to know what’s going on. Maybe the doctors have a choice of treatments, and they need to know what you would prefer. Without an Advance Medical Directive and HIPAA Authorization, not only can your partner not share your wishes with your healthcare providers, he or she can’t even get an update about your condition.
Ok, so your partner goes to the court to get authorization to give input on your medical condition. But wait, you aren’t married, and there is someone else — say, a family member you aren’t particularly close to — who shows up and wants to be authorized instead. What’s going to happen? It’s hard to say, but you certainly won’t be able to give your input. That’s why an Advance Medical Directive is so important. It not only allows you to appoint a Healthcare Proxy who can make medical decisions on your behalf, it also allows you to state your preferences for care and end-of-life decisions right in the document.
Avoiding the Uncomfortable, Keep Your Documents Updated and Accessible
Even if you have completed these documents in the past, it’s important to update them regularly. Keep them in a place that is easy to access and make sure that trusted family members know where to find them. Maybe even send a copy to each of the individuals you appoint. Your documents do you no good if they can’t be found when they are needed. Similarly, if they are out of date, they may be worse than useless. You may no longer be close to, or even on good terms with, a person you previously appointed. You wouldn’t want a former spouse or an estranged relative taking priority over your current partner for medical decisions, right?
Get in Touch with the Experienced Attorneys at Brian M. Douglas & Associates to Get these Essential Documents in Place
So, what now? Give Brian M. Douglas & Associates a call to get these documents in place or update your old, outdated documents. We can talk about how to save yourself and your loved ones money, too. But let’s start with the most important stuff.