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How are financial and medical powers of attorney different?

On Behalf of | Apr 29, 2024 | Estate Planning

Estate plans involve more than just preparing for your death. Someday, you may suffer a serious disability or incapacitation, or you become too infirm to make life decisions for yourself. This is why many people name someone to be their power of attorney.

Powers of attorney cover different areas of authority. You should consider who may be your financial POA and your medical POA.

Financial power of attorney

A financial POA authorizes someone, called an agent or attorney-in-fact, to manage your finances and property. This person can pay bills, manage investments, file taxes and conduct banking transactions for you. The powers you grant depend on the specifics outlined in your POA document.

You maintain control of decision-making unless you become incapacitated. At that point, your designated agent takes over your financial matters according to the terms you set. You can make this POA effective immediately or only upon your incapacitation.

Medical power of attorney

A medical POA, also known as a healthcare proxy, names someone to make medical decisions on your behalf if you cannot communicate them yourself. This person ensures healthcare professionals follow your wishes regarding treatment options, hospitalization and end-of-life care.

Discussing your values and treatment preferences with your healthcare agent helps them advocate for you appropriately. The document goes into effect when you lack the capacity to make your own medical decisions due to reasons that can include unconsciousness, dementia or mental incapacitation.

Combining or separating POAs

The main distinction between these POAs lies in the areas of authority. A financial power of attorney covers economic and property matters, while a medical power focuses solely on healthcare decisions.

However, these legal instruments can work in tandem. The same person may serve both roles, effectively combining two POAs into one. Still, if you wish to keep them separate so that no one person has too much power over your affairs, you retain the option to appoint distinct individuals.

Protecting your interests through powers of attorney requires understanding their purposes. Carefully consider who you entrust with such weighty obligations.