Durable Power of Attorney for Healthcare and Financial Affairs 

What is a Power of Attorney?
A Power of Attorney is a written document signed with the appropri­ate formalities that authoriz­es a person to act on your behalf.  The person so empowered is variously termed "attorney-in-fact", "agent", or "proxy".  The person granting the power is the "princi­pal".

How much power can be delegated to an attorney-in-fact?
Practically anything you can do, your attorney-in-fact can do for you.  There are some excep­tions.  For instance, an attorney-in-fact cannot sign a Will, vote or get married for you, nor can he engage in an illegal act on your behalf. 

On the other hand, there is no requirement that a third party deal with your attor­ney-in-fact.  Any power of attorney is useful only to the extent the agent is able to persuade third persons to permit him to transact business on behalf of the principal.  For example, there is no require­ment that a bank honor the request of an attor­ney-in-fact to disburse funds or transfer assets, regard­less of how formal, impressive, or broadly worded the power of attorney docu­ment is.  The usual basis for such a refusal is:  "I'm sorry Mr. Attorney, but your power of attorney doesn't include the power to ...".  For this reason, most power of attorney forms contain a great deal of de­tail, some of which may be relevant and some not.  The reason is that the inclu­sion of a specific power (for example "I give my attorney-in-fact the power to sell my home and buy a condominium for my use") will go a long way towards reassuring the third party that the agent or attorney-in-fact is operating within the bounds of authority that have been delegated to him.  I have never had a third party refuse to honor a power of attorney when the specific act was therein authorized, but there is no legal compulsion -- a third party can refuse for no reason at all and be within his rights. 

Similar­ly, the IRS (in specifying what needs to be included in a power of attorney authoriz­ing an attorney-in-fact to deal with them with regard to a taxpayer's tax returns or audit) will require not only the name of the principal but also his social security number, the name, address and telephone number of the agent, the specific tax return forms to be discussed, and the tax years involved.  Thus, if tax matters are to be included in a power of attorney form and there are no tax problems presently in existence, the paragraph dealing with tax matters will be very broad. 

What is a "durable" power of attorney?
All fifty states now have statutory authorization for a "durable" power of attorney.  Prior to such statutory enactment, a power of attorney became ineffective when the Principal became incompe­tent.  From an estate planning point of view, this is exactly the time when a power of attorney is most needed.  Therefore, statutory changes to the common law rule were enacted in all states so that now the words "this power of attorney shall not be affected by my subsequent disability or incapacity" or words of similar import will result in the continued effectiveness of the document.  Death, of course, terminates the agency relationship.

Should the power of attorney for health care and financial affairs be com­bined?
There is no legal reason why both objectives cannot be contained in a single document.  However, there appears to be a good practical reason, in that the individual who handles your financial affairs may not be the person that you want to make your health care deci­sions.  That being the case, the documents are usually prepared separately so that it is possible to name different individuals to handle the separate tasks.

Should you have a living will in addition to a durable power of attorney for health care?
The living will is a narrowly focused document.  It comes into play only when the individual is in a "terminal" situation and the pros­pect for recovery is zero.  The durable power of attorney for health care on the other hand is effective for a much broader range of situa­tions, only one of which is where the individual is termi­nally ill.  For instance, a severe case of Alzheimer's disease where the intellectual capacity is gone but the body is still healthy would be well covered by a durable power of attorney for health care but a living will would be ineffective. 

Why is it necessary to have a durable power of attorney for financial affairs when one has a revocable trust?
A revocable trust is a vehicle designed to manage assets while one is living.  As long as the settlor is competent, it is no problem for him to transfer assets to a trust.  If, however, the settlor is incompetent and it becomes necessary to transfer property to the revocable trust, there must be a mechanism by which the transfer can be made.  That mechanism is a power of attorney.  A power of attorney should be executed even though the settlor has transferred all of his known assets to the revocable trust.  An unforeseen event can cause problems which might have been avoided if there is an attorney-in-fact available to act.  If, for in­stance, the set­tlor has become incompe­tent, and then a long-lost relative dies and wills stock to him, the attorney-in-fact can transfer the stock to the trust.

The following is a partial list of powers one should consider giving to an attorney-in-fact for financial affairs:
            a.  Power to sell and to dispose of the proceeds of the sale

            b.  Power to buy -- securities, a condo, whatever

            c.  Borrow money in order to buy

            d.  Use credit cards
            e.  Repay loans

            f.  Power to invest

            g.  Open brokerage accounts

            h.  Manage agency accounts

            i.  Employ consultants

            j.  Power to manage real property, grant mortgages, deeds of trust, and so forth

            k.  Power to manage personal property

            l.  Power to grant a security interest

            m.  Power to operate a business or a partnership

            n.  Power to exercise securities rights and vote at shareholders meetings

            o.  Power to lend to a corporation or guarantee its loans

            p.  Power to compromise or discharge

            q.  Power to exercise elective share rights

            r.  Powers with respect to employment benefits or borrow from a plan or sell assets                       to a plan or to change a plan beneficiary

            s.  Powers with respect to bank accounts, safe deposit boxes, and so forth

            t.  Powers with respect to legal actions

            u.  Power to borrow money including insurance policy loans     

            v.  Power to create a trust and to fund it

            w.  Power to withdraw from a trust

            x.  Power to disclaim, renounce, release, or abandon proper­ty interests.

            y.  Powers with respect to insurance, change of beneficiaries, or to cancel insur­ance

            z.  Powers with respect to taxes

            aa. Powers to make gifts and limitations thereon.          

            ab. Power to release medical records
 

The following is a partial list of powers one should consider giving to an agent for health care:
            a)  Give, withhold, or withdraw, consent to specific medical or surgical measures with reference to the principal's condi­tion, prog­nosis, and known wishes;

            b)  Authorize appropriate end of life care including pain-relieving procedures,

            c)  To grant releases to medical personnel,

            d)  Employ and dis­charge medical personnel,

            e)  Have access to and disclose medical records and other personal informa­tion,

            f)  Expend funds needed to carry out medical treat­ment,

            g)  Communicate your previous treatment deci­sions,

            h)  Resort to court action, if necessary, to obtain authorization regarding treatment                   decisions.