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Legal Update

Powers of Attorney for Health Care and Property

12 March 2007
Mayer Brown Legal Update
Powers of Attorney for Health Care and Property

If you become incapacitated and are unable to make decisions for yourself regarding your finances or health care, who would make those decisions for you? A family member? A friend? Maybe – if court proceedings determine they are proper choices for you. Why take a chance? Take the opportunity now to determine who should be making decisions on your behalf through a power of attorney. A power of attorney enables you to appoint who will manage your finances and health care decisions in the event you become unable to do so yourself. A power of attorney will also help you and your family avoid the time and expense of a court proceeding to determine who will make decisions for you when you are incapacitated.

Statutory Powers of Attorney

A power of attorney is a written instrument that authorizes another person to act on your behalf. This person is called your “agent” or your “attorney-in-fact.” There are two kinds of powers of attorney – those that allow your agent to manage your property and those that allow your agent to make your health care decisions. Your state may have specific forms for each. A standard power of attorney for property will grant your agent the authority to handle matters such as real estate transactions, banking, stocks and bonds, insurance, tax issues, loans, and business operations. A power of attorney for health care permits an agent to make decisions concerning your medical treatment. You can also give your agent the power to decide whether to withhold life-prolonging treatment or donate your organs. You can draft your power of attorney to fit your particular needs and desires.

Flexibility

When you create a power of attorney, you still have the authority to make your own decisions. Your power of attorney simply allows your agent to make decisions for you if you cannot make them yourself. Your power of attorney can grant your agent broad powers or limit your agent’s authority to only a few, select matters. You can revoke your power of attorney at any time.
When a Power of Attorney Becomes Effective
Your power of attorney becomes effective at the time that you choose. You can decide to have your power of attorney become effective as soon as you sign it. Alternatively, you can choose to have your power of attorney become effective only upon the occurrence of a specific event, such as when your doctor determines that you are no longer capable of making your own decisions. If your power of attorney allows your agent to make decisions for you when you are incapacitated, the power of attorney is called a “durable power of attorney.”

Agents

Your agent’s decisions are legally binding on you and so it is critical to select a person who is trustworthy. Your agent under your power of attorney for property should be someone responsible and knowledgeable about finances or someone who will seek professional financial advice if necessary. Your agent should also be someone who is willing to put in the necessary time and effort to manage your affairs. Your agent has a duty to act in your best interests at all times.

You have the freedom to list different agents on different powers of attorney. If, for example, you think one person would be an ideal agent to manage your finances, but think that another person would be a better agent to make your health care decisions, you can designate the first person on your power of attorney for property and the other person on your power of attorney for health care. You may also wish to name successor agents in the event that your first choice of agent is unable or unwilling to act on your behalf. Many people choose to name a spouse, family member or close friend as agent.

Conclusion

Powers of attorney can ensure that your financial and health care decisions stay in the hands of the people you trust most, while avoiding the expense of a court guardianship proceeding.

Authors

  • Daniel W. Luther
    T +1 312 701 7137
  • Donna E. Morgan
    T +1 312 701 7138
  • James A. Casey
    T +1 312 701 8670
  • Richard A. Campbell
    T +1 312 701 7111
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