A power of attorney is a legal document granting powers to someone you trust to act in your place when you are not available or no longer capable of doing so. This person is called an agent or attorney in fact. Broadly speaking, there are two types of power of attorney: financial powers of attorney and medical powers of attorney. An agent appointed under a financial power attorney acts on your behalf with respect to financial matters. A medical power of attorney allows you to select the person who will make medical and care decisions for you when you lack the ability to give informed consent.
Many people mistakenly believe that there is no need to create powers of attorney if they are married. They may believe that they are protected if they and their spouse are joint owners of property, or that their spouse will automatically be able to make medical and financial decisions for them when they cannot. However, this is not always the case.
With respect to financial issues, a spouse may be able to access and use funds held in jointly owned accounts to a certain extent, such as to pay bills. However, their rights are significantly limited in terms of selling or mortgaging property spouses own together. For instance, one spouse could not sell or refinance a home they own as joint tenants, nor sell vehicles owned jointly. Further, one spouse cannot access, control, or sell assets owned solely by the other spouse. This can cause significant issues when one spouse is incapacitated, and the other spouse needs maximum flexibility in order to provide for the care of both.
Without a financial power of attorney in place, your spouse or other family members may need to seek judicial appointment of a conservator in order to manage your finances when you are incapacitated.
With respect to medical decisions, if an individual lacks the decisional capacity to provide informed consent to or refusal of medical treatment, and a medical power of attorney has not been implemented, physicians will look to a “proxy decision-maker” to make such decisions. The proxy may or may not be your spouse. In these situations, your spouse, family members and close friends (the “interested persons”) are supposed to come to a consensus about which of them should be selected as proxy decision-maker. If they cannot come to an agreement, or if any of the interested persons disagrees with the decision or the selection of proxy-decision maker, any of the interested persons make seek judicial appointment of a guardian. Thereafter, your court appointed guardian would make medical decisions on your behalf. In limited circumstances, such as when no interested persons can be found or none are willing to serve as proxy, your physician may designate another willing physician to make health care treatment decisions on your behalf.
Utilizing a medical power of attorney offers several advantages over relying on a proxy decision-maker. First and foremost, a medical power of attorney allows you to select the person(s) you trust the most to make medical decisions for you. Your selection of an agent greatly reduces the likelihood of familial disputes which unfortunately do arise in the context of selecting a proxy when you already lack decisional capacity. Further, a robust medical power of attorney may also include significant guidance to your agent as to what your preferences are with respect to medical treatment, as well as the overarching principles your agent should bear in mind when exercising their authority.
Powers of attorney are just two of the instruments which should form part of an estate plan. However, they are among the most important to ensure that your needs are properly met if you become incapacitated.
