VOL. 132 | NO. 258 | Friday, December 29, 2017
Rays of Wisdom
Dana and Ray Brandon
Powers of Attorney: A Big Part of the Plan
Ray and Dana Brandon
Ray’s Take: There are multiple moving parts to a good estate plan and various powers of attorney are an important element. Power of attorney basically gives someone else the right to act on your behalf; there are two types of powers of attorney.
A medical power of attorney names someone to make medical decisions for you if you’re unable to make them yourself. It can be very broad and general powers or very specific powers they may have.
A financial power of attorney allows someone to manage your financial affairs. You can limit it to certain functions or make it all-encompassing. This is different than your power of attorney for personal care; you need to have them both in your financial planning process.
Spouses just assume they will be able to act for each other if such trouble strikes, but that’s not necessarily true. For example, you would not be able to make any financial decisions relating to investments or retirement accounts held solely in your spouse’s name without a power of attorney.
When it comes to health care decisions, under the Health Insurance Portability and Accountability Act (HIPAA), health care providers can only talk with and release information to authorized representatives.
Once you’ve decided to execute these powers of attorney, sit down with the person to whom you are giving the authority. It can be a difficult conversation, but it’s crucial that this person understands your wishes and agrees to act on your behalf.
In many cases they can and should be different people. Not everyone is good in financial matters. Not everyone can keep a cool head in the face of life-and-death decisions at the hospital. Having this conversation in advance can spare your family from having to make difficult decisions on your behalf – often on short notice and in a state of emotional distress.
The potential cost of not having these documents in your plan could be very high in the event you become incapacitated.
Dana’s Take: At age 18, your child is an adult in the eyes of the law. And that means you no longer automatically have access to their medical or financial information or have the right to make medical decisions on their behalf. Increasingly protective privacy rules, while they are beneficial in the big picture, limit your powers as a parent.
For example, if your child goes to college in another town, or even out of state, and a medical emergency arises, most likely the medical staff will not discuss your child’s condition with you. When your child turns 18, make arrangements to have him/her execute both of these powers of attorney. Hopefully you will never need it, but better to have it in place just in case.
Ray Brandon, CEO of Brandon Financial Planning, and his wife, Dana, a licensed clinical social worker, can be reached at brandonplanning.com.