Defining Durable Financial Power of Attorney & Other Important Terms
What is a Durable Financial Power of Attorney? What about an advance healthcare directive? What about a living will?
When it comes to legal and financial planning, it’s easy to feel overwhelmed. Every specialized area of life has its own vocabulary. Estate planning and elder law have their own lingo, too. Without understanding these key terms, it’s easy to get frustrated trying to properly protect yourself and those you care about.
The shortest path to peace of mind when planning is knowledge. The simple act of understanding the words involved, will inoculate you from getting lost or overwhelmed. Continue reading to better understand three cornerstone estate planning documents:
- Powers of Attorney,
- Durable Powers of Attorney, and
- Living Wills
The Differences Between a Texas Durable Power of Attorney, Medical Power of Attorney and Living Will.
What is a Power of Attorney?
Before we can discuss the different types of Power of Attorney (POA), it’s important to understand exactly what a POA is supposed to do.
A Power Of Attorney is a legal document that gives one person (the attorney-in-fact) the right to act and/or make decisions on behalf of another person (the Principal). What specific actions or decisions can be made by the attorney-in-fact vary according to the specific contents of the written Power of Attorney. A general or uniform Power of Attorney is what you’ll use when the Principal wishes the attorney-in-fact to have complete legal control over their affairs.
What is a Texas Durable Power of Attorney?
A Durable Power Of Attorney, short for Power Of Attorney with Durable Provisions, is required when the attorney-in-fact wishes to continue acting on behalf of the Principal even after the Principal suffers a disability or legal incapacity. For example, if your parent or loved one suffers from a cognitive or mental issue but has prepared a Durable Power Of Attorney, the person they designate can serve as that person’s surrogate decision-maker no matter how their illness progresses.
Without the additional durability language the authority in the document ends with the Principal’s loss of cognition.
Types of Power of Attorney
Now that you know the difference between a non-durable and Durable POA, let’s quickly run through the some unique Powers of Attorney forms you might request from your elder law attorney. Sometimes, a general POA isn’t the right solution, so these are some alternatives to consider:
Medical Power of Attorney: Otherwise known as a Health Care Power Of Attorney, this is a limited POA that explicitly provides the attorney-in-fact with the authority to handle medical and healthcare-related decisions in the event that you no longer can make those decisions for yourself.
Financial Durable Power of Attorney: Much like the Medical POA, this is a limited Durable Power Of Attorney that only gives the agent legal power to make decisions over the Principal’s financial affairs.
These are the two most common “limited” Powers of Attorney, but hopefully you are starting to understand how to decipher what each type might mean. Last but not least, we have a living will.
What is a Living Will?
A living will, which is not the same thing as a living trust, is what’s called an “advance healthcare directive”. In plain English, it’s a legal document that officially describes you or your loved one’s life-prolonging healthcare wishes. For example, if you have a debilitating stroke and don’t wish to be kept alive on life support, a living will is how you make that clear to your family and healthcare providers. A living will cannot become effective until the Principal has become incapacitated.
Putting the Pieces Together
The goal of this article is to make it easier to talk to your Houston Elder Law lawyer about proper estate planning. By knowing the difference between general and limited Powers of Attorney, making an informed decision with your parents or you and your spouse should be much easier.
If you have further questions about living wills, Durable Financial Powers of Attorney or anything else related to estate planning, call (713) 970-1300. I’d be happy to help you and your family plan ahead.