Tom and Jane have been married for 50 years. They have enjoyed a happy marriage including the joys of raising their son, Dennis. Through the years, Jane developed Alzheimer’s and Tom became her caregiver. Suddenly, Tom had a stroke and was in the hospital on life support. Their son, Dennis, knows that his father’s wish was to be kept off life support but he is powerless to do anything. In the meantime, a court declares Jane incompetent and appoints someone to look over her and her husband’s financial affairs. While this scenario is fictitious, it may become an unpleasant reality for someone who doesn’t have the proper legal documents prepared before they become impaired. If you have considered naming a trusted family member or friend as the person to make your decisions during a crisis, make sure to meet with a professional who can help you put the proper documents in place. To get an idea of just how these documents would benefit you, consider the following commonly asked questions. Question: What is a durable power-of-attorney? Answer: A power-of-attorney is a legal document that names another person as an agent to make decisions on your behalf. Making the document durable means that the power-of-attorney would continue if you become incompetent or disabled. While a power-of-attorney is a simple document, it is also a powerful one. That’s why it is important that you completely trust the individual you select as your agent. Question: Are there different types of powers-of-attorney? Answer: Yes. There are several powers-of-attorney – each with different purposes. A general power-of-attorney gives your agent authorization to make financial decisions on your behalf. A health care power-of-attorney allows your trusted representative to make medical decisions for you if you are mentally incompetent or physically incapacitated. Finally, a limited power-of-attorney is used to execute a specific task in a designated timeframe. For example, if you are travelling, your agent could represent you to close the purchase or sale of property. Question: What happens if I don’t have a power-of-attorney and I can’t make decisions on my own? Answer: As in the example above, if serious illness or injury leaves you unable to tend to your affairs and you haven’t executed a general power-of-attorney, a court may declare you incompetent and appoint a guardian to make decisions for you. The court process can be time-consuming and expensive. In the event of a medical crisis without a health care power-of-attorney, hospital personnel will sustain life support to prevent your death even if there is no hope for your recovery. If your family members know that these measures are against your wishes, they won’t be allowed to overrule the decisions made by medical staff once extraordinary measures are taken. Question: I have a living will. Do I still need a health care power-of-attorney? Answer: While living wills provide guidance to your loved ones in carrying out your wishes, the power-of-attorney grants decision-making power. Even though these documents serve different purposes, they work hand-in-hand for your best interests. Living wills and health care powers-of-attorney are sometimes combined in a single form and some attorneys routinely prepare them at the time when regular wills are prepared. Question: Should I name my spouse as agent in my power-of-attorney? Answer: Most married couples name their spouse as their agent. However, if one partner suffers from declining health, it might make sense to reconsider this decision and appoint another trusted individual. As our fictitious example illustrates, a health crisis can arise without warning. Question: Can I revoke my power-of-attorney if I change my mind about the person I’ve appointed as agent? Answer: Yes. You can revoke a power-of-attorney at any time by destroying it yourself or by giving instructions to your attorney to destroy it. Question: Is it expensive to execute powers-of-attorney? Answer: The preparation of a power-of-attorney is usually among the most inexpensive services offered by attorneys. The cost may be especially small in relation to the potentially high court costs the documents could eliminate. As you plan your overall estate, don’t underestimate the “power” of a power-of-attorney. A qualified financial advisor can be a valuable resource as you make sure that all the financial affairs that make up your personal economy are in order. Then you and your family can sit back and enjoy the irreplaceable time you have together. This information is provided for informational purposes only. It is intended to be generic in nature and should not be applied or relied upon in any particular situation without the advice of your tax, legal and/or your financial advisor. The views expressed may not be suitable for every situation. American Express Financial Advisors Inc. Member NASD. American Express Company is separate from American Express Financial Advisors Inc. and is not a broker-dealer.
