While most of us are aware of the importance of having a Will to take care of our finances and assets after death, many people fail to see the importance of drawing up a document of power-of-attorney. Should you become disabled, or mentally incapacitated, or even suffer a long-term illness or injury and be unable to manage your own financial affairs, someone needs to be in a position to pay your bills
In appointing a power-of-attorney, there are a few things that you should know.
1. Limited Power-Of-Attorney — gives an individual rights over certain of your investments, such as your current cheque account. This can normally be done by signing a simple form with your bankers.
2. Complete or General Power-Of-Attorney — gives the individual the right to make decisions regarding all of your assets (and liabilities).
Remember that a Power-Of-Attorney takes effect immediately, the moment it has been signed! So even if your are still in good health and mentally alert, the individual has access to all your money! For that reason you need to be absolutely sure of their trustworthiness, or appoint a joint power-of-attorney. There are many tales of trusted friends drawing huge amounts from an account whilst their friend languished in hospital! The document remains valid until it is formally cancelled — remember this if you have appointed someone to take care of your affairs while you go on a world cruise, and make a note to cancel it on your return.
Alternatively, you can have a delayed or durable Power-Of-Attorney document drawn up, in which case it will only come into effect at such time as you are disabled or mentally incapable. However, this can cause delays as the various institutions may require specialist confirmation that this is indeed the case i.e. medical reports and testimonies. For health-related decisions, you will need to have a separate healthcare power of attorney drawn up, which will enable the person or people to make decisions regarding ongoing medical care, etc.
Read more on this topic:
What’s the difference between a Living Will and a Healthcare Power of Attorney?
Both are documents that allow you to give instructions about the type of health care you want to receive, including who should oversee your treatment if you are unable to speak for yourself. Here’s a brief overview to help you understand the basic types of health care directives.
Health Care Power Of Attorney
This is a general form that names a Health Care Representative and grants authority to make limited health care decisions for you including, if you wish, the decision to refuse intravenous feeding or turn off the respirator if you’re brain-dead.