For as long as humans have been on planet Earth, we’ve done our level best to try to predict what the future might hold – using everything from ancient divination techniques to modern computer simulations. Despite our best efforts, the future has always remained unknowable and just beyond the reach of our understanding – and that’s why we try so hard to plan for the unknown. That should be true in matters related to our health and finances too, since we can’t even predict how healthy we’ll be tomorrow. Fortunately, the power of attorney can serve as a shield against that uncertain future.
How Power of Attorney Works
Most adults have heard of power of attorney, but few understand what it actually does. In Michigan, as in other jurisdictions, the power of attorney is a tool that is used to empower one adult to make decisions and take actions that affect another adult’s finances or health care. It is important to recognize, of course, that these different types of decision-making each require a different power of attorney.
- Durable Power of Attorney for Finances: This document empowers another adult to serve as your agent-in-fact on matters related to your finances. He or she will have the authority to act on your behalf in all financial areas designated by you.
- Durable Power of Attorney for Health Care: This document is often found as part of an Advance Directive packet, and is typically accompanied by a living will form. It enables you to designate someone to serve as your Patient Advocate, and empower that person to make medical decisions on your behalf.
Why it Matters
Everyone in Michigan should have these basic power of attorney documents. Even if you don’t believe that you have an estate large enough to justify comprehensive estate planning strategies, you should still recognize that you need at least a will and these essential power of attorney documents to protect yourself and your loved ones against possible periods of incapacity. And make no mistake: incapacitation is something that can happen to any of us at any time.
Millions of car accidents occur each and every year, with injuries ranging from minor bumps and bruises to traumatic brain injury and death. If you were to be one of those severely injured accident victims and suddenly lost the ability to make your own decisions, do you have a plan in place to protect your interests and your family? If you suddenly contracted an illness that left you in a coma or otherwise nonresponsive, would there be someone legally empowered to step in and act on your behalf? If you answered “no” to either of those questions, then you need to create a plan now that will ensure continuity in your financial and medical decision-making in the event that something happens to you.
How it Can Shield You Against Uncertainty
You might wonder how power of attorney could possibly be of benefit to you and your loved ones if you lose decision-making capacity. The answer to that question can best be understood by examining the positive benefits provided by power of attorney and contrasting them with negative consequences that can result from a failure to properly plan ahead.
- Power of attorney provides a seamless transfer of decision-making authority when you suffer an incapacitating injury or illness. That ensures that your designated agent-in-fact and patient advocate have the power they need to make crucial financial and medical decisions on your behalf. Without that seamless authority transfer, your family would have to ask a judge to appoint a guardian to look after your best interests.
- With those power of attorney documents, your designated representatives can make important financial decisions and – more importantly – carry out critical actions related to your finances, and determine the type of care that you receive. In both instances, the decisions that are made and the power exercised on your behalf will have been decided at the time you created the power of attorney documents. As a result, your actual intentions will have been made known prior to your incapacitation. That can remove any guesswork from the decision-making process.
- In the absence of a clear plan, any court-appointed guardian will have to use his or her best judgment to determine how your finances and health care should be managed. That can lead to results that could be dramatically different than the outcome that you would choose for yourself. Moreover, the guardianship itself might provoke legal challenges from family members opposed to the decisions being made by your guardian.
- Guardianship can also be a costly affair. Since the costs associated with court proceedings, attorney’s fees, and guardian compensation are paid for using your assets, a lengthy period of guardianship could severely tax your financial resources. If your family relies on your assets for sustenance, a long and drawn out period of guardianship could cause them undue hardship. You can avoid those expenses by planning ahead and designating the representatives you need to look after your interests when incapacity strikes.
Protect Your Loved Ones Now!
Obviously, there is no denying that power of attorney should play a vital role in your estate planning efforts. Without this protection, your financial and medical interests are at risk of being misrepresented, and your entire family could be placed in financial jeopardy as your estate is slowly consumed by guardianship expenses. Once you decide to remedy the situation, however, it is important to get the kind of help you need to ensure that your planning is done right.
At Biddinger & Estelle, we are committed to ensuring that our clients receive the best estate planning advice and assistance available anywhere in the state of Michigan. We can help you develop the power of attorney documents you need to accomplish your planning goals, with a sensible approach that takes into consideration your own unique circumstances and needs. To find out more about how power of attorney can benefit you and your loved ones, contact us at our website or call us today at (989) 872-5601.
- When Does Someone Need Long-Term Care? - May 12, 2020
- Special Estate Planning Issues When You Have a Large Estate - December 16, 2017
- Five Questions to Help You Determine if Your Assets are at Risk - December 12, 2017