One of the most important and sometimes confusing elements of estate planning is the Power of Attorney. These legal documents allow you to name someone who will be given the legal authority to make decisions on your behalf should you become incapacitated. There are different types of Powers of Attorney and while each state has its own laws and compliance guidelines, we explore Ohio’s distinctions in this article.
The basis is simple: you (the principal) determine a number of elements that will define your Power of Attorney. You can create as specific a document as you wish and you can have more than one. For instance, you can name one person in a Medical Power of Attorney (sometimes referred to as a Healthcare Directive) and another person whom you trust to make your financial decisions, known as a Financial Power of Attorney. The person or people you choose will be required to memorialize decisions, changes, money spent, etc., so it’s crucial you choose wisely.
The Durable Power of Attorney
You have the option of limiting the role of each Power of Attorney. For instance, you can create a Living Will which will outline your wishes should you become terminally ill or are nearing death. Your Medical Power of Attorney will work to ensure your wishes are respected, per your Living Will. He or she has the authority to ensure nothing more and nothing less than what’s specified in the Living Will is done on your behalf.
From a financial perspective, your Financial Power of Attorney will have the responsibility of paying bills, filing taxes, paying insurance premiums, investing money and managing accounts, including checking and savings accounts as well as retirement accounts. Just as a Living Will can define the parameters of a Healthcare Directive, a Revocable Living Trust can provide the same protections that your Power of Attorney must commit to. It’s not mandatory, but for some, it’s an additional layer of protection. The Trust will provide the foundation, built on your wishes, and your Power of Attorney will oversee the management.
HIPAA and Other Third Parties
Another reason the Powers of Attorney are so important come down to the third party legalities. The new HIPAA laws are ironclad and significantly limit medical professionals from even acknowledging a patient is in their facility. The Power of Attorney is the one who won’t run into those obstacles and will be able to speak with doctors and nurses while also providing your family, if you wish, updates.
On the other hand, a Financial Power of Attorney gives banks, credit card companies and other businesses permission to speak with the person you’ve chosen so that your finances are properly covered. Without it, these companies won’t reveal anything, even if it jeopardizes your assets or credit rating or even if it means your electricity will be disconnected for nonpayment. They’re simply prohibited from doing so.
If there are any disadvantages to this occurs when the documents may be a few years old. Because human nature is the one common denominator, companies are hesitant in honoring a Power of Attorney from 1981, especially if it’s an ex-wife or ex-husband who’s presenting it and demanding access to your bank accounts. Your estate planning lawyer can help you keep those important documents current so that banks, insurance companies and other businesses can have better confidence in accepting them.
Creating a Power of Attorney in Cincinnati
Remember that this is really just the tip of the proverbial iceberg. There are many other dynamics involved, but they’re typically specific to each client’s needs. We invite you to contact us today to learn more about these important estate planning tools and why they can better protect you and your family.
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