Use a Power of Attorney and a Medical Directive to Appoint Someone You Trust to Act on Your Behalf

Many begin arranging their estate plans when they retire. But they should also arrange for what happens when they become unable to make decisions but are still living.

Dementia and other afflictions leading to mental disabilities destroy our ability to act for ourselves - such as handling our financial and medical decisions. If you haven't formally assigned someone to make those decisions for you, someone else will - and may not make the kind of decisions you'd like.

But you can only choose someone to act for you when you're mentally competent. So, below, I discuss the type of powers of attorney you can assign to anyone to act for you.

When you assign a power of attorney to someone, he can then act on your behalf. That person does not have to be a lawyer. It can be anyone who's of legal age and who you trust to handle decisions as you would want them handled.

Most often, you'll need to validate this assignment with a signed - and possibly notarized - written document since hospitals, banks and the IRS generally want proof when someone else is acting for you.

According to the wording of your assignment, you can limit the area and time for which you assign the power of attorney. You may assign one person a power of attorney to handle your financial affairs, and another person to handle your heath-related decisions.

You can assign someone to begin acting for you under his power of attorney at any time. But since we're concerned with the circumstance of you becoming mentally incompetent to act, let's review some different types of powers of attorney you can choose from.

A Limited Power of Attorney means someone you choose can act for you to handle some restricted area of your life such as paying bills, handling financial decision, or investing. You'd have to specify those areas clearly.

A General Power of Attorney is not restricted to any single area. So whoever you chose can act for you in all respects.

Any power of attorney will cease when you become mentally incompetent unless you specify otherwise. Two types of powers of attorney remain in effect under your incompetence - which is the point of this article.

A Durable Power of Attorney keeps your assignment valid even when you become incapacitated. So be sure to make your assignment 'durable' if that's your intention.

A Springing Power of Attorney comes into effect only when you become incapacitated - and not before. Of course, for this power of attorney to come into effect some 'proof' that you are sufficiently incapacitated will be required. This may require a doctor's letter and some court action if necessary.

It might happen that someone you to whom you assign a power of attorney may be unscrupulous and will waste or steal your assets. This can happen if you're elderly and slowing down about things. So, if you're unsure of how someone will handle your affairs, you may want to grant him power of attorney while you're in good mental health to see how he performs. That's not a bad idea, in any case, since you can discuss with him what you think of his decisions to help frame his future ones.

Unless you make a power of attorney irrevocable, you can revoke it simply be telling that person his assignment is revoked. But be sure to notify others that the power was revoked, too.

Health Care-Related Power of Attorney When you become incapacitated, you may want some one to make health-related decisions for you. You do this with a Medical Durable Power of Attorney. This is also called a Health Care Proxy. It takes effect only when you require medical treatment and your physician determines that you can't communicate your wishes concerning treatment.

Again, you must execute this document when you're competent. Your health care proxy ensures your instructions will be carried out. Some states differ on what decisions can be included in a health care proxy. So check the rules in your state.

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