You may think that only the elderly should be concerned with planning for incapacity; however, this type of planning is critical for everyone. The purpose of planning for incapacity is to provide for a trusted agent to act on your behalf in the event you are unable to act for yourself with respect to your property and health care decisions. For example, if you are unable to act for yourself, who will take care of your children? Pay your bills? Discuss with a doctor a planned course of medical action?
In the absence of a plan for this scenario, state statutes will dictate in many cases who will act on your behalf and the hierarchy directed by law may put in place someone to act on your behalf that you would not prefer and may even lead to a court-appointed guardian or conservator. Many legal documents can assist clients in planning for incapacity in a manner that follows the incapacitated individual’s wishes. Two of the most common documents used in nearly every estate plan are the durable power of attorney and the advanced health care directive.
- Durable power of attorney. A durable power of attorney (DPOA) for property authorizes an attorney-in-fact, or agent, to act in behalf of the principal. The principal is the person signing the DPOA that names the agent and details the powers granted to the agent, which may generally be as broad or restrictive as the principal desires. The DPOA is durable because the agent’s power does not terminate upon the principal’s incapacitation. DPOAs may be effective immediately upon the principal signing the DPOA, or it may be springing, in which case the agent’s power does not become effective until the principal is incapacitated as defined in the DPOA itself.
- Advanced health care directive. An advanced health care directive (AHCD) is a document that typically combines a power of attorney for health care and an individual instruction (similar to a living will). A power of attorney for health care is similar to a DPOA but as you might imagine, deals with health care decisions. Health care decisions may consist of selecting and discharging healthcare providers, approval or disapproval of tests and procedures, and directions regarding providing or withholding certain care. Like a DPOA, the the power of attorney for health care may generally grant broad or restricted powers based on the desire of the principal. An individual instruction allows the individual to provide direction to the individual’s agent and health care providers in specific scenarios; for example, decisions related to end of life care and whether or not the individual desires to be kept alive by artificial nutrition and hydration.