This was originally published on Monday, September 28, 2015, in the Pacific Daily News. Click here to subscribe to the PDN.
A power of attorney can give you peace of mind that if you are away or should become incapacitated your agent will be able to carry out your wishes. Even if you never use one, it is always good to have them on hand in case of an emergency. You should appoint someone you trust to make the decisions that would benefit you and your estate.
Medical or Health Care Power of Attorney: This legal document gives your agent the ability to make medical decisions for you. You must be in a state where you are unable to make decisions for yourself for this document to become effective. To ensure that you are incapacitated you can name a doctor you want to certify your condition or request that two doctors must come to the same conclusion. This document does not replace a living will. A living will lets your healthcare provider know what types of medication or procedures you may want, such as a “do not resuscitate” or keeping you on life support. You can have both a living will and a medical power of attorney, as a matter of fact it is highly recommended. You can also give your agent medical power of attorney of your dependents to make medical decisions in you absence with specific instructions. Make copies of your medical power of attorney and give it to your primary medical care giver and insurance company.
Financial Power of Attorney: Much like a medical power of attorney covers you medically, a financial power of attorney gives your agent authority to make financial decisions on your behalf. This could include the sale of a home, banking transactions, or paying for utilities. It could also include the sale of stocks, claims and litigations, tax matters, and insurance transactions. It could also allow your agent to borrow money on your behalf.
In Loco Parentis: A Latin term that means “in place of parent” that gives your agent temporary power to care for your child, much as you would. It gives the agent the ability to act on your behalf with certain medical situations, school, or other situations where a parent must be present but cannot be there. This document usually lasts for a year and can be renewed.
Power of attorneys are good documents to have, but they do not replace a will. Both a will and a power of attorney allow your agent to legally act on your behalf, and both are highly recommended to have. The difference is when they become valid. While the principal is alive, their agent has the power to act on their behalf. There are different types of power of attorneys that start under certain circumstances. Upon death of the principal, a will grants the executor the authority to divide the principal’s estate. An agent does not automatically become an executor after the principal passes away. The authority of the executor of the will supersedes that of the agent of a power of attorney after death. But if the principal does not have a will, the estate then goes to probate court in which a judge will determine who is fit to carry out the principal’s wishes. The agent of the power of attorney can petition to be appointed, but it is not guaranteed. If the agent of the power of attorney and the executor of the will are the same person, a probate court will approve the executor’s appointment unless the principal’s relatives object.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@ yahoo.com and read past columns at the Money Matters blog at moneymattersguam.wordpress.com.