Power of attorney vs. living will

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.

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Adjust the limits of agent’s power

This was originally published on Monday, September 21, 2015, in the Pacific Daily News.  Click here to subscribe to the PDN.

Question: I am a single mother and just started a new job. My job will require me to travel frequently. I will be leaving my daughter with my parents who will also be house sitting for me. I know that I should leave a power of attorney for them but I am not sure what type.

Answer: Congratulations on your new job! You are smart to think about getting a power of attorney. If something should happen to you, your daughter, or even your house, you need someone there to make decisions for you. There are several types of powers of attorney and which one you choose depends on how much power you want to give the agent(s), the person/people you give permission to carry out your wishes.

  • General Power of Attorney. This is the broadest type of authorization you can give to your agent. A general power of attorney can be part of an estate plan as well. A power of attorney can include the buying and selling of property, managing your real estate, or taking care of financial decisions. A general power of attorney can give your agent the authority to file your taxes. It can also include the power to represent you in a court of law. Because this legal document is very powerful you need to appoint someone whom you trust.
  • Special or Limited Power of Attorney. Gives the agent the authority to act on your behalf on specific situations. It can cover most of what a general power of attorney covers but narrows the scope to what authorization your agent has. You can give your agent authorization to care for your home but not sell it. You can have more than one special power of attorney to the same agent for different situations.
  • Conventional Power of Attorney. Most standard power of attorneys fall under this category. The agent has power from the time the document is signed until the principal becomes mentally incapacitated.
  • Durable Power of Attorney. This gives your agent the right to make decisions if you become incapacitated or pass away. A general and special power of attorney can be made a durable power of attorney. If your power of attorney does not specifically say that it is “durable” then your agent can only exercise the power you have. In other words, if you have an accident and slip into a comma your agent cannot sign to sell your home since you are not able to do so yourself.

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 www.moneymattersguam.wordpress.com.

An emergency fund can spare financial hardship

This was originally published on Monday, August 18, 2014, in the Pacific Daily News.  Click here to subscribe to the PDN.

Question: My car recently underwent some major repairs. I do not live paycheck to paycheck, but when unforeseen occurrences like this happen, it always seems to put me in a position of hardship. What should I do to ensure that if a really major occurrence happens, it does not financially hurt me?

Answer: There is a saying that “A map helps us see the destination. A plan reveals how you get there.” If your goal is to be prepared for unforeseen financial emergencies then your plan should be to create an emergency fund. An emergency fund is money that is set aside just for emergencies. A 2011 survey conducted by the National Foundation for Credit Counseling has concluded that 64 percent of Americans do not have a thousand dollars on hand in the event of an emergency. Not having an emergency fund could add unnecessary stress to an already stressful situation. A solid emergency fund is one of the most vital tools in growing and filling monetary security. No matter how well you plan, bad things happen from time to time.

Your emergency fund should not be used for buying a new 60-inch flat screen TV, or to go on vacation, or to remodel your kitchen. Money for these types of expenses should come from a separate account created just for that purpose. Instead, your emergency fund should be money that is stashed away for handling emergencies. It could be used to fix your car, for medical bills, or as rent if you lose your job. Use a bank account that is separate from your other financial accounts. If they are linked together, you could be tempted to make transfers from your emergency account to another. Do not carry a debit card or checks linked to the account; this will force you to reconsider if this is an actual emergency.

Your emergency fund should be highly liquid. A simple savings account will do. Don’t think of it as an investment. Usually higher interest rates come with higher risks. Your emergency fund should be placed in an account with little to no risk. Market accounts or time certificates could penalize or prohibit you from making withdrawals. In fact, you may end up paying penalties on the money you withdraw.

How much you put aside depends on your income and your expenses. There is no right amount, so do what is comfortable for you. Some experts say that you should save at least three months of your income set aside for emergencies. You may not reach that goal right away. Start off small and build up to it. When goals are too lofty and hard to obtain, you may become frustrated. If goals are small and attainable, you are more likely to continue with that goal. Start by setting a goal for the month then two months and so on.

Once you set your goal, include it in your budget. You should contribute to it regularly. Think of it as another bill such as your rent, power or telephone. Once you pay for those, pay into your emergency fund. Payments can be made as an allotment from your paycheck or from another account. If the money is automatically transferred, there are no excuses as to why the money did not get deposited that payday. Being unprepared during uncertain economic times can devastate a family or put one’s financial future at risk. Just remember having something saved up for a rainy day is better than not having anything at all.

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 www.moneymattersguam.wordpress.com.

Directives can help in case of emergency

This was originally published on Monday, June 9, 2014, in the Pacific Daily News.  Click here to subscribe to the PDN.

Life is unpredictable. You are never sure what can happen in a minute’s notice. A serious medical emergency can happen at any time. No one likes to imagine the worst, but planning for it can ease the stress your loved ones could experience when having to make difficult life-or-death decisions. Your family may know your wishes, but under the duress of the situation they may not be able to convey them. Having a living will states clearly what your wishes are.

A living will and other advance directives let you specify your preferences regarding decisions when you are not able to speak for yourself. Advance directives are legally binding and should be prepared by an attorney. When making these arrangements consider your religious beliefs, if you want to utilize artificial life support and for how long, if you want to stay in a nursing home, and details of your funeral arrangements.

• Living will

A living will describes certain treatments that you would or would not want to prolong your life if you become incapacitated by a terminal illness or in a coma. It usually does not go into effect until your doctor and a second doctor agree that you are not able to make decisions. Usually a living will is used when recovery is not possible. This legal document can state your requests about mechanical breathing apparatuses, feeding tubes, resuscitation, dialysis, and, in some cases, if you want to be an organ donor.

• Medical Power of Attorney (POA)

A medical POA also is a legal document but it appoints an individual to help you make medical decisions when you are unable to do so. Unlike a living will, a medical POA can make choices for you regarding regular health care, not just life-ending decisions. Your medical POA can follow your wishes stated in your living will. Pick someone you really trust and has your best interest in mind because this person has a great responsibility deciding if you live or how you live. He or she does not have to be a family member. A medical POA also can be called a “health care proxy.” He or she is not financially responsible for your medical bills.

• Do Not Resuscitate (DNR)

A DNR is a legal document that states your decision not to be resuscitated. Some advance directives do not have a DNR in them. Sometimes a DNR is not included in a living will or medical POA. A doctor may give you a DNR form to complete before a major surgery or treatment. Like a living will, the law changes from state to state.

Advance directives are important, especially when you and your family may not see eye-to-eye on medical matters. Let your family members know where you keep these important documents. No one likes talking about worst-case scenarios, but share your wishes with your family. Planning ahead can ensure you get the medical treatment you desire and will relieve your family from having to make some very hard decisions. Review your advance directives from time to time. These documents can be changed at any time.

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 www.moneymattersguam.wordpress.com.

Be prepared in case of a medical emergency

This was originally published on Monday, June 2, 2014, in the Pacific Daily News.  Click here to subscribe to the PDN.

Question: I recently had a friend who had a serious medical emergency. She is doing much better, but was unprepared for this situation. This has me thinking of what I need to do in case a medical emergency happens to me. Do you have any suggestions?

Answer: I am pleased to hear that your friend is doing better. Medical emergencies can happen anytime, anywhere. Many don’t plan and find themselves in a position that goes against their wishes, especially when they cannot communicate. Being prepared for them takes a little planning, but it’s worth it. Your plan should include procedures for minor emergencies to the worst case — passing away. Create a file and put it in a safe place. Your emergency contact also should get a copy of the file. Your file should contain:

• Medical information: This information also should be kept in a place that is easily found in your home, your car and in your wallet. Let those that are your “in case of emergency” contacts know exactly where your information and legal documents are. The information should contain:

• Your name, age and gender;

• Who to contact in case of emergency or next of kin;

• Your insurance company name, phone number and policy;

• A list of the medications you take and the dosage;

• Any medical conditions you may have;

• Previous surgeries;

• Name and phone numbers of your primary care provider and clinic. If you see a specialist, include that information as well;

• Name and phone numbers of religious leaders or place of worship;

• Any allergies or dietary restrictions; and

• Your blood type.

This information should be kept updated as your health changes. If you have children, create a sheet for them. Keep a copy with you and place one in their school bag, wallet or purse. If you have a serious condition or allergies, use a medical ID bracelet or dog tag to identify your condition. Look online for templates of credit card-sized information templates you can fill out and print.

• Important documents: A copy of these documents may be needed to check you into a hospital:

• Identification cards (driver’s license, Guam ID, military ID, student ID, etc.);

• Your birth certificate;

• A copy of your passport;

• Your health insurance card;

• Updated immunization card;

• Social Security card;

• Letter of instruction or living will; and

• Funeral and burial plans.

On your phone, create an ICE “In Case of Emergency” contact. I was able to do this on my Samsung Galaxy S4 Active. This acronym is recognized by first responders. Research online how your phone can be programed to create an ICE contact. This contact should be able to be viewed without having to unlock the phone. Whatever contact you choose will show up on the Emergency Call List, even if your phone is locked.

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 www.moneymattersguam.wordpress.com.