A “best practice” is to have a separate Healthcare Power of Attorney and a separate General (or Financial) Power of Attorney. If combined, the document can become too long and therefore not as useful. The bank won’t care about the power to make healthcare decisions, and the hospital won’t care about the power to deal with the client’s bank account.
General durable powers of attorney may be the most important estate planning document a person signs. These are used for anything financial, including business with banks, health insurance companies, utilities, the IRS, etc.
Two reasons general durable powers of attorney are so important are 1) well-drafted ones are relatively easy to obtain, and 2) if an incapacitated person does not have one, the only other alternative for conducting their business would be by guardianship in the probate court.
Some may believe all general powers of attorney are the same, but that is far from true. “Well drafted” powers of attorney references at least a few general issues. One is whether the power should begin immediately or later, such as when a doctor’s opinion is that it’s needed. Another issue is that even though a power of attorney “states that general powers are granted and it grants power to act with respect to all lawful subjects and purposes,” there are a number of important powers that are not authorized unless specifically included and are frequently used, especially with nursing home clients.
“Well drafted” also includes the format and the actual wording used. There is no legal requirement anyone accepts the authority of a durable power of attorney, so even though certain language may not be required, it may be of particular usefulness when trying to use the power of attorney with banks, insurance companies, title companies, and other financial institutions.
It’s important to have a primary person listed in the power of attorney and at least one successor as a back-up to the primary person. If a couple nominates each other as the primary person, it is recommended to have two successors because one of them will not get their first choice.
Click to read more: The Ultimate Guide to Beginning Your Estate Plan
The persons nominated for a healthcare power of attorney can be different than those nominated for a general power of attorney. Some people believe it is easier for the person acting to do both, and others believe it is good to nominate different persons so 1) the work is divided, or 2) there is a “check and balance” in place.
