When people think about estate planning tools, the first thing that typically comes to mind is a Last Will and Testament (“Will”) or Trust. Wills and Trusts are very important, but do not overlook the importance of medical and financial power of attorney.
What are medical and financial power of attorney?
A medical power of attorney, also known as a power of attorney for healthcare, is a document that appoints a person you trust to be your “agent” to make medical decisions for you when you are unable to make such decisions for yourself. For example, if an accident renders you unconscious and unable to communicate, the power of attorney allows your health care provider to communicate with your trusted agent. The agent will be able to make important medical decisions on your behalf. Tenn. Code Ann. § 34-6-204, governing health care power of attorney, states in part, that the agent for health care may make decisions for you, before or after your death, to the same extent as you could make health care decisions for yourself if you had the capacity to do so, including:
- Making an organ donation;
- Authorizing an autopsy; and
- Directing the disposition of your remains.
Similar to a medical power of attorney, a general durable power of attorney for finance appoints a person you trust to be your agent for all financial and legal matters. The financial power of attorney powers are governed under Tenn. Code Ann. § 34-6-109, and provides that the agent can generally do, sign or perform in your name, place and stead, any act, deed, matter or thing whatsoever, that ought to be done, signed or performed, or that, in the opinion of the agent, ought to be done, signed or performed in and about the premises, of every nature and kind whatsoever, to all intents and purposes whatsoever, as fully and effectually as you could do yourself financially and legally. T.C.A. § 34-6-109. This statute provides very broad powers to your agent and with it your agent can pay bills on your behalf, open or close bank accounts, invest money, sign contracts, sell property, etc.
The medical power of attorney and financial power of attorney take effect only upon your incapacity or disability. If you do not have a medical and financial power of attorney in place upon incapacity or disability, a friend or family member might have to go to court to have a conservator appointed if you are no longer able to make decisions for yourself. The conservatorship process can be lengthy, expensive, and open to the public. If a conservatorship is granted, you and your estate become a “ward” of the state and the Court will require the appointed conservator to post a bond, file annual accountings of your financials, and request permission from the court prior to making any major decisions on your behalf. The costs of the conservatorship proceeding including court costs; guardian ad litem fees and expenses; medical examination costs; and the conservator’s attorney fees may be charged against your estate. This can all be avoided by preparing your medical and financial power of attorney documents now, before any unforeseen incapacity or disability.
The contents of this post do not constitute legal advice.
