There are two basic types of powers of attorney in Ohio. The first is a power of attorney for finances (often called a general durable power of attorney), and the second is a power of attorney for healthcare. The person who signs the power of attorney is the principal, and the person who is given authority to act on behalf of the principal is called the attorney-in-fact.
Power of Attorney for Finances
A power of attorney for finances authorizes someone (or more than one person) identified by the principal in the power of attorney to manage the principal's financial affairs. The power of attorney can be written so that it will go into effect immediately, or only in the event that the principal is incapacitated and cannot personally manage his or her own affairs. Powers of attorney are not just for the elderly. We unfortunately see all around us reminders that anyone can become incapacitated at any time. If you don't have a power of attorney, it will be extremely difficult for your loved ones to pay your bills and manage your assets during any period of time when you are unable to do so.
Having both types of powers of attorney makes it less likely that a guardian will ever have to be appointed for you in a probate court proceeding. If you become unable to manage your own financial affairs or lack the mental capacity to make your own health care decisions and you don't have either type of power of attorney, your relatives may be forced to go to court and have a guardian appointed for you. Before a guardian can be appointed, the court must make a determination of legal incapacity, which can be embarrassing to the person for whom the guardianship is sought. A guardianship court proceeding also involves time, inconvenience, legal fees, and court costs. (On the other hand, a potential benefit of a guardianship is that the court oversees the activities of the guardian, which is not the case with an attorney-in-fact acting under a power of attorney.)
The power of attorney itself sets forth how incapacity is determined. For example, it could state that your personal physician will make the decision, or it could require two physicians from different medical practices to sign affidavits attesting to your lack of capacity.
You can limit the extent of the attorney-in-fact's authority in the power of attorney, or you can give the attorney-in-fact complete authority to take virtually any action you could take with regard to the management of your finances and assets. You will need to decide whether you want to give your attorney-in-fact the authority to make gifts. Why might you give your attorney-in-fact the power to make gifts? It may be advantageous for you from an estate tax standpoint to make gifts. Also, you may qualify for Medicaid sooner if your attorney-in-fact makes gifts of your assets. An attorney-in-fact should not make gifts either for estate tax or Medicaid planning purposes without seeking the advice of an experienced estate planning attorney, since mistakes in these areas can have serious and costly consequences.
Power of Attorney for Health Care
A power of attorney for health care gives the person (or people) you appoint the authority to make health care decisions on your behalf if you are incapacitated and cannot make those decisions for yourself. Having a power of attorney for health care gives healthcare providers the ability to proceed with your care promptly, having clear, legally authorized instructions from your attorney-in-fact. If your family members disagree about your medical treatment and you don't have a health care power of attorney, your treatment could be delayed and your wishes might not be carried out.
You may limit the types of decisions your health care attorney-in-fact can make for you, or you may give your attorney-in-fact the power to make all healthcare decisions you could make yourself, including decisions about whether to continue life sustaining treatments if you are near death with no chance of recovery or if you are in a permanently unconscious state.
Living Will
The name "living will" is a bit confusing, because a living will does not go into effect at death and has nothing to do with transfers of property to beneficiaries. A living will goes into effect during life, hence the name "living" will. It is basically an instruction to hospitals, hospices, and nursing homes regarding how you would like to be cared for if terminally ill and near death, or in a permanently unconscious state, and unable to make your own health care decisions. Living wills typically instruct doctors not to administer life extending and sustaining treatments and to take measures only to increase comfort and minimize pain. I recommend that my clients have a living will in order to avoid the type of situation that arose in the Terri Schiavo case, where family members became embroiled in a lengthy legal battle over whether Ms. Schiavo, who was diagnosed to be in a persistent vegetative state, should be kept alive by artificial means. In the absence of a living will, a Florida court had to decide based on the testimony of numerous witnesses, what Ms. Schiavo's wishes would have been.
Under Ohio law, instructions in a living will "trump" the decisions of an attorney-in-fact named in a health care power of attorney. Therefore, it is important that your health care attorney-in-fact be given a copy of your living will. You may also want to supply a copy to your physician and local hospital.
