It is important to be well-informed for any large decision in life. Making decisions for the end of your life is no different. That is why it is essential to understand the elements and responsibilities of powers of attorney, to ensure your decisions will be in good hands when you are unable to make them yourself.
How does power of attorney work?
To put it simply, a power of attorney gives someone you trust the power to make decisions for you when you cannot do so yourself. However, there is nothing simple about giving someone else the responsibility of making life decisions on your behalf.
That is why Tennessee law requires you, the principal, to specifically state the kinds of decisions your chosen advocate, or agent, can make.
The agent's responsibilities
The agent's general duties often include:
- Making financial decisions, including filing taxes and dealing with banks
- Making legal decisions, including signing contracts or making real estate decisions
- Gifting money to other parties on your behalf
- Following your healthcare directives
- Keeping records of all transactions and decisions in your name
It is important to remember that even though your agent will be making these decisions for you, you still have control. That is the whole objective of establishing power of attorney. You can give your agent specific or general responsibilities, as long as you word your power of attorney document correctly. With the help of a knowledgeable estate planning attorney, you can protect your rights and wishes.
How is durable power of attorney different?
Even if you establish power of attorney, your agent may still run into some legal problems. Creating a durable power of attorney can help avoid those problems.
For example, if you are medically incapacitated, your agent should be able to make a decision following your advance directives. However, power of attorney can sometimes clash with the Health Insurance and Accountability Act (HIPAA).
HIPAA laws require your doctor to keep your medical information private. This is usually a good thing, but it can become difficult for your agent to make healthcare decisions if they cannot discuss your conditions with your doctor.
In creating durable power of attorney, you can override privacy laws to allow your agent to make an informed decision on your behalf.
Trust is the key
You must be able to trust your chosen agent will act in good faith. Choosing a reliable and trustworthy agent is probably the most important part of establishing power of attorney. Whether it is your spouse, child or friend, you should be able to trust that your agent will always act in your best interest.