What Healthcare Directives and Powers of Attorney Have in Common: You

What is estate planning? A straightforward question, to be sure, but one that isn’t so straightforward to answer. Estate planning is one of those things people may know is important but don’t fully understand the scope of. It follows that people often don’t know where or how to begin this branch of planning.  

Very broadly speaking, a holistic approach to estate planning considers many things beyond just having a will. For instance, life insurance and ways it can be used strategically to cover final expenses and/or provide tax-free inheritances or charitable donations. It also involves planning for how your investments and assets will be used and disbursed, and in what order, to whom. Funeral costs and considerations are accounted for, and arrangements are made in case of incapacitation.

Estate planning is as relevant in life as it is afterward and it can be easy to forget that, especially when we’re feeling healthy, able-bodied and preoccupied with other priorities. We underestimate how quickly our health can change, and how necessary it is to have plans in place in the event we are unable to make important decisions. Two things to think about (and then act on) are healthcare directives (HD) and powers of attorney (POA).

A healthcare directive is a written or typed letter specifying how you would like to be treated and who you trust to make medical and personal care decisions on your behalf – called a proxy – if you are unable to communicate your wishes due to illness or injury. Similarly, your power of attorney, is the person who would be responsible for making financial decisions while you’re unable to. You could list two different people or entrust both roles to a single person.

Healthcare directives should clearly outline what sorts of treatment you would like to receive in certain situations. Your proxy should know what to do if you are diagnosed with a terminal illness or end up in a permanent coma or persistent vegetative state. Your wishes for or against resuscitation should also be clear. Keep in mind, medical personnel will not actively seek out your directive or take steps to determine if you have one so ensure your family and friends are aware of its existence and have easy access to it in case of emergency.

Healthcare professionals are obliged to abide by the instructions in a healthcare directive to the extent that they do not conflict with medical best practice. If ever you are in a situation where your instructions are refused, especially for reasons specific to a certain hospital/institution, you are entitled to seek care elsewhere. 

Having a healthcare directive and a designated power of attorney are integral to ensuring your personal and medical autonomy and values are not compromised without your consent. Though they are legally distinct specifications, HDs and POAs are mutually beneficial.

How, you ask? Well, one example could be a 71-year-old who is unexpectedly diagnosed with a terminal illness. They experience a rapid decline in health and end up unable to communicate clearly and lucidly. Because they have a healthcare directive, their spouse can advocate for them and determine a palliative plan in line with their wishes. As power of attorney, the spouse is also able to start getting their partner’s affairs in order with relative ease. Maybe they have an RSP that must be converted to a RIF by December 31 of that year. As POA, the spouse can sign off on all the paperwork and ensure this conversion happens on time.

POAs have limited decision-making control and one of the things they can’t do is change or designate beneficiaries. In the above RIF conversion case, the POA spouse cannot choose the beneficiary of the new account but can elect the spousal rollover provision and/or have the account pay out to the estate.

Beyond making sure you, the patient, receive the care you want, a healthcare directive also takes the pressure of making the “wrong choices” off loved ones. Likewise, a power of attorney gives a trusted person the legal ability to make financial decisions potentially related to your healthcare. We see this in situations, for example, were an incapacitated person needs to be moved to a care home and their POA must be able to access the necessary funds to facilitate such a transition.

Estate planning is complex and the best way to make sure you are properly prepared for today and tomorrow is by seeking professional guidance. If, however, you’re not quite ready for that and you’re wondering where the best place to start your estate planning journey is, healthcare directives and powers of attorney are a safe bet.

For help with any estate planning questions you may have, connect with us.