Delegate, Delegate, Delegate.

(Estimated reading time: 3 min) 

During these past eight months, many people have found themselves separated from family and friends. This has meant grandparents having to stay retirement homes or remaining apart across the country, and children off to college in the middle of a pandemic. While I usually speak and advise on estate planning considerations for families with young children, it feels timely to write about a tool that can help ensure that family and friends that you cannot physically be with are able to advocate for their health and medical decisions, as well as the ability to nominate someone to take care of their financial matters, should they become incapacitated. 

A durable what?  

A Durable Powers of Attorney (DPOA) document allows you to nominate an Agent to make financial decisions for you, as well as medical/health care decisions for you. This particular DPOA document makes it possible for someone of your choosing to step into your shoes and manage these decisions on your behalf when you are not able to do so. Aside from having this document in place, it is also important to check in with family to ensure they have one in place for themselves as well.  

Absent a DPOA, the alternate way to naming a financial agent to act on your behalf as your fiduciary, is to delegate decision-making authority. This can mean having a guardianship established in case you become incapacitated. Or it could mean hoping a spouse, family, or friend would be able to create a patchwork system to provide for you financially if nobody else had the authority to make payments from your accounts.  

For the medical agent, most states have laws that determine who is in charge of medical decision making when an individual is not able to make his or her own decisions when there is not a Durable Power of Attorney in place to instruct otherwise. However, for some, the default list of family members, spouse, parents, siblings, etc., who will be in charge of your medical decisions if you are not able to make them for yourself, is not the best choice. A friend or non-immediate family member who is trustworthy and will follow your wishes may better serve in the role.  

Getting those ducks in a row 

In addition to the Durable Power of Attorney, it can be very helpful for adults to create an inventory of assets that their financial agent can access if they need to step into the role of fiduciary for the adult. A document that lists out where various financial accounts, such as checking, savings, brokerage, life insurance, 401k, IRAs, etc., are held can be a useful roadmap when suddenly stepping into the role of managing someone else’s financial world. In addition, a list of monthly payments can be equally helpful. 

This pandemic has been a clear reminder that we are not invincible, and that it makes sense to plan for the chance that we might become ill and may need help from our family and friends. Legally, the Durable Power of Attorney is the easiest and most secure way to delegate this decision-making authority. I have seen a flurry of parents with college-age children asking that the young adult put this document into place before they head off to campus. I am witnessing adult children helping their aging parents and grandparents complete this document so that the right person can step in to help manage affairs should health decline or if it becomes difficult to see family members due to stay-at-home measures. An adult can benefit from a Durable Power of Attorney, at any age or stage.