Health Care Proxy vs. Power of Attorney: Understanding the Difference

There are some critical differences between a health care proxy vs. power of attorney, and it’s essential to understand those differences as you embark on planning for your future. Estate planning is often reduced to just a will, but there is so much more to it. Planning your wishes means making arrangements for the possibility that you may not be able to speak for yourself one day. Who will speak for you? How can you ensure your wishes are respected if you cannot voice them?

Health care proxies and powers of attorney are two answers to these questions that serve different situations. A health care proxy and a power of attorney may seem similar at first glance, and some may even feel that planning for one means you don’t have to plan for the other, but these roles are different in particular ways. In this easy-to-read guide, we’ll illustrate those differences for you in plain language so you can make sure to plan for both.

Both a health care proxy and a power of attorney are legal documents with which you can name someone to serve as your voice in the event you can no longer speak for yourself. They are also the names given to the roles you ask the people you have named in these documents to perform on your behalf. However, these two roles differ when we look at their responsibilities. It’s essential to understand the importance of both roles so you don’t leave loose ends in your estate planning. Let’s take a closer look at how these two roles differ.

A power of attorney identifies a person of your choice as your representative for business, legal and financial decisions. It's also the name of the role performed by the person you name. Most people choose family members or friends they trust to make critical decisions. Your power attorney may find themself having to make decisions on your behalf regarding:

• Bank accounts
• Investments
• Assets
• Taxes
• Insurance
• Your business

It’s essential to select someone you trust to represent your wishes over their own when you choose the person who will serve as your power of attorney.

There are a few different types of power of attorney. Each of these varieties gives the person you have named in the document different responsibilities. Let’s go over the different types of powers of attorney:

• Durable power of attorney - This document is activated right away and does not end until the principal, which is the person who creates the power of attorney, passes away. It remains in effect even if the principal is incapacitated, meaning unable to speak for themself.
• Non-durable power of attorney - Unlike the durable power of attorney, a non-durable power of attorney ends when the principal becomes incapacitated.
• Medical/health care power of attorney - A medical POA names someone who can make medical and healthcare decisions on your behalf in the event you are unable. This document can also be a medical durable power of attorney, sometimes called a durable power of attorney for healthcare.
• Springing power of attorney - A springing power of attorney is a form that only comes into effect once a specific event happens. For instance, when you have become incapacitated or on the written advice of a doctor.
• General power of attorney - This legal document gives a person of your choosing the ability to make decisions on your behalf and can be limited or specific. What is a limited power of attorney? A limited power of attorney gives the named agent the ability to perform a specific task, such as selling your house. After that task is completed, their power of attorney ends.
• Financial power of attorney - Your financial power of attorney can make decisions regarding your finances and assets.

Each of these serves a purpose in a different scenario. You may decide to use some or all of these documents to cover your bases if you ever find yourself unable to make decisions on your own.

A healthcare proxy is a legal document with which you can name an individual who would take on the responsibility of making medical and health-related decisions on your behalf in any scenario where you cannot do it yourself. Once your healthcare proxy documents are signed, you still have complete medical control of your life unless you become incapacitated or unable to make informed decisions. Your proxy may be asked to make decisions regarding:

• Medical Treatment
• Medications
• Life Support
• Resuscitation
• And any other medical decisions that may arise when you cannot speak for yourself.

A healthcare proxy should be someone you trust to represent your values and wishes even if they conflict with their feelings.

There is one main difference between health care proxy and power of attorney. A power of attorney makes decisions primarily about assets and finances, while a healthcare proxy is there to oversee your medical treatment while representing your wishes. Each deals with a different part of your life, but sometimes the decisions they have to make overlap. For instance, if your medical proxy decides that you need to be placed in a nursing home, your power of attorney may object based on cost. When this happens, and both your power of attorney and healthcare proxy can’t agree, the issue is likely to be settled in court, which can deplete any funds in your estate. Scenarios like this are an excellent reason to find someone who can serve as both your healthcare proxy and your power of attorney. It can be challenging to find someone you can trust to handle both, though, so if you have to select two different people, try to find two friends or loved ones capable of working as a team.

People of working age have a one in five chance of becoming disabled, and once you become a senior, those odds increase exponentially. One out of every nine people of retirement age will experience Alzheimer’s, and that’s just one of the many illnesses and accidents that can happen that can strip you of your ability to make decisions for yourself. In such an event, if you have not named a healthcare proxy or a power of attorney, financial and medical decisions will be left up to your loved ones. When a group of people is faced with these decisions, disagreements arise, and rifts can form. Your family can become increasingly stressed and may find that they will have to settle some disputes in court.

By naming a healthcare proxy and power of attorney, you save your family this excess grief. The responsibility of each decision falls to one person who previously agreed to take responsibility. Decisions become much more manageable, much less costly, and they will represent any wishes you’ve made known to your proxy and power of attorney.

These two documents are among the most crucial to have now, no matter what your age may be.

The most compelling argument for having a fiduciary power of attorney is what happens if you don’t have one. If you are unable to make decisions for yourself, someone has to make them for you. If you do not have a power of attorney, that means your choices may be made by next of kin, loved ones, or your medical caregivers. In short, people who may not understand your wishes or disagree with them can choose a route you would disapprove of. Your assets may not end up where you want them to, and your money may end up in the hands of someone you had no intention of giving it to. Your estate runs the risk of depletion as disagreements between your closest family are settled in court.

A simple document that takes moments to fill out can save your family this excess stress and ensure your wishes are represented even when you can’t speak up for yourself.

If you become incapacitated without a healthcare proxy, all your health and medical decisions will fall on the next of kin. While this may not sound so bad, it can be the beginning of significant fallouts amongst the people you love the most. When more than one person has a say in crucial healthcare decisions regarding someone they love, emotions soar, and disagreements can be brutal. What’s more, you may end up having decisions made on your behalf that you would have never wanted. For instance, if you have always wished to be resuscitated under any circumstances, but your children believe you do not wish to be revived, they will decide for you. When you have a healthcare proxy, you’ve named one person and one person only to make those decisions avoiding any disagreements. You’ll also have spoken to your healthcare proxy about your wishes in specific medical scenarios, so they will know what you truly would have wanted.

Our content is created for educational purposes only. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Everdays encourages individuals to seek advice from their own investment or tax advisor or legal counsel.