"Who Will Speak for You?” Why Everyone Over 18 Should Sign Powers of Attorney for Finances and Health Care

I have a friend whose college-age son was in a serious accident. Because her son was of legal age, and my friend did not hold a power of attorney for health care or a health care directive from her son, she was unable to speak with his doctor or medical staff at the hospital about her son’s care or see his medical records. Fortunately, he was able to recover and authorize his mother to have full access to his care (and his financial matters, if needed) by signing powers of attorney for property and health care. This experience highlights an important question that everybody should ask themselves: who will manage my finances and who will consult with my doctor if I cannot (or if I just do not want to) act?

Without the necessary powers of attorney in place, these decisions may require a court-appointed guardian of the person (for healthcare) or guardian of the estate (for finances). The guardianship process with continued Court supervision is typically a very expensive formal and time-consuming process. By planning ahead to establish the necessary powers of attorney, you can enjoy peace of mind that your future is secure if you should become disabled.

Understanding Powers of Attorney

A financial power of attorney allows an individual, often referred to as a principal, to authorize another person (as agent) to act on his or her behalf. This agent can make decisions and take actions with respect to the principal’s property (real and personal) and finances, including bank and investment accounts, retirement plans, government benefits, businesses, and digital assets.

A power of attorney for finances may also contain the power of the agent to make gifts of the principal’s property, including charitable donations to qualified charities, that can potentially reduce income and estate taxes as well as maintain eligibility for governmental benefits. For gifts to individuals, principals who grant their agents this authority typically impose a specific amount for the maximum amount to any one individual in a given year using the annual federal gift tax exclusion amount, which in 2025 is $19,000 per donee without being required to file a U.S. gift tax return.

For principals who have established donor advised funds (DAFs) with third party institutions, it is important for the financial power of attorney to include a power authorizing the agent to access the DAF account and recommend grants to charities as well as investment allocations within the DAF account. Also, it may be wise for the financial power of attorney to authorize the agent to make qualified charitable distributions (QCDs) from a traditional IRA(s) held by the principal, which could be a more tax efficient way to make donations for those principals who are eligible to make QCD gifts.

A medical power of attorney may be named a power of attorney for health care, an advanced directive, or a healthcare proxy, depending on the state. Medical directives, like powers of attorney for property and finances, allow the principal to designate another individual as his or her agent in decisions regarding health care matters if the principal cannot make or communicate those decisions for himself or herself. Matters such as reviewing medical records, consent to medical testing and procedures, determining where health care is given and who are the providers, and making life support decisions, may all be part of an agent’s authority in a health care power of attorney. As in a power of attorney for property, the principal may state in the medical directive whether the document is effective upon signing or when there is a future health care event, usually in the opinion of the principal’s attending physician.

Avoiding Conflict: The Importance of Planning Ahead

I was involved in a contested guardianship hearing about the authority of agents under a power of attorney for health care to allow for the termination for life support that was permitted under state law for such a power of attorney. The state statute, however, provided that the principal could only appoint one agent at a time to make that decision. In this case, the mother, who was the principal, named all of her four children as her co-agents for health care.

Two of her children believed that terminating life support measures was in their mother’s best interests, and the other two children contended that maintaining life support was the best course of action. The children were forced to spend days in Court instead of spending their mother’s last days with her. Had the mother followed the state statute by appointing her children one at a time, the time and expense with lawyers in Court might have been avoided.

At least 31 states, along with the District of Columbia, have state approved or “statutory forms” of powers of attorney and health care directives. Third parties, such as banks, are usually familiar with a statutory form of a power of attorney for property, and in many states, released from liability if not acting in a negligent manner. A statutory form may make it easier or more expedient to use the power of attorney or directive. Non-statutory forms may need to comply with certain state law requirements to be valid. In any case, it is important to seek counsel from a qualified attorney licensed in your state to make certain that the state’s power of attorney form is appropriate for your individual circumstances.

Without powers of attorney in place, your loved ones may have to go through the courts to gain the authority to help you. This process can be costly, time-consuming, and stressful.

By signing a financial power of attorney and a health care directive, you can:

• Choose who will manage your affairs
• Avoid court involvement and your affairs being made public
• Ensure that your wishes are honored
• Provide peace of mind for yourself and your family

Proactive planning puts these decisions in the hands of people you trust—not the court.

About the Author

Andrew R. Gelman
Holland & Knight LLP

Andy Gelman is a partner in the law firm of Holland & Knight LLP in Chicago who concentrates his practice in estate planning and estate and trust administration and controversies in his firm’s Private Wealth Services Practice Group. Often his advice is in the area of federal and state estate, fiduciary income, gift and generation-skipping transfer taxation, asset planning, and charitable giving and entities. Andy has a further concentration in the area of legal disability and the use of trusts to protect disabled adults and minors. He has represented numerous corporate and individual fiduciaries and beneficiaries in the administration of estates and trusts and in contested matters. He is also a certified mediator for the Court-Annexed Mediation Program of the Probate Division of the Circuit Court of Cook County.

The opinions expressed in this article are solely those of the author and do not reflect the views or endorsements of the American Heart Association. The Association does not endorse or assume responsibility for any information or opinions presented in this article.