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Powers of attorney and advance directives for healthcare can fulfill crucial estate planning goals. A medical power of attorney, or what Ohio’s laws call a “durable power of attorney for healthcare,” can allow you to designate a healthcare proxy or surrogate who will be authorized to make medical decisions on your behalf in the event that you are injured or ill and unable to make important healthcare decisions or grant informed consent for medical treatments on your own behalf, while a financial power of attorney can similarly enable you to designate someone to access crucial accounts and conduct important transactions on your behalf, either immediately or only if a circumstance arises in which you are unable to manage those affairs for yourself. Healthcare directives, such as a durable power of attorney for healthcare and a living will, provide a means by which individuals can anticipate and give explicit instructions regarding a variety of possible medical eventualities, ensuring that their preferences regarding key healthcare practices and treatment interventions – or their refusal – will be known and followed, even if the individual is unable to communicate those preferences independently when the time comes.
A durable power of attorney can be among the most efficient and practically useful estate planning tools. Ohio recognizes two main types of powers of attorney: a general or financial power of attorney, and a medical power of attorney or “power of attorney for healthcare.” Both types may have a place in a comprehensive estate plan.
If you see a reference to “power of attorney” and the powers granted are not otherwise specified, this is most likely a general or financial power of attorney. This type of power of attorney enables one person, the person who grants it, the “principal,” to authorize another person, their “agent,” to act on the principal’s behalf in a variety of business and financial matters. Typical examples may include handling bank accounts, paying bills or setting up services that will require them, and buying or selling real property (real estate).
A general or financial power of attorney may at first glance seem primarily applicable to business settings, as anyone who engages in multiple commercial ventures may very easily appreciate the advantages of being able to “deputize” a trusted agent to evaluate, negotiate, and ultimately contract deals on their behalf. In practice, however, for business purposes it is very common for the entrepreneur or investor to work with a business attorney, who legally represents their client’s interests and who, in contracts as in court, is empowered to make statements, and to offer and accept terms, just as if these came directly from the client the attorney is representing. Although the terms can become so familiar as to slip out of conscious awareness, allowing one person to “stand in” for another is the essence of legal representation – a feature which also serves to explain why the person designated as “agent” in a financial power of attorney is sometimes alternately called the “attorney-in-fact,” distinguished from the “attorney-at-law” term that, in American English, is often shortened to “attorney” and used to refer to any person engaged in the practice of law: that is to say, a lawyer.
A separate type of power of attorney is used for medical situations vs. the management of financial affairs. Although both types authorize an agent to make decisions on the behalf of the principal, a financial power of attorney imbues its agent with the authority to engage in important transactions on the principal’s behalf, typically granting the attorney-in-fact access to some or all of the principal’s savings, retirement, and investment accounts. The power of attorney document itself can be written so as to limit the agent’s scope of authority and decision-making activity, but in general this type of document grants the attorney-in-fact broad authority to exercise their own judgment, and substantial access with which to implement the decisions they have made.
A medical power of attorney, which the Ohio Revised Code (ORC) calls a “durable power of attorney for healthcare,” is different. A durable power of attorney for healthcare executed under O.R.C. § 1337.13 will in general impose fairly tight restrictions under the types of decisions the medical power of attorney is authorized to make, and the circumstances under which he or she is authorized to make them. The principal creating a durable power of attorney for healthcare in Ohio has the right to use the document to also nominate a guardian of their estate, their person, or both, to be considered by the Ohio probate court if proceedings for guardianship (a more extensive role than that of an attorney-in-fact for healthcare) are initiated at a later date – a provision which allows an individual preparing an estate plan to account for such contingencies as surviving a medical emergency, but with diminished capacity and energy for overseeing their personal affairs. The person nominated for future consideration if needed may or may not be the same individual designated as agent in the power of attorney, but – importantly – § 1337.12 specifically provides that the future appointment of a guardian will not, in and of itself, automatically override the pre-existing authority of an healthcare agent.
In addition to the differentiation between a power of attorney for healthcare and a power of attorney to cover more general decision-making and financial contingencies, Ohioans can specify whether they wish the authority granted in each power of attorney to be durable, non-durable, or “springing.” Each of the categories carries distinct implications for estate planning.
A major purpose of power of attorney designations in estate planning is precisely to ensure that an agent will be already in place and prepared to carry out the principal’s business if a time comes when the principal lacks the capacity to manage their own affairs. For this reason, virtually all powers of attorney executed as part of an estate plan are durable. Furthermore, as previously mentioned estate planning, while not the sole use for powers of attorney, is certainly an important, perhaps even dominant, one.
In light of this typical usage, therefore, state legislatures have generally attempted to make the “default” form for powers of attorney the one that is the most likely to be applicable in the greatest number of circumstances and correspondingly to see the greatest frequency of use. Although the language used in establishing the relevant statutes varies somewhat from one jurisdiction to the next, a major function of the Uniform Power of Attorney Act (UPOAA) in the states – including Ohio – that have adopted it has been to ensure a relatively high degree of consistency on how such matters as the durability of powers of attorney when executed within those states, and so Ohio, which according to the Ohio State Bar Association adopted the UPOAA in 2012, specifies in O.R.C. § 1337.24 that a power of attorney legally executed in the state will be considered “durable” in terms of the principal’s capacity unless the principal includes a specific provision to the contrary.
The presumption or “default” case of durability for powers of attorney in Ohio has some important implications for estate planning. Although it is true that many of the situations in which a power of attorney is most likely to be useful are those in which the principal lacks the capacity to manage their own affairs, situations can also arise in which an individual in poor physical health – or simply disinclined to spend their days running to and fro in keeping watch on myriad tedious matters – but in excellent mental condition – may wish to create a financial power of attorney, with terms carefully detailed and delimited, in order to delegate someone else to handle business on which the principal finds it inconvenient or irksome to spend their time. An individual in this situation might, despite entrusting the agent with considerable authority within the scope of the limits set out in the power of attorney document, and despite enjoying the convenience the arrangement potentially allows, nonetheless entertain some reservations about trust the same attorney-in-fact with the same types of matters, unmonitored, and in perpetuity.
A non-durable power of attorney makes allowance for precisely this kind of circumstance. Individuals preparing powers of attorney as part of their Ohio estate planning process can include, or ask an estate planning lawyer to include, a clause in the statutory power of attorney form found in O.R.C. § 1337.60, specifying that the agent’s authority shall be revoked in the event that the principal is found to be incapacitated. The terminology used for such a clause may draw on Ohio’s legal definition of incapacity, but individuals may also find it helpful to consult with an estate planning lawyer to determine the precise wording that will most effectively convey their wishes, as well as to ensure that all aspects of the finished document are legally valid.
In addition to durable and non-durable powers of attorney, estate planners may wish to consider a third type: springing. “Springing,” according to Cornell University Law School’s Legal Information Institute (LII), means that the power of attorney “springs” into effect only once specific conditions, outlined by the principal in the power of attorney document itself, are met. A durable power of attorney for healthcare drafted in accordance with O.R.C. § 1337.17 will have as its conditions for activation a medical declaration of the principal’s incapacity, pursuant to O.R.C. § 1337.13.
In practice the vast majority of springing powers of attorney are also durable, in large part because a very common non-medical use of the “springing” clause is to create a financial power of attorney that takes effect at the same time, and under the same conditions, as the medical power of attorney that is subject to a determination of incapacity by a medical professional (in Ohio, the professional assessment will need to be performed by the principal’s “attending physician”). A springing durable financial power of attorney often has considerable appeal for individuals who are choosing their estate planning documents while in good health and actively managing their own affairs without difficulty. An Ohio estate planning attorney with Rhodium Law may be able to help you evaluate whether establishing separate medical vs. financial powers of attorney may make sense in your situation.
The relatively similar circumstances for which estate planning often uses powers of attorney vs. other advance directives to prepare can sometimes lead to confusion on the part of individuals trying to choose the most appropriate estate planning documents to ensure that their own needs and preferences will be provided for and that their loved ones will be spared unnecessary stress if and when adverse events transpire. On some level, terminological distinctions may not have much practical impact for individuals preparing their estate plans, as a good many people are likely to need both types of documents, in broadly similar situations and for much the same reasons.
On the other hand, however, navigating a bewildering network of overlapping terms and definitions can estate planning a more fraught, frustrating, and mentally and emotionally taxing process than it needs to be. From that perspective, a brief overview of how some of the terms for related categories of estate planning documents are typically used may help to reduce the overall mental load. The three main terms to keep in mind are:
Financial powers of attorney are not typically considered advance directives, even though they certainly constitute a form of advance preparation. Medical powers of attorney, however – also known in some states as designations for a healthcare proxy or healthcare surrogate – are one type of advance directive, according to the National Institute on Aging (NIA).
A Venn diagram can be a useful way to envision the relationship between powers of attorney and advance directives. One type of advance directive is a medical power of attorney, but there are other powers of attorney that are not considered advance directives, while the advance directive sometimes called a healthcare proxy designation is also a medical power of attorney, but there are other types of advance directives that do not involve powers of attorney.
There are two main types of advance directives, per the NIA. One of these is the medical power of attorney or durable power of attorney for healthcare previously mentioned; some states, like Florida, use a substantially similar type of document but refer to it as a designation of healthcare proxy. The other is a living will. Laws for the number of contingencies addressed by a living will and the requirements for legal validity of these documents vary state-by-state; in Ohio, a living will has a relatively limited purview, delineated in O.R.C. § 2133.02.
In executing a declaration pursuant to § 2133.02, the individual making the declaration (known as the “declarant”) has the option to explicitly include or exclude specific types of life-sustaining and emergency medical interventions that are otherwise sometimes and in other jurisdictions filed separately, such as standing orders regarding consent to, or contrastively refusal of, administration of cardiopulmonary resuscitation (CPR); an order to refuse CPR administration constitutes a do-not-resuscitate order, more commonly known as a DNR. The NIA treats DNRs and similarly specific orders as types of advance directives when the forms are properly filed but not included in a larger document such as a living will; for individuals wishing to condense their paperwork, the Ohio State Bar Association offers a single form that incorporates several such orders, along with a space for indicating preferences regarding organ donation, in a Declaration of Living Will.
“Healthcare directive” is sometimes used instead of “advance directive” to refer to the same type of document, generally with a view toward underscoring the context in which advance directives are apt to be used. Other variations you may encounter during your estate planning research and discussions include:
Ohio’s statutory language uses “healthcare” throughout, but some sources (including the National Institutes of Health) prefer health care, as two separate words. Simply becoming familiar with these variable ways of expressing the same basic concepts can make navigating the wealth of resources available to people preparing for “advance planning” (the National Institute on Aging’s preferred term”) or “incapacity planning” (widely used among estate planning attorneys) –– or whatever term you prefer to use for how developing and putting in place documents to account for contingencies that involve your own eventual ill health and end-of-life decisions fits into your personal estate planning strategy –– much more intuitive and less stressful than an initial web search might lead one to anticipate.
Even though the meanings of the various combinations of “advance” vs. “healthcare” directives are all essentially interchangeable, an estate planning attorney may sometimes make a strategic choice to prefer a term that incorporates a reference to healthcare (or “health care”) over any of the variations that do not, especially when the discussion involves powers of attorney – for purely practical reasons. Individuals outside the medical profession and the practice of estate planning law often find it understandably difficult to parse why a medical power of attorney is, but a financial power of attorney is not, a form of advance directive. Very few people, regardless of their background, have the same kind of trouble understanding why a financial power of attorney is not, but a medical power of attorney is, a type of healthcare directive, so estate planning attorneys who place a high value on clarity and transparency in their interactions with clients will often make their choice of term accordingly.
Advance healthcare directives such as a medical power of attorney can be powerful estate planning tools. To ensure the maximum benefit, they may need to be combined with other custom estate planning documents, such as a financial power of attorney. In some situations it may even be appropriate to create a trust to provide for the possibility of financial needs in the event that you or a loved one may require extended medical care or treatment. The ideal combination of powers of attorney and other estate planning tools to meet your needs will depend on the specifics of your situation, so consider discussing your circumstances in detail with an experienced estate planning attorney to ensure that you have a comprehensive understanding of the factors involved as you make your selections. Call Rhodium Law today at (216) 699-8145 to speak with a member of our client-focused and compassionate estate planning team.
