Medical vs. Financial Power of Attorney: Reasons to Separate Them

Choosing people you trust to hold your medical and financial powers of attorney gives you more control over your interests and ensures your wishes are followed. But should you appoint the same person to hold these essential directives? There are several issues to consider.

A financial power of attorney, or general power of attorney, permits someone you have designated (your “agent”) to oversee your finances. Typically it is used so the person can step in and pay your bills or handle other financial matters when you cannot physically or mentally handle your affairs, although it may also be used for situations when it is not convenient for you to be present – say a real estate closing in a distant town. A power of attorney usually takes effect as soon as you sign it; however, your agent may never use it unless it becomes necessary.  (For more, see Reasons to Designate a General Power of Attorney.)

The power to make medical decisions on your behalf is not included in a general power of attorney. For that, you need a healthcare proxy, or medical power of attorney, which clearly states you have chosen the person named to make medical decisions when you no longer have capacity to do so. This may be needed temporarily (when you’re under anaesthesia, for instance, and complications arise) or for navigating a longer term health crisis, often (but not always) related to aging. Many people have strong feelings about the kind and degree of medical treatment they want; a healthcare proxy gives you control over these decisions, even when you can’t speak for yourself. It only goes into effect when you do not have the capacity to make your wishes known regarding your medical treatment.  

A medical power of attorney and a general power of attorney are typically created in separate legal documents. Both are known in legal terms as advance directives. “Generally, the law addresses each type of advanced directive separately, because the two documents serve different purposes,” says Kim Trigoboff, an elder law attorney who practices in New York City. “The power of attorney focuses on property management and sometimes on certain aspects of personal care management, such as hiring a geriatric care manager. A healthcare proxy involves giving someone else the authority to make medical and treatment decisions that a principal can no longer make for themselves.” 

While many people choose the same person, such as a spouse or an adult child, to hold their healthcare proxy and their power of attorney, don’t do this automatically. It may sometimes be preferable to ask different people to take on these roles. “Property management decisions, while important, are in a different category from decisions made by a healthcare agent, which can involve matters of life and death,” says Trigoboff.

Your healthcare proxy should be over 18, someone with whom you can discuss your wishes frankly and someone who will support those wishes. You should ask the person you select if she or he feels able to take on the responsibility. Usually you appoint only one person as your healthcare proxy, though you can and should name alternates for when that person is not available. Trigoboff cautions that you will want to consider someone’s life experience before asking the person to take on this role. The person must be able to make difficult choices, even ones that may end medical care. “Some loved ones might not be up to acting as the appointed healthcare agent,” she notes. You will also want to consider whether the person is close by and can meet with your doctors should the need arise. (See, also: Medical Power of Attorney: Which Child to Choose?)

Many of these concerns do not apply in selecting an agent to hold your power of attorney. Instead, you will want to weigh whether the person has enough financial acumen to handle their responsibilities. The person doesn’t necessarily need to be nearby to ensure that your bills are paid promptly; online banking and electronic billing make it possible to entrust a power of attorney to the relative, friend or advisor most capable of taking on the responsibility and diligently executing it. You will want to consider whether the person handles their own affairs well, pays bills in a timely way and seems detail-oriented. Finally, handling someone’s finances does not demand the intimate knowledge of end-of-life wishes or religious beliefs that a healthcare proxy holder ought to have. Some people may even choose a family attorney or their CPA for the role. (For further reading, see Which Child's Best for Monetary Power of Attorney?)

Selecting a different person for your financial power of attorney and your healthcare proxy may help you choose the best person for each job. If you do select different people for each role, you will want to make sure that they can work together in your best interest should the need arise.  Discuss your wishes with them together as well as one on one, to ensure that they will cooperate with one another to ensure your best care.