Power of Attorney, Durable Power of Attorney & Health Care Directives: What Is the Difference?

Estate planning can include several different elements and is an important endeavor for people of all income levels and family sizes. Contrary to popular belief, estate planning is not only for wealthy people as it is a way to preserve a person's end-of-life wishes and distribute his or her assets properly, regardless of financial value. For example, one person might have a massive portfolio of valuable investments and another might only have a modest bank account, yet both of these individuals will benefit from advance directives regarding how their assets will be handled if death or serious illness becomes an issue.

Three of the most common documents that appear in estate plans are a power of attorney, a durable power of attorney and health care directives. To citizens not involved in the legal industry, these terms may seem confusing, but they are relatively simple to understand with a proper explanation. Each of these estate planning documents have different legal requirements, making it important for people to acquire a good understanding of what they mean before signing off on any documents.

Learn About Powers of Attorney

It is helpful to learn about both a power of attorney and a durable power of attorney during estate planning endeavors. Both of these estate planning tools perform extremely important functions, making them a priority for people who like to have things in order regardless of health or age. By finding out how each power of attorney functions, people will understand the differences between the two legal tools.

Power of Attorney: In simple terms, a power of attorney allows a person to grant another person the power to make decisions on one's behalf. This type of power of attorney can be used for general purposes or for a specific purpose. Many people implement a power of attorney when they need someone to handle something specific such as negotiating a contract. In most cases, people can choose anyone to act as their agent in a power of attorney, and the legal document can be canceled at any time by either party. This type of power of attorney may also contain a clause specifying when and under what conditions a limited power of attorney will end.

Durable Power of Attorney: While similar, a durable power of attorney is different because it is a much more formal estate planning document. Most of the time, this type of legal document is created in case the user becomes ill or incapacitated and can no longer manage his or her finances. As it is sometimes impossible to know when this might occur, many people choose to put the document in place before any sign of illness begins. The major difference between a regular and a durable power of attorney is language. In order for a durable power of attorney to be valid, it must explicitly state that it will go into effect when or if the subject becomes incapacitated in some way and it must also state that an incapacity will not render the document invalid. Some states may require an accompanying document called a self-proving affidavit. Should a person become incapacitated without a plan in place, the courts may appoint a guardian or conservator to make important decisions on his or her behalf.

How Health Care Directives Differ from Powers of Attorney

In almost all cases, a power of attorney does not give the agent the capacity to make health care decisions for the subject. Instead, advanced health care directives, also known as appointing a health care proxy, perform this kind of function. Essentially, health care directives empower a trusted person to make medical decisions on the subjects's behalf. The document does not cover financial decisions, which is why this legal tool is different from a power of attorney. Some states will allow the subject's physician to act as his or her health care proxy while other states believe this represents a conflict of interest and will not allow such a practice.

While these explanations about health care directives and powers of attorney are useful in helping people understand legal terminology, an experienced estate planning attorney is still the best source of information. An attorney familiar with estate planning can also help those interested in creating advance directives learn about the other kinds of documents commonly used to manage estates.

The information on this page is meant to provide a general overview of the law. The laws in your state and/or city may deviate significantly from those described here. If you have specific questions related to your situation you should speak with a local attorney.

Additional Estate Planning Articles

Search LawInfo's Estate Planning Resources