By: Kathryn Nekola
Two documents included in a standard estate plan are a power of attorney and a health care directive. A power of attorney allows someone to manage your financial and legal matters, while a health care directive allows someone to make your medical decisions. Both documents plan ahead for a time when you cannot act for yourself, but they govern entirely different areas of your life. If you are weighing your options, our estate planning attorneys can help you decide what you need.
What Is a Power of Attorney?
A power of attorney is a document in which you, the principal, appoint another person, your agent or attorney-in-fact, to handle your financial and legal matters. North Dakota follows the Uniform Durable Power of Attorney Act as codified in N.D.C.C. ch. 30.1-30. A durable power of attorney remains effective even if you later become incapacitated, which is exactly when a majority of people need it the most.
Your agent or attorney-in-fact’s authority can be broad or narrow. Typical powers include paying bills, managing bank and investment accounts, filing taxes, handling real estate, and running a business. Importantly, a power of attorney does not cover medical treatment decisions, and it terminates automatically when the principal dies.
What Is a Health Care Directive?
A health care directive is a document that outlines your wishes about medical treatment and lets you appoint a health care agent to make medical decisions if you are unable to speak for yourself. Through N.D.C.C. ch. 23-06.5, North Dakota law combines what other states call a “living will” and a “medical power of attorney” into a single instrument.
Under North Dakota law, health care directives can include two parts: instructions about the care you do or do not want to receive (such as life-sustaining treatment, pain relief, comfort care through nutrition and hydration, and anatomical gifts), and the appointment of an agent to carry out those wishes. A health care directive generally takes effect only when a physician determines you can no longer make or communicate your own health care decisions.
Key Similarities
Both documents share the same core purpose: they let a trusted person act on your behalf when you cannot. Other similarities include:
- Advance planning. Each document is signed while you are competent, so your wishes are recorded before a crisis.
- Revocable while competent. You can change or revoke either document at any time as long as you have the necessary legal capacity.
- Avoiding court intervention. Both can help your family avoid a guardianship and/or conservatorship proceeding.
Key Differences
The clearest way to understand the differences between these documents is to look at what each one controls. They are not interchangeable. One document cannot do the job of the other. Key differences include:
- Scope of decisions. A power of attorney covers finances and legal matters. A health care directive covers medical and end-of-life decisions.
- Governing law. Power of attorneys fall under N.D.C.C. ch. 30.1-30, while health care directives fall under N.D.C.C. ch. 23-06.5.
- When it takes effect. A durable power of attorney can be effective immediately or upon incapacity. A health care directive typically becomes effective only once you are deemed to be incapacitated.
- Signing requirements. A power of attorney is generally notarized, while a health care directive requires either notarization or two qualified witnesses.
Do You Need Both Documents?
A common question is whether both documents are really necessary. For most adults, the answer is yes. Because a power of attorney cannot authorize medical decisions and a health care directive cannot authorize bill paying or property management, the two documents fill different gaps.
Without these documents, your loved ones may have to petition a court to be appointed as your guardian and/or conservator, a process that is public, time-consuming, and often costly. A few signed pages prepared in advance can spare your family that burden.
Additional Resources
If you are interested in reading more on this and related topics, check out the following blogs:
- Powers Of Attorney And Health Care Directives In COVID-19 Times
- What Happens If I Don’t Have A Health Care Directive
- Power Of Attorney Or Guardianship?
- How to Spot Diminished Capacity Signs in a Loved One
- Who’s Who In Estate Planning
- Recognizing Financial Exploitation In Vulnerable Adults
Conclusion
A power of attorney and a health care directive are two important documents in any estate plan, and together they protect both your finances and your medical wishes. An estate planning attorney can help you prepare a coordinated estate plan, including a power of attorney and a health care directive that reflect your specific wishes and are properly executed.
If you have any questions regarding power of attorneys or health care directives, please contact us!
This article is for informational purposes only and is subject to our disclaimer.
