Although the core concept behind powers of attorney and living wills is similar, each document deals with different subjects.
- Power of Attorney. Generally denotes a financial power of attorney, which is an estate planning document through which you can delegate financial decision-making authority to a trusted individual as your agent
- Living Will. Specifies your health care preferences in advance, just in case you are ever unable to later communicate those preferences directly. Living wills are often paired with medical powers of attorney to collectively form what is known as an advance health care directive
In this article, we show how the differences between a durable financial power of attorney and living will makes them complementary estate planning documents. We'll discuss how you can use each as part of creating a comprehensive estate plan.
Difference at a Glance
| Advance Health Care Directive | Power of Attorney | |
|---|---|---|
| Authorizes agent to make certain financial decisions | No | Yes |
| States health care preferences | Yes (Living Will) |
No |
| Authorizes agent to make health care decisions | Yes (Medical Power of Attorney) |
No |
| Effective while principal has capacity | No* | Yes |
| Effective when principal does not have capacity | Yes | Yes |
| Grants authority to act after death | Limited | No |
* Although you can legally authorize your agent acting under a medical power of attorney to make healthcare decisions for you while you have capacity, such an arrangement is not common.
The key difference between a financial power of attorney and a living will is that a financial power of attorney grants the agent authority over financial decisions, whereas a living will establishes your healthcare preferences, typically with a focus on end-of-life healthcare decisions.
Some people will also use the term “living will” interchangeably with an advance health care directive. An advance health care directive includes a living will and a medical power of attorney through which you can delegate the authority to make healthcare decisions on your behalf if you cannot make them yourself.
Beyond their different subject matters, financial powers of attorney and living wills have a few more subtle differences, including when the agent can act and whether the decision-making authority continues after death.
When the Agent Can Act During Life
Agent Acting Under a Power of Attorney
In your financial power of attorney, you can specify when you want to authorize your agent to act. Based on what you specify, your power of attorney will be considered either a "springing" power of attorney or a "durable" power of attorney.
| Act While You Have Capacity | Act if You Are Incapacitated | |
|---|---|---|
| Springing Power of Attorney | No | Yes |
| Durable Power of Attorney | Yes | Yes |
A springing financial power of attorney 'springs' to become effective only if you are judged or diagnosed to be incapable of making your own decisions.
A durable financial power of attorney allows your agent to act both while you have the ability to make decisions for yourself and if you become incapacitated and lose that ability.
Durable financial powers of attorney are the most common form of financial powers of attorney. Nonetheless, in many states, you still need to explicitly declare in your financial power of attorney that you intend for it to be a durable financial power of attorney.
Agent Acting Under an Advance Health Care Directive
Since a living will only establishes your healthcare preferences in advance, a living will by itself does not confer any agent decision-making authority. Instead, think of your living will as like a rule book that guides your medical team in providing your care.
If you want to authorize someone to make healthcare decisions for you, you'll need to create a medical power of attorney (sometimes called a power of attorney for healthcare). That healthcare agent typically only acts if you lose the ability to make your own decisions. Although less common, if you wish, you can authorize your healthcare agent to make decisions for you while you are still capable of making them yourself, too.
Ability to Act After Death
The authority of an agent to act under a financial power of attorney – regardless of whether it is a springing power of attorney or durable power of attorney – ends at death. After you pass, a different person will step in to manage and wind up your earthly affairs. If you created a last will, this person is your executor. If you created a revocable living trust, this person is known as the Trustee.
The authority under a medical power of attorney for the most part also ends at death (there are no more healthcare decisions for the agent to make!). The one exception is if you authorize your agent to commission an autopsy or donate your organs, in which case your healthcare agent retains those limited decision-making powers for such time following your death as is necessary to fulfill those wishes.
Can you have a durable financial power of attorney and a living will?
Durable financial powers of attorney and living wills serve complementary purposes. Most estate planning attorneys recommend that you create both a durable financial power of attorney and living will as part of your comprehensive last will or trust package.
How to create a durable financial power of attorney and living will
Creating a durable financial power of attorney or living will is easy to do.
If you create your last will or revocable living trust with an estate planning attorney, most will include the option to create a durable financial power of attorney and living will at no extra cost.
If you plan to do create your documents by yourself, you can usually find a template power of attorney and template living will in your state’s legal statutes. Simple google searches for “[State] Uniform Power of Attorney” or “[State] Short Form Power of Attorney” usually turn up the right pages for a power of attorney, and you can likely use “[State] Health Care Decisions Act” to find a state-approved version of a living will. Focus on .gov sites operated by your state, or your sites containing your state’s legal code.
The simplest and most convenient way to create a durable financial power of attorney or living will is through an online estate planning platform like Just In Case Estates. We walk you through the process in our step-by-step questionnaire and include helpful context and resources to help you understand the decisions available to you. We translate your answers into custom documents specific to your state that are guaranteed to be legally valid.
Both a power of attorney and living will are included for free in our last will and revocable living trust packages. So what are you waiting for?
