If you ever become incapacitated (through accident, illness, or just plain aging) and are unable to handle your own affairs, a court order may appoint a guardian or conservator to manage your money. The court may not appoint the guardian whom you would have chosen. Even if the court ultimately does approve your choice of guardian, the approval process will be subject to unnecessary red tape and confusion. The simplest way to protect yourself - and to ensure that your property will continue to be managed as you see fit – is to appoint a guardian for yourself through a durable power of attorney. Preparing a durable power of attorney ensures that if you ever become unable to manage your own financial and personal affairs, someone whom you trust will act on your behalf. No matter how it is arranged, your durable power of attorney may be canceled at any time, and it terminates immediately upon your death.
Health privacy rules may require a change in power of attorney or living trust documents. The Health Insurance Portability and Accountability Act (HIPAA) was designed to protect medical privacy by, among other things, preventing doctors from speaking freely about a patient's medical condition without consent. But this well-intentioned law may create a problem if you have given power of attorney to someone to take care of your medical and financial needs in the event you become incapacitated. Most power of attorney documents or trusts that appoint a trustee in such events are triggered only when you become incapacitated. Therein lies the problem. Under HIPAA rules, the person you have designated to act on your behalf may not be able to secure enough medical information to ascertain your incapacity.
The solution for a power of attorney is to prepare a HIPAA authorization form that permits the person you designated to act on your behalf to have access to your medical information. If you have a trust, the procedure to enable access to your medical records is more complicated, but is no less necessary. Check with your attorney in either case.