This article is for educational purposes only and does not constitute medical, legal, or financial advice. Every family situation is different, and you should consult with appropriate professionals about your specific circumstances.

Healthcare Power of Attorney vs. Financial Power of Attorney: They're Different

If you've started looking into power of attorney documents, you've probably noticed that people keep mentioning two different ones. You might think they're the same thing with different names. They're not. They're completely separate documents that give you completely separate authority, and your parent might need both.

The confusion is understandable. The language is similar. They serve the same purpose: giving you the legal right to act on your parent's behalf if they can't act for themselves. But the domain is different. One covers healthcare decisions. One covers money and property. Getting confused about which is which can leave you without authority where you need it most, and it can mean going to court to get guardianship when a simple document would have done the job.

This article walks you through the real differences and explains why most families need both documents, not just one.

Healthcare Power of Attorney: Medical Decisions

A healthcare power of attorney gives you authority to make medical decisions on your parent's behalf. This is sometimes called a healthcare proxy, medical power of attorney, or healthcare attorney-in-fact. The terminology varies by state, but the concept is the same: your parent is saying you get to decide about their medical care if they can't.

What does that actually cover? It means you can talk to their doctors and ask for their medical information. You can decide whether to pursue treatment, change treatment, or stop treatment. You can choose which hospital they go to or which specialist treats them. You can direct their care based on their values, even if the doctors don't think it's the best medical choice. You can decide whether to keep them on life support if they're dying and have no chance of recovery. You can make decisions about pain management, comfort care, end-of-life decisions, organ donation, and what happens to their body after death.

The specific scope depends on what your parent puts in the document. Some parents give their agent broad authority to make any medical decision. Some parents limit it. They might say, "I want you to make all decisions except you cannot remove me from life support unless I've been unconscious for six months and there's no chance I'll recover." Or, "You can make decisions about treatment but not about where I live." Or, "Only decide about pain medication, not about surgery." Your parent's document spells this out.

There's often confusion about the difference between a healthcare power of attorney and a living will. They do different jobs. A living will is a document where your parent tells you and their doctors what they want done if they're dying. A healthcare power of attorney gives you the authority to make decisions and to speak for your parent in medical settings. Many families have both, because they work together. The living will tells you what your parent wanted. The healthcare power of attorney gives you the legal right to carry out those wishes.

Here's a practical scenario: Your parent has a stroke and is hospitalized. They're conscious but unable to speak. The doctors want to know whether to do aggressive rehabilitation or palliative care. A living will doesn't help in this situation because your parent isn't dying, they're recovering from a stroke. But a healthcare power of attorney helps, because the document says you get to speak for your parent and tell the doctors what your parent's values are and how they want to approach their recovery.

Another scenario: Your parent is dying of cancer. They said in their living will that they don't want CPR and they don't want to be kept alive on machines. The healthcare power of attorney gives you the legal authority to tell the doctors to honor that wish and to work with the hospice team on comfort care.

The healthcare power of attorney takes effect when your parent can't make medical decisions for themselves. That might be because they're unconscious, or it might be because they have cognitive decline and can't understand medical information. The document usually specifies this. Some say it takes effect immediately. Some say it only takes effect after a doctor certifies that your parent lacks capacity. Either way, once it's in effect, you're the one who speaks for your parent in medical settings.

You'll present the healthcare power of attorney to hospitals, nursing facilities, rehabilitation centers, your parent's doctors, and any other medical provider. They'll want to see the original document or a certified copy. Some facilities have their own medical power of attorney form and will want your parent to fill that out in addition to the one you have. Be prepared for that. It's bureaucratic, but it's normal.

Financial Power of Attorney: Money and Property

A financial power of attorney gives you authority over your parent's money and property. This is sometimes called a durable power of attorney or a financial power of attorney. Again, terminology varies by state, but the function is the same: your parent is saying you get to manage their financial affairs if they can't.

What does that cover? It might mean paying bills, managing bank accounts, making deposits and withdrawals, managing investments, buying or selling property, refinancing the mortgage, filing taxes, managing insurance policies, paying medical bills, handling Medicare and Social Security, making charitable gifts, or hiring someone to care for your parent and paying them from your parent's money.

The scope is whatever your parent decides. Some parents make it very broad: you can do anything with their money and property that they could have done. Some parents limit it: you can pay bills and access one specific account, but you can't touch the investments or sell property. Your parent decides and puts it in the document.

This document is essential if your parent ever loses capacity and you need to keep their financial life going. If your parent has a stroke and becomes unable to manage money, you need this document to pay their bills, keep insurance current, manage their investments, and handle all the financial obligations that don't stop just because your parent is incapacitated.

Without it, you can't do any of those things, even if your parent's accounts are empty and bills are piling up. You'll have to go to court and ask for guardianship or conservatorship. A judge will appoint you to manage your parent's money, but only after a legal proceeding that takes time and costs money.

There's also a practical angle here. Your parent might not lose complete capacity. They might still be conscious and able to understand conversation, but have early dementia and not be able to manage a checking account anymore. Or they might be too physically frail or in pain to deal with bills and financial matters. A financial power of attorney lets you step in and help without court involvement.

The document takes effect either immediately or when your parent becomes incapacitated, depending on how your parent and their lawyer set it up. Most lawyers recommend making it effective immediately, because if your parent is still capable, they're right there with you and you can work together. If your parent loses capacity later, the document is already in place.

You'll present the financial power of attorney to banks, insurance companies, investment firms, the mortgage lender, the property tax assessor, the IRS for taxes, Medicare, Social Security, and anywhere else that manages your parent's money or property. They'll verify it, and some might ask for it to be notarized or might require additional forms. Be prepared for that. Financial institutions have their own requirements, and they're often more stringent about verifying authority than healthcare providers are.

Why You Might Need Both

Some people assume that if you have a power of attorney, you have authority over everything. That's not how it works. A healthcare power of attorney gives you authority only over healthcare. A financial power of attorney gives you authority only over money and property. If you only have a healthcare power of attorney and your parent loses capacity and their bills aren't getting paid, you have no authority to fix that. You can't access the money. If you only have a financial power of attorney and your parent is hospitalized, you can't make medical decisions.

Some people also assume they can name the same person as agent for both documents. You can, if you want. But you don't have to. Your parent might trust one child with medical decisions and another child with money. Or your parent might trust a spouse with healthcare but a younger child with finances because the spouse isn't comfortable managing those details. Or your parent might trust a lawyer or accountant with financial decisions and a family member with healthcare decisions. The documents are separate, so the authority can be split however your parent wants.

Here's a practical reason to have both: if something happens to your parent, you need to be able to manage their medical care and their finances at the same time. Your parent is hospitalized. You need to make medical decisions about their care. You also need to authorize payment for that care, coordinate with their insurance, pay their rent while they're hospitalized, and make sure their other bills don't get behind. Without a financial power of attorney, you can be sitting in the hospital making sure your parent gets the right medical care while their rent goes unpaid because you have no authority to access their bank account.

How They Work Together

These documents often work with other documents. A healthcare power of attorney works with a living will. A financial power of attorney works with a will. A will tells you what happens to your parent's property after they die. A power of attorney tells you what authority you have while they're alive.

They might also work with an advance directive, which is an umbrella term that can include both healthcare directives and financial directives in one document. Some states use the word "advance directive" to mean anything that directs what happens if your parent becomes incapacitated. Some use it to mean specifically healthcare directives. Your lawyer will know what makes sense for your state.

Some families also set up a living trust, which is a separate legal structure that can avoid probate and can specify what happens to property if the person setting it up loses capacity. A power of attorney is still important even if there's a living trust, because the power of attorney covers decisions and actions that the trust doesn't address.

What matters is that your parent thinks clearly about what authority they want to give you, and that they have the right documents in place to give you that authority. One document won't do it all. Two usually does.

Getting Them Done

Both documents need to be prepared by a lawyer or at least reviewed by a lawyer before your parent signs. A template from the internet might work, or it might not. It depends on your state's requirements, what your parent's specific situation is, and whether banks and hospitals will accept it. Having a lawyer handle it costs money, but it's insurance against the documents not working when you need them.

Your parent needs to be mentally capable of signing both documents. They need to understand what they're signing and what authority they're giving you. If there's any question about whether your parent has capacity, talk to their doctor. Some doctors will give you a letter saying your parent has capacity if you're planning to do this paperwork, just to have it in the file in case there's ever a question later.

Both documents need to be signed and notarized. Most states require notarization for both. Some states require witnesses. Your lawyer will handle this. Once they're signed, keep the originals in a safe place and give your parent a copy. You might want to give copies to your parent's doctors and financial institutions, or you might wait until you need them.

Tell your parent where the originals are. Tell at least one other family member. If nobody can find them after something happens, they're much harder to enforce.

The Practical Reality

In a perfect world, your parent would have both documents prepared by a lawyer, signed, notarized, and stored safely. In the real world, a lot of people don't have either. Some have one but not the other. Some have documents that are years old and might not be accepted by current institutions.

If your parent doesn't have these documents, get them done now. If your parent is already showing signs of cognitive decline, get them done immediately. If there's any question about capacity, see a doctor first and get documentation.

If your parent has documents but you're not sure if they're the right ones, have a lawyer review them. It might be that they need to be updated or clarified. It's worth the money to know that you have the right authority when you need it.

How To Help Your Elders is an educational resource. We do not provide medical, legal, or financial advice. The information in this article is general in nature and may not apply to your specific situation. If you are concerned about a loved one's cognitive health or safety, consult with their healthcare provider or contact your local Area Agency on Aging for guidance and support.