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Healthcare vs. Financial Power of Attorney: Why Both Matter in Your Estate Plan

Not all critical roles in estate planning wait until death to take effect. Two key documents—the Healthcare Power of Attorney (sometimes called a Health Care Proxy or Advance Directive) and the Durable Financial Power of Attorney—let you appoint an agent to act on your behalf during your lifetime. While you are capable, you remain in control of your own decisions. If you become incapacitated, your chosen agent steps in to make healthcare or financial decisions as outlined in the document.

What is a Healthcare Power of Attorney?

A Healthcare Power of Attorney is a legal document that authorizes a chosen individual, called a Healthcare Agent (or Health Care Proxy in some states), to make medical decisions if a person is unable to do so themselves. These can include decisions about treatments, surgeries, and even life-sustaining measures like ventilation or feeding tubes. Many states also require that the document include HIPAA authorization so the Healthcare Agent can access medical records.

The COVID-19 pandemic brought renewed awareness to the importance of this document and the Healthcare Agent’s role. In scenarios where patients were sedated or placed on ventilators, decisions about care often fell to Healthcare Agents, highlighting the real-world impact of having this designation in place.

What is a Durable Financial Power of Attorney?

A Durable Financial Power of Attorney is a legal document that authorizes a chosen individual, called a Financial Agent or Attorney-in-Fact, to manage financial affairs immediately upon signing. Unlike a standard power of attorney, it remains valid even if the individual later becomes incapacitated. This could include:

  • Paying bills and managing accounts
  • Handling investments
  • Managing property
  • Working with tax professionals or attorneys on the individual’s behalf

This authority automatically ends at death, at which point the Executor (also called a Personal Representative) assumes control.

For an aging population, this document—and the Financial Agent appointed under it—are critical to protecting assets and preventing financial mismanagement or exploitation. Without formal authorization, even close family members might not have the legal ability to act, risking unpaid expenses or frozen accounts when it matters most.

Can One Person Serve Both Roles?

Often, yes. The same person can serve as both Healthcare Agent (appointed under a Healthcare Power of Attorney) and Financial Agent (appointed under a Durable Financial Power of Attorney). However, it’s important to assess whether the individual has the skills—and emotional capacity—to handle both responsibilities effectively. If separate individuals are appointed, it’s wise to ensure they can collaborate, especially since medical decisions often have financial implications.

Who May Not Be the Best Candidates for These Roles?

Not everyone is an ideal choice. For example:

  • Minors and convicted felons are often legally restricted from serving
  • A healthcare agent generally cannot be the operator of a facility currently providing treatment unless they are related to the patient by blood, marriage, or adoption
  • Someone with a history of financial mismanagement may not be the strongest candidate for a financial role

Why Thoughtful Planning is Key

Assigning these roles requires more than picking someone “close.” It requires trust, clarity, and consideration of each person’s qualifications. When these decisions are left unmade, families can face legal barriers, confusion, or conflicts during already difficult times.

OneDigitalTrust equips financial institutions, advisors, and banks with tools to help clients formally assign these roles, supported by educational resources and step-by-step guidance. With our platform, these essential roles aren’t just names on a document—they’re informed decisions that provide clarity when it matters most.

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Why Choosing the Right Executor Matters

When creating an estate plan, much of the focus tends to be on “who gets what.” But just as critical is who makes it all happen. That’s the role of the Executor—the person (or institution) appointed in a Will to administer an estate after someone passes.

The choice of Executor carries significant weight. Not only are they responsible for carrying out the terms of the Will, but they must also navigate the probate process, settle debts, and manage relationships among heirs. For families, this can be a sensitive and emotional time, making the right Executor essential to minimizing conflict and ensuring a smooth settlement.

What Does an Executor Do?

The process usually starts when the nominated Executor files the Will and a petition for probate with the court. If approved, the court issues “letters testamentary” authorizing them to act.

Once officially appointed, an Executor’s duties typically include:

  • Notifying beneficiaries and potential heirs
  • Notifying known creditors and publishing notice to unknown creditors, as required by law
  • Collecting, inventorying, and valuing assets (courts often require a formal inventory and appraisal)
  • Paying outstanding debts, taxes, and final expenses (including obtaining an estate tax ID number and filing any required tax returns)
  • Managing and distributing assets according to the Will
  • Closing accounts and wrapping up the estate

Beyond paperwork, the Executor becomes the family’s point person—fielding questions, managing emotions, and keeping things on track. In families with existing conflicts, the right Executor can be the difference between a smooth process and ongoing disputes.

The role can also take months or even years, especially with complex estates or unique assets like businesses or property in multiple states (which may require ancillary probate in those jurisdictions). Beneficiaries may get impatient, so the Executor needs the time, patience, and commitment to see it through.

Who Should Serve as Executor?

While many people appoint a family member or close friend, it’s important to consider:

  • Financial savvy: Executors often handle complex financial tasks. Someone who struggles with finances may not be the ideal choice.
  • Location: If an Executor lives out of state, they may face logistical challenges depending on the jurisdiction. Some states require out-of-state Executors to appoint an in-state agent or post a bond, and a few restrict nonresidents unless they’re close relatives.
  • Family dynamics: Old rivalries or personal biases can make an otherwise well-intentioned choice problematic.

In some cases, families may choose to appoint a third-party or institutional Executor, such as a bank or trust company, particularly when estates are large or family dynamics are complex. All Executors—whether individual or institutional—must be appointed by the probate court, and corporate fiduciaries must also be authorized under state law. These entities typically charge a fee, which is often a percentage of the estate, and their appointment may require court approval depending on state laws.

A Critical but Often Overlooked Decision

Choosing an Executor isn’t just a formality. It’s a decision that shapes how an estate plan is executed in real life. And yet, it’s one of the most overlooked aspects of estate planning.

At OneDigitalTrust, our estate planning platform helps individuals name an Executor with guidance along the way. For financial institutions, wealth advisors, and credit unions, we can help provide their clients with the tools to prepare these critical decisions—helping ensure estates are settled promptly and with care.