Power of attorney is a document empowering another individual to make decisions on your behalf. For example, someone can be given power of attorney to make a business decision on a person’s behalf if that person couldn’t attend an important meeting. In the context of estate planning, the most common power of attorney is a durable power of attorney. This means the document remains effective for an individual if s/he is incapacitated. You can have separate medical and financial power of attorney documents, naming one person to act on your behalf for medical decisions and another person for financial decisions.
A living will works in conjunction with a power of attorney by expressing your wishes should you be incapacitated or in a vegetative state. The living will can ensure your wishes for your medical care are followed, but since you don’t know if or what may happen to you, any additional decisions can be left up to the trusted individual named in your medical power of attorney. Likewise, the individual given financial power of attorney can act on your behalf in that capacity while you’re unable to perform those actions.