Which legal document designates someone to handle another person's legal and financial decisions if they are unable to?

The correct response is the durable power of attorney. This legal document specifically designates an individual to manage another person's financial and legal decisions in the event that they become incapacitated or unable to do so themselves. It provides the appointed agent with the authority to act on behalf of the principal, making decisions regarding financial matters, property transactions, and other legal issues, ensuring that the individual's wishes are honored even when they cannot communicate them.

A living will, on the other hand, is focused solely on medical decisions and outlines an individual's preferences regarding medical treatment in end-of-life situations. This document does not address financial or broader legal matters.

A health care proxy is a type of advance directive that specifically relates to medical decisions, empowering someone to make health care choices when the patient cannot. While important, it does not extend to financial or legal matters like a durable power of attorney does.

An advance directive is a general term that encompasses several documents relating to a person's wishes regarding medical treatment and can include both living wills and health care proxies; however, it does not specify who can handle financial matters.

Thus, the durable power of attorney is the most accurate answer as it clearly outlines the ability to manage both legal and financial affairs on behalf of someone else.