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Five Power of Attorney Myths…

Five Power of Attorney Myths…

FIVE POWER OF ATTORNEY MYTHS

Powers of attorney are documents where a person names a person (their “attorney”) to make healthcare and financial decisions for them if they are incapacitated.  Such incapacity could be temporary or permanent.  Some powers of attorney are drafted so that a person gives another person power to do something because they cannot.  An example would be giving your adult child power of attorney to sign closing documents for the sale of your home because you live out of state.

Power of attorney lawyer O’Fallon, Missouri can help you draft these very important documents which are a cornerstone of any estate plan.

There are a few myths about these documents and here are five of them:

  1. Any Power of Attorney Form Will Work

The Web is an all too easy place to find a form for anything these days.  However, with a power of attorney, every state has different rules and statutes to make the document legally binding.  Forms online are often too general, do not contain details that are appropriate to your specific situation and are ambiguous.  An even bigger problem is that by the time you discover the form document you printed doesn’t work, it’s too late.  See below.

  1. You Can Sign a Power of Attorney At Any Time

Many people are unaware that you have to be mentally competent in order to create a power of attorney.  However, very often a person needs a power of attorney because they are no longer competent.

Unfortunately, if that person is incompetent, it’s too late anda court has to determine whether the person should have a guardian and/or conservator appointed.  It’s a much more dragged out process, it’s costly and can be challenged by others.

Bottomline, if someone you know is in need of a power of attorney, don’t wait.  Act quickly before they lose competence.

  1. A Durable Power of Attorney Is Still Valid After Death

A power of attorney allows a person to make decisions for another only as long as they are alive.  Once a person passes away powers of attorney are invalid.  At death, the operating documents are the person’s will and/or trust.

For a healthcare power of attorney O’Fallon, Missouri, the last thing the agent can do is arrange the cremation or burial wishes of the deceased.  This is called the Right of Sepulcher.

  1. A Power of Attorney Allows a Person to Do Whatever They Want

A person chosen to be a power of attorney has a fiduciary duty to the principal, the person who gave them authority.  That means they have to act in the principal’s best interests at all times, even if it’s not stated in the document, which it usually isn’t.

It’s important to note, however, that fiduciary duties are broken all the time.  Therefore, it’s important that a person choose a trustworthy individual to be there power of attorney.  It also helps to name someone who knows a bit about financial matters and you know will act and act properly.

  1. If You’re Married, Your Spouse Is Already Your Power of Attorney

When it comes to a power of attorney, being married doesn’t automatically make your spouse your agent.  That doesn’t mean they can’t be your power of attorney but they’ll need to be named so in the document, just like anyone else.  You’ll also need alternates in case you and your spouse are both incapacitated at the same time.

For healthcare decisions, if you don’t have a healthcare power of attorney, you spouse is considered your first next of kin and can make decisions above anyone else.  But the next of kin after your spouse may not be your choice, so it’s necessary to create a healthcare power of attorney.  In so doing, you’ll also create a much needed healthcare directive, sometimes referred to as a living will or advanced directive.  This document provides end of life instructions about medical treatment you either would or would not want to have withheld if a doctor determines it can’t heal you.

A Guide to Caretaking for an Elderly Parent: Part 1 – Estate Planning

A Guide to Caretaking for an Elderly Parent: Part 1 – Estate Planning

A Guide to Caretaking for an Elderly Parent: Part 1 – Estate Planning

One of the first steps a person caring for their elderly parent should look into is whether they have an estate plan.  Do they have a will?  Is there a financial power of attorney?  Does Mom have a healthcare directive or living will?

These are just a few of the questions that Part 1 of my blog post series “A Guide to Caretaking for an Elderly Parent” will discuss.

But first, a reality check.  People in your position often feel embarrassed that they don’t know about Mom or Dad’s finances, the specifics of what medications they take or where they do their banking.  They also feel inadequate that they are not doing enough.  Take solace in knowing that this is very normal.  There is no course in college or many ways to prepare for suddenly becoming the parent for your own parents.  That’s just how it is.  You’re going to need to get used to the fact that this is all new, that’s it’s all happening fast and that you can make mistakes and learn from them.  It’s just like parenting really.  There’s the plan and then there’s life.

Okay, with that out of the way, the first step you need to take is to review what legal documents your parent or parents have put together as part of their estate plan.  Look around the house, ask their financial advisor.  Are you the power of attorney for Dad?  Where is the document?  I advise most clients that I do estate planning for to keep their documents in a place that their family can find them, rather than locked up.  Start with a search with that in mind.

If your parents don’t have any planning, the next step is to meet with an estate planning attorney like myself so they can  determine whether Mom or Dad (or both) have capacity to create an estate plan.  That is, do they have the legal ability to make and understand a power of attorney, a will, a living will or a trust?  An attorney can make that determination after meeting with them.

If they can make an estate plan, get that done as soon as possible.  You’ll need the power of attorney to help them do things like banking, dealing with doctor appointments and filing taxes.

If they do not have capacity, the attorney you meet with may suggest that you get guardianship and perhaps conservatorship over your parent.  That means that you will need to file paperwork in the court where they live to be appointed as the legal decision maker (guardian) and financial decision maker (conservator) for them.  If Mom does not have capacity, a doctor will indicate that by completing documentation supporting your guardianship petition.  The downside is that this may take a couple of months to get resolved.  However, once Letters of Guardianship and Conservatorship are awarded, you may assist your parent with whatever they need.  You are legally in charge of all the decision making related to their lives.

In Part 2 of “A Guide to Caretaking for an Elderly Parent” we will look at a crucial issue:  does Mom or Dad stay at home or do they need to go into long term care?

Family Fighting Over Powers of Attorney…

Family Fighting Over Powers of Attorney…

FAMILY FIGHTING OVER POWERS OF ATTORNEY

Squabbles over who can act on your parent’s behalf through a Power of Attorney and the decisions made in that role can cause problems within any family.

Even when mom or dad plans ahead and creates the Power of Attorney (POA) legal document before they’re impaired by a health condition, there can be ongoing strife among family members.

Sometimes the decision of who to appoint in the Power of Attorney role, from the parent’s standpoint, is very clear and easily made. Parents will put their faith in the oldest child, or choose one child over another based on who lives closest or whom they trust because of their skills, especially with financial decisions.

In my own practice, I often see years of responsible living by one child making all the difference when it comes down to deciding who should be in charge.

In other cases, a parent is suspicious about their child and doesn’t trust them 100 percent with their money. Sometimes if the oldest isn’t chosen, there’s emotional backlash toward parents and siblings because they are insulted by the decision.

In Missouri., multiple people can be appointed Power of Attorney.  The downside to selecting multiple people is that can result in arguments later, if they cannot agree on a decision.  Luckily in Missouri, we allow separate Powers of Attorney for healthcare and financial decisions, so the duties can be separated between siblings.

In some families, having a child in the healthcare field as a doctor or nurse makes it very easy to decide who should be in charge for healthcare decisions in a power of attorney.  The same is true for families with a child who is an accountant or financial advisor.  They make easy selections for who should be in charge for financial decisions in a power of attorney.

Be aware, however, that even if the appointment of POA is smooth and didn’t involve much gnashing of teeth, that doesn’t mean bickering won’t begin once the person granted POA assumes duties related to parents’ financial and medical decisions. Many times, the challenge to the POA happens after the parent passes away, when transactions and other decisions by the POA are second guessed by the other children.

While the parent is still alive, a sibling may try to trump the person appointed POA by saying their parent was incapacitated when making the decision. When that happens, it can result in an expensive guardianship fight in court.

Here are other common situations seen by elder law attorneys:

“The Sibling Rivalry” : An ongoing sibling rivalry can chip away at the “power” that someone granted Power of Attorney holds and cause kids to argue over daily and long-term decisions. When the siblings don’t trust the person granted POA, what I see most often  is constant questioning about decisions. One or multiple siblings may appear to be always on the POA holder’s back, challenging each health care and financial decision.

“Unwilling To Let Go” :  The POA holder must act in the best interest of the person they are representing, even when it comes to making those tough health decisions.  If not, they can be sued.  Having handled these types of cases on both sides, they can be nasty, protracted and expensive.

“Financial Feuds” :  Once siblings start to question what is happening to their ineritance, the battle over finances heads to court, and it can happen whether the parent is alive or has died.

In a frequent scenario, the person appointed POA may decide to pay themselves back for the expenses of caring for a parent, such as driving them to doctor’s appointments and buying food or medications.

In one case I had when I practiced in New Jersey, the only daughter was appointed POA and took care of her mother for years, even as her health sharply declined.  Two brothers, who lived out of state, questioned everything she did, although it was very clear that Mom had decided to reward her daughter in her estate plan by giving her a large share of the estate.  The brothers were incensed but it was clear that years of neglect by her sons had upset her and that she recognized that her daughter going above and beyond and the sacrifices she made for years in taking care of her and making sure her every need was met.

One recommendation I make to clients is that they contact an attorney before the damage within these families becomes permanent.  Often an attorney can act as a buffer between the two sides and bring everyone together.   This not only may salvage the long term relations among family members, but save a lot of emotional turmoil and hurt feelings.

Estate planning and mental capacity…

Estate planning and mental capacity…

Every time I meet with an estate planning client, I have to assess whether they have the mental capacity to create and execute an estate plan.  In most cases, this is a quick and simple assessment.  At other times, usually with elderly clients, it can be more difficult.

One side of the capacity equation involves the client’s abilities, which may change from day to day (or even during the day), depending on the course of the illness, fatigue and the effects of medication. On the other side, greater understanding is required for some legal activities than for others. For instance, the capacity required for entering into a contract is higher than that required to execute a will.

This is a relatively “low threshold,” meaning that signing a will does not require a great deal of capacity. The fact that the next day the testator does not remember the will signing and is not sufficiently “with it” to execute a will then does not invalidate the will if he understood it when he signed it. In contrast, the threshold for entering into contracts is fairly high.

The standards for entering into a contract are different because the individual must know not only the nature of her property and the person with whom she is dealing, but also the broader context of the market in which she is agreeing to buy or sell services or property. Competency to enter into a contract presupposes something more than a transient surge of lucidity. It requires the ability to comprehend the nature and quality of the transaction, together with an understanding of what is “going on,” but an ability to comprehend the nature and quality of the transaction, together with an understanding of its significance and consequences.

As a practical matter, in assessing a client’s capacity to execute a legal document, attorneys generally ask the question, “Is anyone going to challenge this transaction?” If a client of questionable capacity executes a will giving her estate to her husband, and then to her children if her husband does not survive her, it’s unlikely to be challenged.  If, on the other hand, she executes a will giving her estate entirely to one daughter with nothing passing to her other children, the attorney must be more certain of being able to prove the client’s capacity.

While the standards may seem clear, applying them to particular clients may be difficult. The fact that a client does not know the year or the name of the President may mean she does not have capacity to enter into a contract, but not necessarily that she can’t execute a will or durable power of attorney. The determination mixes medical, psychological and legal judgments. It must be made by the attorney (or a judge, in the case of guardianship or probate determinations) based on information gleaned by the attorney in interactions with the client, from other sources such as family members and social workers, and, if necessary, from medical personnel.  Doctors and psychiatrists cannot themselves make a determination as to whether an individual has capacity to undertake a legal commitment.  But they can provide a professional evaluation of the person that will help an attorney or a court make this decision.

Because you need a third-party to assess capacity and because you need to be certain that the formal legal requirements are followed, it can be risky to prepare and execute legal documents on your own without representation by an attorney.

How to choose the people in charge of your estate plan

How to choose the people in charge of your estate plan

How to choose the people in charge of your estate plan

One of the most important aspects in creating an estate plan is creating the people who will carry out your wishes.  This can be especially difficult if you are single and/or have a small family.  In fact, this issue requires the strongest consultation skills because most people understandably don’t grasp the duties involved of a person such as a power of attorney, an executor or a trustee.  This is one of the many values I can bring to my client in helping create their estate plan:  offering advice on who should be put in charge and for what purposes.

This first blog article will cover the process of choosing the individual(s) to be your power of attorney.

I’ve written other articles on the importance of having power of attorney documents.  In most estate plans, they come in two types.  The first document is a durable power of attorney for finance and property.  This document allows you to name someone to make financial and, indeed, almost all non-health related decisions for you if you are unable to do so yourself.  The other document is a healthcare power of attorney.  In this document you name a person (called an “agent”) to make healthcare decisions for you if you are incapacitated.  Such decisions could also allow the decision to put you into a skilled nursing facility, to switch doctors or to change the course of a medical treatment.

Now that you have a better background on what these documents are, it’s time to discuss the who aspect of these documents, as in who you want calling the shots if you cannot.

If you are married, the first person you are most likely and frankly should choose to make decisions on your behalf is your spouse.  So the process of choosing a power of attorney is automatically easier.  But…you are now tasked with choosing an alternate or even better, two alternates (or as many as you are comfortable with).

The durable power of attorney for finance requires, above all, someone who you trust and someone who will act.  Trust is obviously a crucial aspect of this document.  Someone in your life who you love but is a liar or has problems with money or managing money is not a good candidate.  Proximity is a plus as well and that is because if you are single or widowed and unable to make decisions for financial matters, you’re going to need this person to act on your behalf every day.  So being close is helpful.  But close and trustworthy is not enough.  Do they have a busy life?  Would it be better to ensure they will act that just name them and assume?  Always ask if there is any doubt as to whether they can act.

Keep in mind that power of attorney for finance does not have to be a finance, legal and accounting wizard.  It’s better, in fact, to have someone who understands that the document permits them to hire someone to handle these various aspects of your life.  Above all, your POA should be a person of action.

And that also goes for the power of attorney for healthcare decisions (again, referred to as your “agent”).  Remember, as we advance in age, health problems can come on gradually or suddenly, i.e. you may need an agent to take you to your doctor appointments and be there immediately if you are rushed to the hospital (hopefully not!).

Your healthcare power of attorney does not need to a medical professional but it certainly does not hurt.   In my next blog article, I will discuss another aspect of the healthcare power of attorney that you need to consider in choosing your agent:  the healthcare directive.