Transcript Estate Planning for Life

Estate Planning for Life
Buckley Fricker, J.D. GCM
[email protected]
The Fairfax County Bar has a section on Elder Law.
www.fairfaxbar.org 703-246-2084
The National Academy of Elder Law Attorneys is based here near Tyson’s
Corner.
www.naela.org 703-942-5711
The information in this packet is for educational purposes and is not meant
to provide “legal advice” to any reader.
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Types
• Power of Attorney
– Durable, or Not Durable
• General/Financial or Limited
• Advance Medical Directive (AMD)
combines:
Health Care Power of Attorney
and Living Will
• Do Not Resuscitate Order (DNR)
•
(There is a push to rename a DNR as AND – “Allow Natural Death)
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What If . . .
• Imagine you have a stroke, and for a few months
you cannot speak, and you never regain the
ability to walk.
• In 2010, you can live for years this way, maybe
longer.
• Who will speak for you? Who will walk to the
store and the post office for you?
• Who will manage to pay your bills, your taxes,
and decide where you will live, what therapies
you get and which care company changes your
diapers and bathes you…
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In The Past . . .
• In the “olden days” if you did become
incapacitated, your family took care of you in
some way, or you lived as an invalid under some
charitable program, if there was one.
• (Picture the Old West for instance, or life during
the Industrial Revolution.)
• Somehow, those who were old and sick and
disabled were cared for, or not, until they passed
away.
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A New Need . . .
• There was no need to designate a person to
decide your financial and health decisions when
there was no such thing as living in a vegetative
state, or living for years with Alzheimer's.
• People just did not live that long, and we did not
have the medical machinery to keep us alive, at
least for very long, through incapacitation.
• Estate Planning for “life” became a “new age”
necessity by the 1980’s.
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Who Comes In Contact With These Documents?
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Financial Planners
Care Managers
Social Workers
Attorneys
Health Care Providers
People with Elderly Parents
People with Special Needs Children
EVERYONE!
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The Statutory “Fall Back”
• Please note that without executing a Financial
Power of Attorney, a person who becomes
mentally incapacitated will have to go through a
court process to have a Conservator named by
the court to act on their behalf for all financial
decisions and obligations.
• Without an Advanced Medical Directive naming
a Health care Power of Attorney, a Guardian will
have to be named by the court to make any
medically or health care related decisions.
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Guardian/Conservator
• The court can appoint the same person to be both
Guardian and Conservator. A suitable family member
will be sought out, and if none is available, a local lawyer
will probably be appointed.
• Quite simply this means that if you do not take the time
to choose WHO will have complete and utter control over
you if you have a stroke, develop dementia or have a
brain injury, a Judge will choose that person for you.
(Scary huh?)
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Power of Attorney (POA)
• Technically, an person who is an Agent/Attorney in Fact
is given a “Power of Attorney,” (the power to act legally).
The POA is a document.
• However, it is easier and widely accepted to refer to the
“agent” as the Power of Attorney for financial POAs, or
Healthcare Power of Attorney for HPOAs.
• I will use “POA” and “HPOA” as nouns referring to the
individual who is the Agent/Attorney in Fact, as well as
the name of the document.
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POA
• A Power of Attorney is an authorization to act on
someone else's behalf - “stand in his shoes” - in a legal
or business matter.
• Imagine way back in history. A business owner needed
to be able to send an Agent on a ship far away to place
an order for goods. That Agent needed a legally binding
document to persuade the seller that he had authority to
act for his boss, hence a Power of Attorney document.
• This type is called a “common law” POA.
• It became invalid upon the Principal’s
death or incapacity.
• Modern POAs become invalid only at death.
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POA
• The Grantor of the power, who is called
the Principal, gives another person (the
Agent or Attorney in Fact - the POA) a
legal right to act on the principal’s behalf.
• There can be multiple originals of a POA
(unlike for a Will).
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Example
• Having 2 originals of the Power of Attorney
document can be handy, for instance:
• Your POA buys property in your name. The
POA document must be filed with the deed at
the Courthouse. The Courthouse can take a
long time to get the original back you.
• In the meantime your POA needs to open an
account in your name and a bank wants to see
an original document.
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Successor and Joint
• It is a good idea to name a back-up POA or HPOA. The
document can say “If Jane Doe does not act, I appoint
John Doe.”
• That way if one POA or HPOA is out of town or not
reachable, the other person can make decisions.
• Alternatively, a Principal (person granting the authority)
can require that two or more people act together or
“jointly” for all decisions. (This can lead to arguments,
but can be a good idea depending on the circumstances
– discuss with your family and your attorney.)
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POA
The POA can do such things as:
• Sign your checks
• Agree to pay for new services for you from your funds
(such as agree to pay the bill for an Assisted Living
Facility or a new wheelchair).
• Open a new bank account and transfer funds for you.
• Possibly “make gifts” (although this requires specific
language and could affect Medicaid planning for LTC
and annual allowable gifts under tax laws).
• POAs cannot give gifts to themselves or “self deal”
without explicit authorization in the POA document.
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Limited or Special POA
• POA documents can have narrow language such as granting a POA legal authority for the
sole purpose of signing closing documents on a
property sale.
• Ex: John Smith is buying real property here but he lives
overseas. He doesn’t want to fly over here just to sign
the closing documents, so he grants a POA to Mary
Jones, a local, to sign the closing documents for him.
• She would sign: John Smith, by Mary Jones Attorney in
Fact.
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Durable POAs
Because of the length of the signature, POA’s
who need to sign checks frequently might
choose to order checks in the account owner’s
name and their name as POA so they can just
sign their name.
Today, most financial POA documents are
1. Durable (survive incapacity)
2. General (not limited)
3. Effective Immediately (not “springing”)
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When Does the POA
Take Effect?
Most are effective immediately because 3rd parties like
banks need to be able to rely on them immediately without
proof you are incapacitated. A “springing” POA does not
become effective UNTIL you become incapacitated (as
discussed below).
•What if your POA decides to clean out your bank
accounts?
•If your POA robs you, presumably, you would notice,
revoke the POA, and press charges/sue them.
This is why you must choose someone Trustworthy!
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Example
• The POA has a legal fiduciary duty to act on your behalf
and can be held liable in court for violating that
obligation. Choose someone you trust and preferably a
back-up successor as well, in case something happens
to your first choice. Most family member POAs are
usually not paid, but payment of a fee for this service can
be provided for in the document. Payment of POAs is a
growing trend. It must be worded correctly in the
document or the POA won’t be able to pay themselves
(Self-Dealing!)
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Springing POA
• A POA (or HPOA) can also be what is called
“Springing”, which means the document has a clause in
it saying that it does not become effective until you are
deemed to be incapacitated by some explicitly stated
means. (Such as: 2 doctors verify in writing that you are
not competent). One problem is this defeats the purpose
of using a POA to avoid the uncomfortable “process” by
which you are proven incapable of handling your own
affairs, like what happens in a Guardian/Conservator
court process!
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Uniform Power of Attorney Act
• Virginia has adopted the Uniform Power of
Attorney Act (one of 48 states, plus the Virgin
Islands) proposed in 2006 by the National
Conference of Commissioners on Uniform State
Laws.
• While the Uniform Power of Attorney Act
(UPOAA) substantially clarifies Virginia law
related to Durable Powers of Attorney (DPAs), it
also makes several key changes to the law. A
few key points are the following:
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UPOAA
• All powers of attorney are presumed durable
(survive the incapacity of the Grantor) unless
stated otherwise in the document.
• The UPOAA provides protections for third
parties who in good faith accept a purportedly
acknowledged (signed with the correct witness
and notary requirements) power of attorney.
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UPOAA
• The UPOAA provides sanctions against
third parties for their unreasonable
refusals of POAs.
• The UPOAA identifies certain powers
(e.g., gifting and changing designations of
beneficiary) that must be specifically
granted.
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Example
Cinderella’s Dad is alive and well. He is 85 and
planning ahead. He grants a durable, general,
financial POA to Cinderella. He can still act on
his own behalf. Although he still pays some of
his bills, he finds it tiring, so he often passes
them on to Cinderella and she pays some of
them from his bank account. Cinderella prefers
online bill paying, so she sets up his online
account, pays some bills that way, while he still
writes paper checks.
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Time Passes. . .
• Cinderella’s Dad is now nearing 90 years old.
He has developed Alzheimer’s disease.
Cinderella, as his POA, is now responsible for
handling all of his finances and assets. The
transition was smooth because of the Power of
Attorney document, and there is no need for a
court hearing to appoint Cinderella or anyone
else as the Conservator. She has had the
stand-by power all this time.
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Bank Accounts
• When a person is appointed as a POA,
they should take the document to the
bank, or banks where the Grantor’s
accounts are held. Each bank has a
process by which they “approve” the
appointment, which paves the way to set
up online banking or order checks, either
at that time or in the future.
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In Addition
• Some Banks and Most Brokerage Firms
have their own Power of Attorney forms.
• In addition to the POA you sign that an
attorney draws up, which will likely
authorize your Agent to act on your behalf
in all financial matters, be sure to inquire
with your financial planner or broker as to
whether they have additional forms.
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Medical Advance Directives
The three legally binding documents that
pertain to your health are:
1. Health Care Power of Attorney (HPOA)
(always “durable.”)
2. Living Will
HPOA and Living Will can be combined in a
single Advance Medical Directive (AMD).
3. Do Not Resuscitate Order (DNR)
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Health Care Power of Attorney (HPOA)
• Similar to when a person appoints another
person to be their Financial Power of
Attorney, one can also appoint another
person to be their Health Care Power of
Attorney.
• Most people appoint family members or
close friends, although you can appoint
anyone you feel can follow through on
your medical directive if you are unable.
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Health Care POA
• A Durable Health Care Power of Attorney document is
used when/if the Principal cannot communicate an
informed decision on their own. (Either physically cannot
speak or write, or is mentally unable to communicate a
competent wish or desire).
• An HPOA usually states that if an attending doctor and
one other doctor or licensed psychologist deems a
person unable to communicate an informed decision,
they will follow the direction of the HPOA.
• (So, you do not need to have a court hearing stating you
lack capacity to make decisions.)
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HPOA
Depending on a specific State’s rules:
• The document can be narrow or Limited,
such as granting a HPOA just for a single
event - such as while you are in surgery.
• It can be broad, such as deciding any and
all “health-related” decisions for you,
including signing a Do Not Resuscitate
Order (discussed below).
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HPOA
• Recently some states (including Virginia)
have broadened the application of
directives from “Medical” to “Health Care”
to make sure an HPOA can make
decisions about such things as admission
to Assisted Living or Nursing Home
Facilities and who can visit a patient.
These were not seen as being “Medical”
per se, but needed to be included.
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HPOA
• Currently the default position is that a HPOA
cannot restrict who may visit a patient in a health
care facility unless the HPOA document
specifically grants that right to the HPOA agent.
• Additionally, absent an HPOA document, if the
facility has to go by the state’s statutory default
for who gets to be the HPOA, that person cannot
restrict who may visit.
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HPOA
• It is crucial to discuss your desires with
your HPOA. They are supposed to be
acting for you, as you would act yourself,
and not insert their own wishes.
• The HPOA cannot do this job if they don’t
know your wishes.
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EXAMPLE
• Cinderella’s Dad appoints her as HPOA
when he is 85 and feeling fine.
• He decides to go jet skiing at the local
inlet. While doing so he collides with
another jet skier and is taken to the
hospital unconscious.
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HPOA
• Cinderella’s Dad needs surgery. There
are pros and cons regarding the treatment
options. One is to amputate the leg;
another is to try to save it. Both have risks
and repercussions and someone needs to
make a decision. Dad is unconscious and
unable to make this decision, so it falls on
Cinderella, the HPOA.
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Communication is Everything
• Lucky for Cinderella, her Dad had talked
about the “What Ifs” with her.
• He said that being active is so important to
him, that he would rather have a shorter
life than an in-active one.
• Therefore, Cinderella directs the doctors to
keep the leg, even though that treatment
method could result in more complications
leading to death.
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HPOA
• As Dad nears 90 and develops Alzheimer’s
disease, he cannot live alone. Cinderella can,
for instance, decide to admit him to an Assisted
Living Facility, or hire the necessary medical
assistance for him to remain at home.
• She can decide many things regarding her
Dad’s health care, such as which medical
treatments and therapies to try.
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HPOA
• As Dad nears death, Cinderella recalls he did
not want to be kept alive artificially.
• Cinderella directs medical personnel NOT to
administer artificial fluids and nutrition to her
father, for she is obligated to follow his wishes.
He will receive “comfort care”.
• If Dad has a Living Will, that document will direct
the Doctor outright, and the HPOA doesn’t have
to actually make this decision. See below.
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Living Will
• A Living Will has nothing to do with a regular “Will” and
it is NOT a Living Trust or Pour Over Will.
~~Don’t confuse the identity of the Living
Will!~~
• A Living Will, is an advance directive, a decision
made in advance. It is a legal document that a
person signs in order to express to medical
personnel what kind of treatment they do or do
not want if treatment would only prolong the
dying process.
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Living Will
• A Living Will got the name because just as
with a regular Will where you direct what
you want to be done with your belongings
and property after you die, a Living Will
directs what you want done with your
“Self” while you are still Living.
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Living Will
• These documents were not really
accepted by the medical community until
the 1990’s because they seemed to
conflict with the Hippocratic Oath, to do no
harm, i.e., do everything medically
necessary to keep a person alive.
• At first, attorneys would have to threaten
to sue doctors who refused to follow the
directives that a patient had signed.
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Example
• Cinderella gets the news that Dad’s
Alzheimer’s disease has progressed and
he is unable to eat or drink. He will not
live long unless he is given IV fluids and a
feeding tube for nutrition.
• Dad’s Living Will says that he does not
want artificial nutrition or fluids to be kept
alive, and it also says he wants to be
made as comfortable as possible until he
dies.
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Example
• Cinderella should ensure that Dad is receiving:
• Palliative Care - “a form of medical care or
treatment that concentrates on reducing the
severity of disease symptoms, rather than
striving to halt, delay, or reverse progression of
the disease itself or provide a cure.” (Wikipedia)
• And/Or
• Comfort Care - getting the necessary pain
medications to make his last few days/months
as comfortable as possible. (Usually provided by Hospice
Services at home or in a facility.)
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Example
• Given the directions in Dad’s Living Will,
Cinderella is legally not permitted to decide, as
HPOA, that she wants to have the doctors keep
Dad alive through artificial means because his
Living Will states his wishes, and her HPOA:
1. Does not trump the Living Will
2. Her obligation as HPOA is to follow his
wishes, which, even without a Living Will, he has
hopefully communicated to her.
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IMPORTANT!
• As you can see, it is crucial to sit down and talk
to your loved ones and/or HPOA about your
wishes concerning your health care.
• To the extent reasonable, incorporate those
wishes in your HPOA document.
• If you do not, your HPOA will be left to guess
what you would have wanted, and that can
cause an emotional burden.
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Do Not Resuscitate Order
• A DNR is used when a patient is near death in
an emergency situation, usually from cardiac or
respiratory arrest.
• This document can be obtained only from a
doctor, not an attorney.
• This document is signed at a doctor’s office or
in a hospital. It is printed on the same paper as
Bonds to deter counterfeiters (e.g., greedy kids
who want their inheritance as soon as possible!)
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DNR
• People living in their own homes with an
emergency DNR often place the DNR on their
refrigerators. If an ambulance is called, the
medical personnel will likely look there to see if
CPR, electric heart shocks or other treatments
should be started.
• A person may also opt to have a DNR bracelet.
• An HPOA can sign a DNR order for a person.
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The Five Wishes
• Virginia is a State in which you can use the Five
Wishes document in lieu of an Advanced
Medical Directive, but regardless of whether you
choose an Advanced Medical Directive or the
Five Wishes, the Five Wishes is an excellent
platform to help you make decisions and talk
about them with your family or HPOA.
• Go to http://www.agingwithdignity.org for
more information.
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