Planning for Incapacity
A durable power of attorney allows you to carry on your financial affairs in the event that you become disabled. Unless you have a properly drafted power of attorney, it may be necessary to apply to a court to have a guardian or conservator appointed to make decisions for you when you are disabled. This guardianship process is time-consuming, expensive, often costing thousands of dollars and emotionally draining.
There are generally two types of durable powers of attorney: a “present” durable power of attorney in which the power is immediately transferred to your attorney in fact; and a “springing” or future durable power of attorney that only comes into effect upon your subsequent disability as determined by your doctor. When you appoint another individual to make financial decisions on your behalf, that individual is called an “attorney in fact”. Anyone can be designated, most commonly your spouse or domestic partner, a trusted family member, or friend. Appointing a power of attorney assures that your wishes are carried out exactly as you want them, allows you to decide who will make decisions for you, and is effective immediately upon subsequent disability.
Generally, any individual over 18 years of age who is a resident of the state in which it is created and who is legally competent can create a power of attorney
In general, an agent may be anyone who is legally competent and over the age of 18. Often, it is a family member such as a spouse, sibling or a child. While more than one person can be named as an agent, naming two or more individuals to act together can prove inconvenient, especially if a power of attorney must be exercised promptly. It is usually more prudent to name one individual as agent and then another as an alternate.
Your agent presents the original power of attorney document to the other party involved in the transaction and signs documents on your behalf. Your agent signs his or her own name, followed by the words “Attorney in Fact for Bob Jones”.
The law allows you to appoint someone you trust, for example, a family member or close friend, to decide about medical treatment options if you lose the ability to decide for yourself. You can do this by using an Advance Health Care Directive where you designate the person or persons to make such decisions on your behalf.
You can allow your Health Care Agent to decide about all health care or only about certain treatments. You may also give your agent instructions that he or she has to follow. Your agent can then make sure that health care professionals follow your wishes and can decide how your wishes apply as your medical condition changes. Hospitals, doctors and other health care providers must follow your agent’s decisions as if they were your own.
In some states, there is also a document called a “Living Will.” A Living Will informs others of your preferred medical treatment should you become permanently unconscious, terminally ill, or otherwise unable to make or communicate decisions regarding your medical treatment and care. In the State of California, the function of a Living Will is contained in the Advance Health Care Directive.
A well drafted Advance Health Care Directive will not only include instructions for your Health Care Agents, but also detained directives to your treating physicians about your care in the event that you no longer have a Health Care Agent. Because it is such an important document, it should be custom-drafted for you.
Most states have instituted “Living Will” laws to protect a patient’s right to refuse medical treatment. Even if you receive medical care in a state without Living Willl laws this document is useful to a court trying to decide what an unconscious patient would want. In conjunction with other estate planning tools, it can bring peace of mind and security while avoiding unnecessary expense and delay in the event of future incapacity.
Some medical providers have refused to release information, even to spouses and adult children authorized by durable medical powers of attorney, on the grounds that the 1996 Health Insurance Portability and Accountability Act, or HIPAA, prohibits such releases. In addition to the above documents, you should also sign a HIPAA Authorization Form that allows the release of medical information to your Agents, your Successor Trustees, your family and other people whom you designate.
Attorney Robert P. Bergman, Board Certified Specialist in Estate Planning, Trust and Probate Law, assists families in the San Francisco Bay Area with Estate Planning, Special Needs Planning for children and adults, special planning for retirement plan assets, and trust administration.