As Deborah Jacobs has so eloquently stated in her Forbes.com article, Estate Planning for Women (and the Men Who Love Them), estate planning is, or at least should be, an issue for all women, young or old, rich or not so rich, married or unmarried, parent or childless. In the “gallery” accompanying her article, she lists Nine Things Women Should Know About Estate Planning. Over the next few posts, we will explore each of those Nine Things and how you can not only know what those Nine Things are, but understand some of the consequences of not knowing, or not acting, on each of those Nine Things.
Caring for Yourself is No. 1
One of the first things a woman needs for estate planning purposes is to provide for someone to take care of her in the event she becomes incapacitated, whether temporarily or permanently. There are two primary documents that are involved. The first is the durable power of attorney for financial and business purposes. The second is a health care power of attorney which deals with your physical and mental health. In Florida, the health care power of attorney is typically referred to as a “designation of health care surrogate.”
Durable Power of Attorney
A durable power of attorney is a document that allows you to designate someone to handle your financial and business affairs on your behalf. Obviously, the person you designate should be someone who is responsible, understands you needs and desires, and foremost, who is trustworthy. The durable power of attorney is a very powerful document that allows the person you have designated to have essentially full control over your assets and business afairs.
There are a number of decisions that must be made in the design and preparation of your power of attorney.
Immediate or Springing
A durable power of attorney can be effective immediately upon signing it, or it can contain language that defers its effectiveness until some defined time in the future when it “springs” into effectiveness. Generally, the “springing” power of attorney becomes effective only in the event you become incapacitated and are unable to manage your own affairs. Your personal needs and desires should control whether you use the immediate or springing power.
If your desire to have your power of attorney be a springing power is because you don’t trust the person designated to have the authority to act immediately, then you should reconsider who you name as your power of attorney. If there might be problems with your designated person’s trustworthiness now, while your are fully capable of managing your own affairs, then there will be problems if you become incapacitated.
The immediate power of attorney can be a convenience if you have reached a point where it is difficult for you to manage things, but you are still capable of making decisions for yourself, or if you travel frequently or for long periods of time.
The only potentially significant disadvantage of the springing power of attorney is the requirement that someone establish your incapacity, without the necessity of a court determination of legal incapacity. A springing power of attorney should have provisions defining what constitutes your incapacity for the purpose of activating the power of attorney. Typically, that will be the sworn statement of one or two physicians who have examined you and determined that you are incapable of managing your own affairs.
Broad or Narrow Scope
A power of attorney can be drafted to cover virtually everything that you can do for youself, or it can be restricted to limit what your designated attorney in fact can do for you. Particular areas of concern often include whether to allow the attorney in fact the ability to change beneficiary designations on retirement plans, life insurance and annuities; whether to allow the attorney in fact to modify other estate planning documents, whether to allow the attorney in fact to sell specific parcels of real property, or whether even to allow access to certain assets. There is no “one size fits all” power of attorney. Yours should be designed to meet your objectives, needs, and concerns.
Single or Multiple Attorneys in Fact
The attorney in fact is the person you have designated to handle your affairs for you. This can be an individual, or multiple individuals, or an institutional fiduciary such as a bank trust department. If multiple individuals are appointed, you can provide that they serve consecutively, so that only one person has the authority to act on your behalf at any given time; or, you can provide that they serve concurrently so that any of the named individuals can act on your behalf at any time. If you designate multiple individuals, you can require that they all agree before any action can be taken on your behalf, or that they act through majority vote. If they are to act consecutively, you can grant broader powers to the first person designated (such as a spouse), but have a more restricted authority for the second or later persons named.
Abuse of the Power of Attorney – Revocation
Powers of attorney can be easily abused. If you have the legal capacity, you can revoke a power of attorney simply by writing to the attorney in fact, identifying the power of attorney by date or generically, and stating that you revoke it effective immediately. You should also notify any third parties that you know may have honored the power of attorney, or any third parties that may have a copy of it in their possession. If you have a loved one who has a durable power of attorney in place, and you observe abuses of the power of attorney, you should consult with counsel. Florida has a number of statutes that provide for recovery of damages for such abuse, and even has a criminal statute dealing with the financial abuse of the elderly.
If You Don’t Have a Durable Power of Attorney
If you become incapacitated, and do not have a power of attorney in place, there typically are few options. Incapacity often arises unexpectedly as a result of strokes, heart attacks, accidents, or sometimes slowly over time in small increments that are not noticed until it’s too late to implement a power of attorney, such as dementia or Alzheimer’s disease.
When you become unable to manage your financial and business affairs without a durable power of attorney, or living trust, in place, the only option available is a court supervised guardanship. (Some states use the term “conservatorship.”) In a court supervised guardianship, your financial, and personal, affairs are controlled by the probate judge, in accordance with guardianship law. It is necessary to obtain court approval for your guardian to use your money and property to provide for your care, and to make proper arrangements for your care. Guardianship proceedings become a part of the public record and are open for inspection by any interested, or curious, person.
Guardianships require attorneys, and are expensive. They can result in clashes among family members over who is going to manage your assets (guardian of the property), and who is going to control your personal and physical care (guardian of the person). Guardianships should be avoided if at all possible.
Designation of Health Care Surrogate
A designation of health care surrogate allows you to name the person or persons you want to make medical decisions for you when your are unable to make those decisions for yourself. It is not a living will, which allows you to express your desires with regard to end of life decisions.
You can name one individual, or multiple individuals as your health care surrogate. You can provide that they serve consecutively or simoultaneously. If multiple health care surrogates are named, you can provide that they act unanimously or by majority vote.
The health care surrogate often has to act quickly and be readily available to respond to medical inquiries. Usually, it is more advantageous that he health care surrogate be someone local or who can be readily available. It also is more advantageous, usually, to have only one, or maybe two, person(s) involved in the decision making process, so prompt action can be taken, and so that there is no dispute as to what action can be taken.
When you check into the hospital for voluntary treatment, the hospital will make sure that you have a designation of health care surrogate for that hospital admission. However, if you arrive at the hospital in an unconcious state, from an accident or stroke, the hospital may be unable to act quickly if there is no designation of health care surrogate in place. The importance of this document cannot be overstated. Every adult person, woman or man, should have a designation of health care surrogate in place at all times.
The designation of health care surrogate should include, either as a part of the document or as a separate complimentary document, a HIPAA release and authorizaiton. The HIPAA release is a document that identifies the person, or persons, you want to have access to your protected health care information from health care providers and medical insurance companies. Without a HIPAA release and authorization, your designated health care surrogate could find themselves in the tenuous position of being authorized to make medical decisions for you, but not have the legal authority for medical personnel to release to your surrogate information about your medical condition. The HIPAA release and authorization is equally important to the designation of health care surrogate.
A durable power of attorney, properly drafted and implemented, is one of the most imporant things a woman (or man) can do for themselves in the area of estate planning. These are the documents that provide for your care, physical and financial, while you are alive, and therefore are the most important documents for you to ensure that you are taken care of the way that you want.
The second “thing” that every woman should know about estate planning will be the topic of the next installment: “Everyone Has An Estate.”
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