APRIL 26, 2010 VOLUME 17, NUMBER 14 A power of attorney is one of the most important, powerful and dangerous documents you will ever sign. Why is it important? Because your family has no inherent right or power to handle your finances in the event that you become incapacitated. Why is it dangerous? Because it is literally a license to steal.
Of course the agent named in your durable power of attorney is not supposed to steal from you. In fact, he or she can go to jail for doing so. But the whole point of the power of attorney is to make it easier for someone to handle your finances without court oversight, and without having to answer to banks or others. Too often agents abuse those powers of attorney.
So why is it important for you to sign a power of attorney? Because the alternative is, for most people, even more disturbing. Your family members and even your most trusted advisers are not able to handle your bank accounts, pay your bills, buy or sell property or protect against abuses by others — unless you have given them authority to do so in an appropriate document. That usually means a power of attorney.
There are alternatives, of course. You could create a living trust, name a successor trustee and transfer your assets into the trust. That may make it a little bit easier for your successor to handle your assets, but it does not provide any additional protection. You could simply add a trusted person to the title on each of your accounts — but that provides even fewer safeguards, and exposes your property to claims leveled against the now-joint owner of your assets.
Or you could simply hope never to need anyone to act on your behalf. Then when someone needs to act they will have to go through the process of securing a conservatorship over your estate (what some states call a guardianship of your estate). That provides better protection, but perhaps at a greater cost than you want to incur — and it means the court, rather than your family member or trusted adviser, having the ultimate authority.
That is why almost everyone we counsel ends up signing a durable power of attorney. That is also why it is so critical to make sure you have selected your agent carefully, warned them about the limitations on their authority, and provided them enough information so that they can act appropriately.
When you name someone as your health care agent, you literally entrust them with life-and-death decisions. When you are the agent the job can sometimes seem overwhelming.
Sometimes health care decisions must be made by someone who was not even designated in a power of attorney. A “surrogate” decision-maker (usually, but not always, the closest family member) is often empowered by state law to act when the patient has not made a specific choice. Few patients have had specific discussions with their agents about their health care wishes, and those who have not gotten around to signing advance directives are even less likely to have given any direction.
Although thousands upon thousands of people make health care decisions for someone else every year, there is little help or direction available for the agent or surrogate. Lawyers may be familiar with end-of-life care and decisions, but they seldom get involved — and may be an expensive way to facilitate decisions even if they are available.
We can offer some general advice and a pair of printed resources for those making health care decisions for someone else. First, a few suggestions:
Talk to the person who has named you as agent about his or her wishes. Sooner is better than later, but even a seriously ill, demented or incapacitated patient might be able to give some direction.
If you know you have been named as health care agent, ask for a copy of the power of attorney. It might include provisions that surprise you, or that you need clarified.
When you have to begin using the health care power of attorney, make sure you get all the information you need. Talk to doctors, nurses and caretakers. Explain why you need to have your questions answered, and insist that you get them answered.
If you do not fully understand the medical issues involved in a given procedure or test, tell the providers you need more information. Do not hesitate to get a second opinion when you are uncertain what you should be doing.
Remember that you are not applying your own standards to the decision, but those of the person for whom you are acting. This can be the most difficult part of handling a health care power of attorney or surrogacy. The law recognizes — and favors — what it calls “substituted judgment.” That means that you are expected to substitute the patient’s judgment for your own, not the other way around.
There are at least two good printed resources for a health care decision-maker to consult. Both are online and free. We regularly recommend these to our clients (and their families):
Hard Choices for Loving People, by former hospital chaplain Hank Dunn. You can read and print it online at no cost. You can also purchase one or more printed copies, in English or Spanish, for $6.00 each (or less — prices drop as you order them in bulk).
When it comes time to complete estate planning, our clients usually have clear ideas about who should receive their property, what health care decisions they would want made — even how they feel about cremation, burial, organ donation and most of the other issues that must be addressed. What stumps more clients than any other issue? Who to name as trustee, personal representative (what we used to call an “executor”), and agent under health care and financial powers of attorney.
Some of the common questions we hear from clients about whom to select:
Is it acceptable to name a child who lives out of state? Yes, at least in Arizona, which does not require in-state residency for any of the various fiduciary roles. With e-mail, fax machines, overnight delivery and other modern communications options, there is usually little difficulty for your son on the east coast (or even your daughter in Japan) to communicate. In fact, we frequently observe that we may have an easier time communicating with your the Iowa sister you named as agent than your nephew who lives on the east side of Tucson.
There is one small exception to that rule, and it is more practical than legal. We generally counsel that the ideal health care agent should live near you. Reviewing medical records, talking to doctors and caretakers, and developing a clear picture of your condition is much easier for someone nearby.
Can I name several, or all, of my children as co-agents, co-trustees, etc.? Yes, though we may try to discourage you from naming multiple fiduciaries. To the extent that you are trying to avoid family disputes, it is our experience that giving everyone equal authority tends to encourage disagreements. We will probably suggest that you might want to name your daughter (the banker) as financial agent, and your son (the nurse practitioner) as health care agent — and each as back-up to the other. If you really want to give them joint authority, though, there is no legal reason not to do so.
Speaking of which, is it better to name different people to health and financial roles, or give the same person authority over everything? There is no clearly correct answer. You know your family (and their strengths and weaknesses) much better than we do. If there is one person who is capable in all areas, by all means give that person authority as health care agent, financial agent, personal representative and trustee. You can segregate the roles as a means of providing checks and balances, or to give everyone reassurance that you value their input.
Do I have to tell everyone involved who will have which authority? No. But as a practical matter, we encourage you to do so. We want your daughter to realize, for instance, that she is the one who needs to make arrangements if something should happen to you. We hate to see someone show up, ready to act — and then find out they have no role. That creates confusion, and obviously can engender hard feelings.
We hope that you will share your estate planning documents with all your family (and any non-family members named as trustee, agent, or personal representative). There is no legal requirement that you do so, but it does increase the likelihood that any problems can be worked out while you are still alive, competent and in charge of your own decisions.
