Powers of Attorney
A power of attorney is a legal document by which a person with mental capacity gives legal authority to another person (called the “attorney in fact,” who does not need to be a licensed “attorney at law”) to manage certain of his affairs. The affairs to be managed are specifically described in the power of attorney. A “springing” power of attorney may be signed at any time but becomes effective upon the occurrence of a specified event, such as incapacity. A “durable” power of attorney becomes effective when it is signed and continues indefinitely through the point of incapacity. In the context of powers of attorney, “capacity” is typically defined as understanding the nature and consequences of the action of executing the power of attorney, though different states may apply slightly different tests. A person without mental capacity cannot execute a valid power of attorney.
A few other characteristics of powers of attorney are important to note. First, a critical distinction between a power of attorney and a “guardianship,” defined below, is that a person granting a power of attorney, while he has mental capacity, may revoke the power of attorney at any time and continue managing his affairs on his own behalf. Second, copies of a power of attorney should be distributed appropriately, with extra copies kept immediately at hand, to ensure that the necessary individuals and entities are aware of the attorney’s decision-making authority. Finally, different states often have different standardized forms that can be used to create simple powers of attorney.
Health Care Decisions
A patient has several options to control health care decisions to be made if he or she becomes incapacitated. Typically, family members are asked to make health care decisions for incapacitated patients, but the options below can minimize potential confusion about which family members should make decisions and which decisions should be made. A “living will” can specify the types of treatments, procedures, and pain management that a terminally ill or vegetative patient does or does not wish to receive. A “health care proxy” or “health care power of attorney” designates a person to make health care decisions for the patient, and is not limited to end-of-life situations. An “advance directive” is typically a document encompassing elements of both a living will and a health care proxy.
A court may appoint a “guardian” or “conservator” to manage the affairs of a person, who is then called the “ward.” A guardianship can typically be established when a person is not able to make decisions managing his affairs, has not executed or is not mentally competent to execute a power of attorney, and serious harm may come to the person if a guardian is not appointed. The court may appoint a guardian of the person, a guardian of the person’s estate or property, or a single guardian for both. A caregiver who believes that a guardian should be appointed may hire an attorney and petition an appropriate court to appoint one or more guardians to handle various aspects of the person’s affairs. Because the establishment of a guardianship involves removing substantial rights from the ward, guardianship is typically considered only after other strategies for protecting the ward have been contemplated, and courts typically attempt to maintain the maximum safe level of autonomy for the ward.
Under extreme circumstances a person may be compelled by a court to receive treatment in a mental institution. Strict legal and procedural standards, often differing from state to state, guide the process of civil commitment. Most states require a finding that a person is dangerous to himself or to others before a court may commit the person to an institution, and most commitments must be temporary, with the court required to redetermine the need for commitment after a certain period of time.
A will is a legal document designating certain persons or entities to receive a person’s property upon his death. A will can be written by any person 18 or older who is mentally competent. A person is typically considered to be “competent” for purposes of creating a will if he knows that he is executing a will, knows the nature and extent of his property, and can identify the persons who are designated in the will. The primary purposes of the will are to designate beneficiaries to receive property, to designate guardians for minor children, to declare preferences for burial arrangements and organ donations, and to appoint an executor to oversee the execution of the will and management of the estate. If a person is the sole parent or legal guardian of minor children and does not designate a guardian for the children, a court will designate a legal guardian for the children.
“Probate” is a term used to describe the process by which a court approves a will and distributes a person’s property according to a will or state law upon the person’s death. If a person dies without a valid will, known as being “intestate,” a probate court will distribute the person’s property to his heirs and creditors according to state law.
For a description of a “living will,” please refer to the section above entitled Health Care Decisions.
A trust is a legal entity into which a person can place certain property or money for the benefit of a beneficiary. The creator of the trust can name someone else as trustee or can name himself as trustee and manage the trust until he dies or becomes incapacitated. A trust typically holds the property or money and pays certain income to the beneficiary, although there are numerous forms of trusts designed to accomplish different objectives. Trusts may also be useful in conjunction with a plan to become eligible for Medicaid.
Special Needs Trust
A “special needs trust” or “supplemental trust” is designed such that a disabled beneficiary can receive gifts, inheritance, or other funds and still maintain eligibility for Medicaid or other government assistance. These trusts are designed to pay for expenses that government assistance programs do not cover. Though typically created by a family member for the benefit of a disabled person, under certain conditions a person may create a special needs trust with his own money and for himself as beneficiary while maintaining eligibility for government assistance.
The Americans with Disabilities Act prohibits government agencies and other employers with 15 or more employees from discriminating against disabled persons who can still perform the essential functions of a job with reasonable accommodations, so long as those accommodations do not cause the employer undue hardship.
Caregiver Predeceasing Patient
All legal and financial planning should take into account the possibility that the caregiver could predecease the incapacitated person. Especially among the elderly, the physical and emotional stress of caregiving can be overwhelming, and can distract the caregiver from appropriately planning his or her own affairs. Where possible, powers of attorney, wills, guardianships, trusts and other documents should identify the person or entity to succeed the caregiver in the event of the caregiver’s death.