Powers of Attorney and Health Care Directives
Providing Peace of Mind For Loved Ones
This past summer, my 85-year-old father had emergency surgery and developed complications. His hospital and nursing home stays kept him away from home for over two months. My cousin, not even at retirement age, has early stages of Alzheimer's disease. She worries that it won't be long before she will be unable to make medical and financial decisions for herself and that the money she has saved will quickly be gone if she needs to live in a nursing home. With some foresight and planning, both of them saved their families from grappling with the hard issues on how to ensure their bills can be paid and medical decisions made effective on their behalf.
Powers of attorney are an effective tool to appoint one or more persons to handle one's financial affairs. The person appointed is called the attorney-in-fact. A person, through a power of attorney, can designate actions that the attorney-in-fact can take on the person's behalf. These may include receiving money, paying bills, making gifts, buying or selling real or personal property, and many other financial transactions that the person may handle on a regular basis. A person can authorize the attorney-in-fact to act presently or during future periods when the person may be mentally incapacitated to act for him or herself. The power of attorney will be effective when the proper signed document is given to the attorney-in-fact.
A person can execute a health care directive outlining instructions regarding medical procedures and treatments, including terminal illness and end-of-life desires. A person can also appoint another as a health care agent who will have authority to make any medical decision which a person must normally make for him or herself. Because my father had executed a power of attorney and a health care directive before his medical emergency, his attorney-in-fact was able to pay his bills while he was in the hospital and nursing home. Because of his health care directive, the doctors knew they could fully discuss his medical treatments with his health care agent. The health care agent was able to make all the arrangements for the nursing home on my father's behalf. Without either of these documents, my father would have had extra worries and surely would not have recovered as soon as he did.
My cousin executed these documents while she was still mentally competent to do so. It is a good idea for a person in her situation to discuss her mental competency with her physician prior to signing these documents. An incompetent person does not have legal capacity to make valid appointments. If the documents are challenged, the physician's opinion of her capacity will be important.
Without these estate planning documents, the only way another person can act on behalf of someone else is to obtain court appointment of a guardian or conservator for the incapacitated person, called the ward. Depending on the need of the ward, a court will give the guardian or conservator powers to handle the ward's finances and assets and make decisions regarding medical care and residence of the ward. Often the guardian or conservator will be a family member, but the judge has the discretion to appoint someone outside the family, such as an agent from the county or a neutral party who has no connections to the ward. For these reasons, most people who plan in advance for their incapacity will execute powers of attorney and health care directives so they can choose who they want to handle their affairs. The guardian or conservator will be under judicial supervision during the period of the appointment.
My cousin worries that she will not be able to leave anything to her son because she will need to pay for extra care when she is no longer able to live alone. Couples in which one spouse will likely need nursing home care, while the other will be able to live at home, worry they will have to sell their home to pay for the nursing home. Again, by planning ahead, people can save some of their assets for family members.
When a person applies for public assistance, the county will review the person's income and assets and "look back" at the person's expenditures for the last five years. The county will add some gifts or other expenditures to the person's assets. There is a limit on the income and assets a person can have to qualify for assistance. If a person is over the limit, he or she will be ineligible for assistance for a period of time. However, the spouse who can live at home will be allowed to keep some assets so as not to be impoverished by paying for the ill spouse's care. The well spouse can continue to live in the home without having to sell it.
Planning for public assistance will include making gifts to family members and transferring or selling assets prior to the look-back period. Elder law attorneys and financial planners can assist a person to understand the complex rules and regulations for qualifying for public assistance.
Without doubt, one of the best gifts a person can give his or her family would be to execute a a power of attorney and a health care directive, and discuss his or her wishes on how to act with the people appointed to make decisions and the family. Doing so will likely avoid stress, family arguments, and judicial intervention when a loved one is incapacitated.
The information contained in this article is not intended to be legal advice or to create a contract between the reader and the author. The reader is encouraged to seek appropriate legal counsel and not to rely on the information contained herein.