Please do not be confused by the term “power of attorney.” Many clients believe this term has something to do with the lawyer preparing their estate plan. Clients sometimes mistakenly fear that they are giving over some kind of power to their lawyer to make decisions for them. This is not true.
When you grant “durable power of attorney” to another person—any other person—you are designating that person as your agent, to act on your behalf. This may be your spouse, your child, a friend, or anyone, as long as he or she is an adult (eighteen or older) and not under a conservatorship or incarcerated. Now and then, someone may indeed choose an attorney for their agent, which adds confusion to the term.
“Durable” means “continuing even when you are incapacitated.” Indeed, these documents are generally written so that these powers are only granted while you are incapacitated and unable to act on your own. These are called “springing” powers of attorney, because they spring into action upon your incapacity.
If you are elderly or facing a long-term illness, you may consider gently easing someone you trust into the role of your “agent,” helping you through powers of attorney, over a period of time. This might be a sibling, a spouse, a child, or someone else you truly trust. This person should understand that if you have a stroke or other sudden decline, they will have to jump in with both feet.
If you think you may someday need to go further, and give full control to someone as conservator, you should nominate a person for that job too. This nomination is contained in the durable power of attorney for property (conservator of the estate nomination) and in the advance healthcare directive or durable power of attorney for healthcare (conservator of the person). These nominations may also be available in a separate document—apart from the durable powers of attorney for property or healthcare.
If it came to the need for a conservatorship—if, for example, you became a danger to yourself or others—a court would have to investigate and confirm your nomination. Your nominee would have to go through a criminal background check, a credit check, and more. But you would have had primary input. If you have not made a nomination, state laws indicate a priority of appointment typically based on your family tree and the laws of “intestate succession.”
Regardless of the situation, clear your decision with your designees and nominees while you still can. It’s a heavy responsibility to take on either power of attorney or to become a conservator, and you want to make sure everyone will agree to serve.
Do not surprise a loved one with this responsibility when you are hit by a car. For one thing, they may say no.
If you are the person caring for someone with a mental incapacity, you may at some point have to consider a conservatorship. Sometimes, you simply have no other choice.
I know a woman who is taking care of her husband with dementia. He had always been a loving and gentle husband and father. But the disease is destroying his judgment, and little by little he is becoming violent. Recently, when they were in the drive-through line at a burger place, he just randomly let loose and clocked her. Knocked her out cold.
Now, it is truly her responsibility to go to court and apply for a conservatorship to have him institutionalized against his will. It happens.
DURABLE POWER OF ATTORNEY FOR PROPERTY
In Mistake #9, we learned that living trusts are not generic, cut-and-paste documents. The same is true with power of attorney documents. For starters, you will be asked to grant separate powers for property and for healthcare decisions.
When you grant property power to your agent, you are authorizing this person to make decisions about your property and your finances while you are incapacitated—and to take specific responsibility for paying your bills, maintaining your online accounts, contributing to, managing, or withdrawing from your IRA, and the thousand other financial responsibilities we all face.
You may or may not, however, want this same person making healthcare decisions for you.
DIVIDED POWERS FOR PROPERTY
You should also understand that even powers of attorney for property may be best divided.
If you own a business, you may want a different person to make business decisions during your incapacity than the person making your personal financial decisions.
You may want a different person making your investment decisions than the person handling your day-to-day finances.
You may also want to grant powers of attorney which are not durable, but end when you lack capacity. This may prevent, for example, a business partner from taking some action while you are out with a stroke.
Nondurable powers may empower a spouse or a business partner to make crucial decisions every time you are on vacation in remote locations, and then disempower them again when you return.
Another important question involves gifting. Most power of attorney documents I have seen do not include gifting authority—in other words, the agent you name during your incapacity generally does not have the right to give away your property to anyone else.
However, the power for one spouse to make a gift of their assets to another may be crucial in public assistance benefit planning, as you will see under “Monetary Fallbacks for Disability,” below.
Work closely with your attorney to discuss these decisions and craft these documents. Consider your choices carefully—they may be the most important choices you ever make.
POWER OF ATTORNEY FOR HEALTHCARE
If you are incapacitated with an illness, even if you are just under sedation for an hour-long operation—who do you trust to have your best interests at heart and make the right calls with doctors? Approve treatments? Argue with hospitals to keep you longer?
If you lose mental capacity due to stroke, dementia, Alzheimer’s, Parkinson’s, or other common conditions, who do you trust to move you from nursing facilities to home and back again?
Every one of us should choose a trusted person, discuss the responsibilities with that person, and update your choice as often as necessary. The power to make medical decisions for us when we cannot do so is called a “durable power of attorney for healthcare,” and is granted through a pretty straightforward document.
The document says simply, “If I cannot make healthcare decisions for myself, then this person or these people can make them for me.” You can name more than one person to serve jointly, or you can name them to serve consecutively. If this person cannot serve, then the power falls to the next, and etc.
Once again, a “power of attorney for healthcare” has nothing to do with the attorney writing the document. You can grant the healthcare power of attorney to anyone.
If you have a primary residence in one state and a vacation home in another, we recommend to our clients that they create a durable power of attorney for healthcare for each state, because a lot of the related laws are state-specific.
HIPAA AUTHORIZATION
A second document works closely with the power of attorney for healthcare decisions.
The Health Insurance Portability and Accountability Act (HIPAA) created significant restrictions on who has access to your healthcare information. Although it boosted privacy, it also created barriers to swift decision-making and intervention by loved ones. If a doctor or hospital divulges your health information to someone without the proper authorization, they face huge fines—as much as $50,000 per violation, in some situations.
As a result, all health professionals and organizations take HIPAA rules very seriously.
The HIPAA authorization you sign gives authority to one or many people to have full access to your health information. As previously discussed in the Introduction, you may want to expand this authorization well beyond the person you have granted your power of attorney for healthcare. For example, you may want a home healthcare worker to be able to call up and check on your prescriptions, even if you don’t want this person to make major medical decisions for you.
Think through your HIPAA authorizations carefully with an expert lawyer. In some cases, for example, you may want to have separate HIPAA authorization documents for different people and circumstances.
Although HIPAA is a federal law, there is no federal HIPAA form. Each state has its own. In my home state of California, for example, a HIPAA authorization must be printed in fourteen-point type to be valid!
LIVING WILL AND ADVANCE HEALTHCARE DIRECTIVES
A “living will,” sometimes known as an “advance healthcare directive,” tells medical personnel, loved ones, and the person you have given power for healthcare decisions your preferences for medical care in dire circumstances, “in advance.” A living will generally comes into play only when you are in the late stages of a fatal illness, fall into a coma, or have suffered an extremely serious injury.
Please do not confuse “living will” with “living trust.” They are completely unrelated documents, with different purposes.
In most cases, the goal of a living will is to give permission to loved ones to let you pass away in order to avoid unnecessary suffering. Most living wills say, in essence, “If I’m a goner, let me go.”
When my grandmother had a heart attack, my grandfather called the paramedics. It was a massive heart attack. The paramedics rushed over, got out their paddles, and shocked her heart back to life. Then they put her on a ventilator and took her to the hospital. But she never recovered consciousness, and never showed signs of recovering the ability to breathe on her own. The doctors said there was no hope, and indeed, when I looked at her, I could see that her soul had probably already left her body.
My grandmother had created no living will and had never even discussed this possibility, so the decision to terminate life support was made even more difficult for my father and his two older brothers. After a week, my father and his brothers made the agonizing choice to terminate life support. Ten years later, my father still asks me, “Did I do the right thing?”
I tell him that I was very close to my grandmother. And then I say, “Of course, you did.” I say this because there really was no alternative. But the choice would have been much easier if she had made her own desires clear in a living will.
I will not go into all the specific details of a living will, such as how it relates to “Do Not Resuscitate (DNR)” and “Physician Orders for Life-Sustaining Treatment (POLST)” orders. Instead, I refer you to your attorney. Just make sure you get the appropriate legal and medical advice.
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