FINANCIAL FOCUS
Planning For Incapacity Or Illness by Tina Triano, Esq.
I
n my law practice, I have the opportunity to review many different estate plans. One issue that fre- quently stands out is missing parts of a complete plan. Merely having a trust docu- ment does not mean you have a complete estate plan. One of the most important compo- nents of a complete estate plan is a document that addresses potential incapacity or illness known as a durable power of attorney.
A durable power of attor- ney is a document in which you appoint someone as your “attorney in fact,” usually your spouse or a close rela- tive, to have the power to take care of your affairs should
anything happen to you, either temporar- ily or permanently, during your lifetime. There is no requirement that an “attor- ney in fact” be an actual attorney. A power of attorney can be “general” or “special.” When you give someone a gen- eral power of attorney, then that person has the power to manage a broad range of your affairs. If you give someone a specific power of attorney, then that per- son has only the specific power that is given to him or her within the document, such as the sale of real estate or health care when you become incapacitated. A properly drafted durable power of attorney becomes effective upon incapac- ity or incompetence. One of the major flaws of an inadequately drafted power of attorney is that the document becomes valid only when your incapacity or incompetence is recognized by one or
44 July 2011 • Out & About
two physicians. The imperfection in this power of attorney is that there may be times when you are not mentally “inca- pacitated” or “incompetent,” but merely unavailable, such as out of the country or extremely ill. Obviously, no physician is going to sign off if you are merely unavailable or of sound mind. A good example of this situation is a cancer patient undergoing regular, but physical- ly and mentally debilitating chemothera- py. In this situation, the personal is nei- ther mentally incapacitated nor incompe- tent, but is certainly unavailable to man- age their personal affairs. When you have a power of attorney that requires physician letters, the document is invalid until these letters are obtained. It can also be very difficult to get a physician (let alone two of them) to write you let- ters of incapacity. Without this “trigger,” the power of attorney has no effect and
no bank, financial institu- tion or title company will accept it and you will still have to go through legal maneuvers for the docu- ment to become effective. Consider the possible situation – you are extremely ill and in no mood to pay bills or do any banking. Instead, you would like your brother or sister, or mother or father to take care of this for you while you convalesce. Your doctors will not write let- ters of incapacity because you are not mentally inca- pacitated. Another possible situation is that you take a trip out of the country and, for whatever reason you
have difficulty returning home perhaps due to terrorist threats or political pres- sures. You certainly could have difficulty paying your bills from overseas and you clearly are not incapacitated, only unavailable. A properly drafted durable power of attorney would allow your attorney in fact to manage your finances until your return. Proper estate planning is supposed to make your life easier in times of difficulty. It is not supposed to create more work for you and your loved ones.
When I draft a power of attorney, I make sure that the document does not require a trigger for it to be effective. They are effective the moment that they are signed and notarized. This also means that you should take great care in selecting your “attorney in fact” as you are giving them full control in the event
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