When people think of estate planning, they most often (and mistakenly) think only of trusts/wills and what happens to their assets upon their death. However, a comprehensive Durable Power of Attorney for Property Management (“DPA”) and Advance Health Care Directive (“ACHD”) provide important before-death benefits that are typically overlooked.
DURABLE POWERS OF ATTORNEY
A Durable Power of Attorney is a document whereby you (the principal) designate an agent to manage, on your behalf, your assets that are not titled to your Trust (if you have one). These assets include bank accounts, vehicles, businesses, retirement accounts, digital assets, real property, securities, and insurance policies. Other powers vested in an agent in a comprehensive DPA include the power to: (a) sue on behalf of the principal, (b) exercise certain limited powers over the principal’s other estate planning documents, (c) prepare/file tax returns, (d) correspond with others, (e) maintain pets, and (f) make payments for funeral/memorial services.
On the contrary, your DPA can also be very limited in terms of the powers the document gives your agent. Regardless, your agent has a legal, fiduciary duty to act your best interests when exercising the powers in the DPA.
A Durable Power of Attorney can be effective immediately, or upon the incapacitation of the principal. If the document is effective immediately then your agent will immediately have the powers expressed in the DPA. However, if the document is effective upon your incapacitation, your agent must first obtain signed letters by physicians indicating that you are incapacitated. If you travel frequently, it may be a good idea to have your DPA effective immediately. In addition, spouses almost always wish to have their DPAs effective immediately for convenience.
DPAs are important to have in place because if you are out of the county, severely ill, incapacitated, or simply do not want to manage your finances anymore, your agent can handle your assets on your behalf. If a DPA is not in place and you become incapacitated, the only way another individual can exercise powers similar to those in a DPA is for that person to be appointed as the conservator of your estate. Appointing a conservator of the estate is an expensive, lengthy court process that a DPA can avoid altogether, or at the very least delay.
It is also worth noting that a DPA becomes invalid once the principal passes away because at this time the individual’s trust and/or will govern how their assets are handled.
Individuals often put others on title to their bank accounts, homes, and other assets in order to give them access to these assets if they are ill or incapacitated. However, this is a very bad idea since that person’s creditors can seize and otherwise access those assets to fulfill the debts, obligations, and liabilities of that person.
ADVANCE HEALTH CARE DIRECTIVES
An Advance Health Care Directive is a separate document whereby you (the principal) designate an agent to make health care decisions on your behalf if you are incapacitated or otherwise unable. Other powers vested in an agent in a comprehensive AHCD include the power to: (a) determine where you will live, (b) provide meals, (c) hire household employees, (d) provide transportation, (e) handle mail, (f) arrange recreation and entertainment, and (g) hire and fire physicians.
In your AHCD you can also indicated whether you want your agent to have the power to donate organs or authorize an autopsy, which can be important in cases of where medical malpractice is suspected. You can also indicate whether you want pain medication/treatment to be provided even if it hastens the moment of your passing.
Furthermore, the Health Insurance Portability and Accountability Act severely restricts third parties’ access to your health records, including your family members. Your AHCD will allow your agent to request, review, and receive any information, verbally or in writing, regarding your physical or mental health, as well as execute on your behalf any releases or other documents that may be required in order to obtain such information.
Most importantly, in an AHCD you express your end-of-life wishes – whether you want life sustaining treatment to be provided or continued if you are in an irreversible coma or persistent vegetative state, terminally ill and treatment would serve only to artificially delay the moment of passing, or where the burdens of treatment outweigh the expected benefits.
Similar to a DPA, if an AHCD is not executed and you become incapacitated, the only way another individual can make medical decisions for you is if the individual is appointed as the conservator of your person. Again, appointing a conservator of the person is an expensive, lengthy court process that an AHCD can delay or avoid altogether.
DPAs and AHCDs differ in that if the principal of an AHCD has capacity, that person will always make health care decisions on his/her own behalf. However, as explain previously, a DPA can be effective immediately or upon your incapacitation.
If you have any questions or concerns regarding these matters, please do not hesitate to contact the Law Offices of Tyler Q. Dahl.
Disclaimer: This material was prepared for general informational purposes only, and is not intended to create an attorney-client relationship and does not constitute legal advice. This material should not be used as a substitute for obtaining legal advice from an attorney licensed or authorized to practice in your jurisdiction. You should always consult a qualified attorney regarding any specific legal problem or matter.
Dahl Law Group
