Articles

HOW THE PIECES FIT TOGETHER

(POWERS OF ATTORNEYS AND ADVANCE DIRECTIVES)

By: Craig Riffel, Attorney and CPA

I have been writing a series of articles attempting to fully explain how various types of planning fit together. The first article in the series was, “How the Pieces Fit Together (Estate, Asset and Medicaid Planning)” discussing estate, asset and Medicaid planning. It described the similarities and differences between the different types of planning. The second article was “How the Pieces Fit Together (Estate Planning)” defining estate planning and what it is and what it is not. My last article was “How the Pieces Fit Together (Trust v. Will)” which compared and contrasted trusts and wills. If you missed any of these articles, they are archived on the website of Senior Resources & Benefits, L.L.C. at www.SRBLLC.com under “Newspaper Articles” located in the “Library” section of the website. This article is the fourth article in the series and discusses durable power of attorneys and advance directives for health care.

When individuals do estate planning whether through a trust, will or other means, they usually focus on what happens when they die. For example, they are concerned about who gets their assets, who will be appointed to manage or finalize their trust or estate, and how to reduce or eliminate estate taxes. However, estate planning is more than just planning for an individual’s death. Estate planning involves making sure the individual is protected during his or her lifetime.

One of the largest threats an individual may face during life is incapacity. What happens if the person is incapacitated and cannot make decisions? In other words, the individual needs to make a legal decision, sign a document, pay bills, make deposits, transfer money, exercise control of an asset, etc. and the individual is not capable of doing so. What happens in those cases?

Some people erroneously believe the incapacitated individual’s spouse or children can act for the individual simply because of their relationship. This is false. The person or persons seeking to act for the incapacitated individual must have the proper legal authority to do so. The relationship between two individuals does confer the authority to act for another. This is true even if the individuals have been married for a long time. In order for a person to act for another, he or she must have the proper legal authority to do so.

There are two different ways to protect the individual from incapacity. First, the individual’s family can ask a court to appoint a guardian for the incapacitated individual. There are a number of problems with this solution. In order to serve as guardian, a court must appoint the guardian in a court proceeding. In many ways, this proceeding is much worse than probate.

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