Recently, I was asked on two separate occasions why a power of attorney is desirable if the client’s respective trust names a successor trustee or trustees to manage assets if he or she is unable to serve as the trustee. The question is valid. In fact, when I began practicing estate planning law more than twelve years ago, I myself did not appreciate the importance of durable powers of attorney and advanced health care directives. Like many, I thought if the client has a revocable trust and a will, they were pretty much covered. How wrong I was. Now that I am well into my second decade as a practicing lawyer, I have had the opportunity to understand through firsthand experience why these documents are crucial to a well-rounded estate plan.
A few years ago, I became involved with a client who had many years prior established and funded a revocable trust. The client did not have a durable power of attorney. As fate would have it, the client began showing signs of dementia and could no longer make personal decisions. The successor trustees did not have the authority to make decisions that were personal in nature for the client. The court (rightfully) determined that a guardian had to be appointed even though there were successor trustees who could manage the assets in the trust.
The trustee of your trust generally has no authority to deal with retirement accounts that must remain in a participant’s sole name, certain insurance policies, government agencies and administrative bodies such as the IRS or Social Security Administration, the prosecution or defense of any claims in court (lawsuits), health care providers, or electronic subscriptions and accounts (email accounts, online banking accounts, social media accounts, etc.). The client referred to above needed help with all these matters, but the trustees had no power in those instances. In the client’s case, a durable power of attorney would have prevented the need for the appointment of a court monitored guardian.
Also important are advanced health care directives, which are commonly referred to as a designation of health care surrogate and living will. In these documents, you can incorporate specifically tailored instructions concerning your health care and your desires concerning end-of-life decisions. You can further provide for any specific funeral instructions and provide for the manner in which your remains are kept and disposed.
As in the absence of a durable power of attorney, without advanced health care directives in place, there is no person named to make personal health care decisions for an individual. A court considering this would be duty-bound to appoint a guardian to make these decisions.
The court appointed guardian may not be the person you would otherwise choose to make these personal financial and health care decisions on your behalf. Furthermore, the appointment of guardians for financial and health care decisions requires ongoing court proceedings, including the preparation of periodic accountings and reports filed with the court until the termination of the guardianship or the death of the ward. In addition to the continuing burden, the cost to maintain a guardianship is also a noteworthy consideration.
At this point, I hope you have concluded that you should take a moment to review your estate planning documents and ensure that at a minimum you have a will or will and trust, a durable power of attorney, a designation of health care surrogate, and a living will. Moreover, now that you have the documents out, please review your existing plan and ensure that it continues to meet your wishes. Consider whether there have been any significant changes in your life such as the birth of a child or grandchild, the death or incapacity of a loved one or a named decision maker in your documents, a marriage or divorce, a change in your financial condition, or any other event that you deem significant.
If nothing else, you may have confirmed that your plan is still relevant as written. Of course, if you have any questions or wish to make changes regarding your estate plan, consult with your attorney. MacLean & Ema, P.A. has represented thousands of clients with their estate, real estate, and business needs. We would be happy to meet with you to address any questions you may have and discuss whether we can meet your legal objectives.