When people think of indispensable legal documents, they automatically think of a last will and testament. But a will is only one of the documents an older person should have. Powers of attorney for health care and property, living wills and living trusts are among other such documents.
The power of attorney for property is a document in which you, the principal, grant authority to another person, the agent, to handle your financial matters, said Darcy Chamberlin, an elder law attorney with a practice in Oak Brook.
“You can give authority on the day you sign it, or on a later date when you might become incapacitated, or when a doctor says you’re unable to handle your affairs,” she said.
If you haven’t signed the powers of attorney in advance, your family will be faced with guardianship, or “probate during life,” she said. Guardianship involves court proceedings to give legal authority to another person to handle your financial affairs.
Guardianship is last resort
“Guardianship is involved and can be an intrusive procedure,” Chamberlin said. “If you have a trustworthy person who’s willing to step forward and take responsibility, it’s a good alternative to guardianship. … Guardianship should always be the last resort.”
In the power of attorney for health care, a person gives legal authority to another person, again named the agent, to take action and make decisions regarding his health care. Such actions may include making end-of-life decisions, gaining access to medical records, giving consent to surgery, obtaining a second opinion or authorizing nursing home admission.
Consider choices carefully
The powers of attorney for property and health care are powerful documents, and a great deal of thought should be given to the person you select as your agent and how broad the powers you grant should be, said Connie Renzi, an elder law attorney and managing attorney for the Elder Law Center, P.C., in Aurora.
“If you think, `I should appoint Mary,’ because she’s your oldest child, but you and she never agree on anything, maybe Mary isn’t the best person,” Renzi said. “You have to select someone you trust implicitly, someone who’s very trustworthy, to carry out your intentions in a manner you’d like them carried out.”
In the case of the power of attorney for health care, forms are available free from hospitals, local bar associations and public libraries, said Sally Hurme, campaign consultant with the consumer protection group at AARP, based in Washington, D.C. The form also is offered on the “Partnership for Caring” Web site (www.partnershipforcaring.org).
Another option is to obtain the AARP booklet called “Planning for Incapacity,” which provides state-specific forms for the power of attorney for health care, instructions on how to fill them out and answers to commonly asked questions. To obtain the booklet, send a $5 check or money order to AARP, P.O. Box 96474, Washington, DC, 20090-6474.
Attorneys’ services valuable
Despite the availability of the power of attorney for health care form, and to a lesser extent the power of attorney for property form, compelling reasons remain to have both prepared by an elder law attorney. “With the financial form, there are certain things that are appropriate to include that may not be part of the standard form, and a lay person is not going to be aware of additional powers to consider for inclusion,” Renzi said. “Many times the family finds out when it’s too late they don’t have the additional powers they thought they’d be granted.”
In the case of the power of attorney for health care, Renzi said she often sees errors in forms completed by lay people. “For example, I many times see the witness to the principal’s signature is the person they’re appointing [as agent], and that’s a defect,” she said.
Both documents are frequently part of larger estate planning services offered by elder law attorneys, Chamberlin said. “Normally it’s going to be an hour’s consultation. I would imagine if we’re just doing a consultation and the forms, it would be $200 to $300.”
People can find an elder law attorney in their area by contacting the National Academy of Elder Law Attorneys, which maintains a roster of such attorneys, Chamberlin said. The Tucson-based organization can be reached at 520-881-4005 or www.naela.com. Other good sources of referrals to elder law attorneys include AARP and senior centers, she said.
Health-care document
Some older people also choose to have a living will prepared. This is a health-care document that is closely related to and may be combined with the power of attorney for health care. It states whether you wish life-sustaining treatment during your final illness.
“But a health-care power of attorney is a broader and much more flexible document,” Hurme said. “If you wish, you can give your health-care agent the same kinds of instructions you put in your living will, as well as many other kinds of decisions. … There’s no harm in having both, and many states have now kind of [combined] these into one document.”
A living trust is similar to a power of attorney for property, but has “more teeth to it,” Hurme said. This document also shares similarities with a will. The person who creates the living trust is the grantor, and the grantor selects a trustee and a beneficiary. The alternate trustee only begins participating when the grantor becomes incapacitated, and alternate beneficiaries benefit only when the grantor dies.
The significant difference between a power of attorney for property and a living trust is that with the latter, the grantor must legally convey what he or she wants managed in the trust. The grantor transfers title to property under his or her name into the name of the trust.
With a power of attorney, on the other hand, there’s no change of title or ownership. The agent simply has the ability to manage what remains the principal’s property.
Living trust another option
“While I still have capacity, I’ll manage the property in my trust as a trustee,” Hurme said. “When I become incapacitated, the person I’ve identified as the alternate trustee will take over my management responsibilities. Where the trust becomes like a will, and very different from a financial power of attorney, is that when I die, my power of attorney becomes a void document, and my agent has no authority to act. But if I have a living trust, my trustee can act like the executor of my will and distribute my property to beneficiaries I’ve named in the trust.”
Not everyone needs a living trust, she said. People with substantial federal estate tax exposure, a family business, they wish sustained, special-needs children or grandchildren or real estate in more than one state are those most likely to benefit.
“You need to be able to identify your own personal circumstances that make it worth the expense and hassle of having a living trust prepared,” Hurme said.
“It’s probably going to [cost] over $2,000, whereas you can get a basic standard will done for $100. The important thing, though, is not the price of the document, but the quality of the legal advice you get that can help you sort through all these options.”
