As seniors age, difficult decisions may eventually need to be
made. If they still have the capacity to deal with their financial,
legal and healthcare affairs, legal planning for seniors should
begin as soon as possible. "In our culture, there seems to be this
idea that we are always going to be able to take care of things.
Unfortunately, we never know when we will have had our best
season," says Terry Hammond, executive director of the National
Guardianship Association.
It's usually best when discussions about final wishes happen
organically, rather than in an intimidating meeting type situation.
However, if you have been unable to broach the subject and feel
outside assistance is warranted, a geriatric case/care manager or
social worker can help lead a conversation on legal planning for seniors. You should then
consult a qualified legal practitioner so your loved one can file
documents to protect his or her personal and financial affairs.
Locate attorneys through the National Guardianship Association or the
National Academy of
Elder Law Attorneys. After one or two planning sessions, says
Hammond, planning instruments--which can include a will or trust,
power-of-attorney variations, and advanced directives--can be
executed in one sitting.
Wills and Living Trusts
A will is a legal document that directs what should be done with
a person's assets when that person dies. It also names the will's
executor, who will be in charge of the issues surrounding those
assets. If someone dies without a will or living trust, state law
will dictate what is to be done with that person's assets.
According to Hammond, a will must be probated (determined to be
valid and genuine) to become effective. To avoid this court
process, which can be lengthy and costly, people often set up
living trusts.
If done properly, a court of law typically does not need to
validate a living trust, unlike for a will, according to Hammond.
To create a living trust, some or all of a person's assets are
transferred to the trust, and that person (called a trustor, or
creator of that trust) can name others to be in charge of the trust
when she or he dies or becomes incapacitated. "The trust can
continue to operate after the person dies," Hammond says.
Living Will (or Health Care Directive)
A living will-also known as health care directive or advanced
directive-is a written statement that dictates health wishes in
case someone becomes incapacitated, terminally ill, or is unable to
communicate her wishes. It is also important to file a legal
document called a Durable Power of Attorney for Health Care
(DPOAHC; see below for additional information), which names a
person as a health care agent. This person has the authority to
make necessary
health care decisions and is responsible for ensuring that
providers carry out the wishes of the incapacitated person.
Creating a living will and naming a DPOAHC are simple procedures,
as most states' Area Agencies on Aging offer free forms for the
public. Still, Hammond suggests "consulting with a skilled
attorney when naming an agent, as powers of attorney are powerful
instruments that give authority over life and death
decisions."
Durable Power of Attorney (DPOA)
To explain Durable Power of Attorney (DPOA), it's useful to
first describe an outdated legal document, the Power of Attorney
(POA). The creator of a POA, called a principal, grants another
person, called an attorney-in-fact, legal rights to act on the
principal's behalf. However, the moment the principal became
incapacitated, the POA would be terminated and the attorney-in-fact
would have no legal rights. (The disabled principal would then need
a guardian; see below.) POAs are rarely used today-according to
Hammond, in 16 years of legal practice he has never prepared a
standard POA.
To overcome limitations of the POA, state legislatures created
the DPOA, which remains in effect after a principal becomes
incapacitated. Under a DPOA, a principal names an attorney-in-fact
(sometimes called an agent) who will control all the principal's
affairs after the principal becomes incapacitated. In effect, the
attorney-in-fact or agent becomes a legal guardian for a disabled
principal.
A DPOA ensures that an attorney-in-fact will manage all the
principal's private matters, including financial and healthcare
issues. Instead of naming one DPOA to cover all these
contingencies, a person can create a separate Durable Power of
Attorney for Healthcare (DPOAHC) or Durable Power of Attorney for
Finances (DPOAF). The DPOAHC is limited to making health-related
decisions for the principal, while a DPOAF only oversees financial
matters for the principal. With all three documents, a principal
can carve out certain areas where he doesn't want the agent to take
care of his concerns, says Hammond. For example, a principal can
state that an agent can pay his property taxes, but the agent
cannot sell his house.
Guardianships
If your loved one has diminished capabilities and is unable to
manage his or her affairs, it may be time to talk with a legal
advisor about naming a guardian to make decisions for this person.
In a guardianship proceeding, a court decides whether a person with
diminished mental capacity should retain his rights to make
decisions about his own affairs, says Hammond.
Often a concerned family member or friend consults an attorney,
who first gives guidance on obtaining medical evidence. This can
involve examinations by a physician, psychologist, or psychiatrist.
Once the evidence is gathered, a petition that states why
guardianship is necessary is filed with the court. Then a hearing
is held; usually the incapacitated person will have an attorney.
"The court will ultimately decide if [the person] needs a guardian,
full or limited, complete or partial," says Hammond. "Guardianship
will typically last as long as the need arises. By far, most of
them last for the remainder of a person's life."
Hammond say fully two-thirds of guardianships in America are
family guardianships. If relatives are far away or if the family
dynamics are difficult, a judge will appoint a local professional
guardian. There are no national guidelines for guardians, and most
states do not offer guidance for this important role. However, the
National Guardianship Association has developed standards of
practice (www.guardianship.org, click
on Standards of Practice). Guardian roles will depend on the court
order that appoints the guardian and the individual state laws.
According to the National Guardianship Association, a guardian may
have the following responsibilities:
- Determine and monitor residence
- Consent to and monitor medical treatment
- Consent to and monitor non-medical services such as education
and counseling
- Consent to release of confidential information
- Make end-of-life decisions
- Act as representative payee
- Maximize independence in the least restrictive manner
possible
- Report to the court about the guardianship status at least
annually
- Marshall and protect assets
- Obtain appraisals of property
- Protect property and assets from loss
- Receive income for the estate
- Make appropriate disbursements
- Obtain court approval prior to selling any asset
- Report to the court on estate status
The termconservatorhas the same meaning as guardian in some
states. Likewise, conservatorship is often interchangeable with
guardianship. Aconservator of the estateoversees financial
concerns, while aconservator of the personmanages health issues and
living arrangements.
Guardianships and conservatorships are more expensive than
routine planning because of the necessity of court involvement-in
contested cases families can spend thousands of dollars on this
expense. Guardianship proceedings are also inherently adversarial,
and a contested case can be difficult for a family to overcome,
says Hammond. As a last resort, guardianship may be the only way to
ensure that the personal and financial affairs of a loved one are
protected.
Hammond recommends legal planning for seniors that includes a
DPOA, a will or living trust, and a health care directive while a
person is still fully lucid. A typical plan will cost between $600
and $800, on average. While guardianships are often necessary, they
can be avoided with proper planning.
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