When people think about estate planning, they usually think about planning for what happens after they die. However, planning for death isn’t the only function of an estate plan. Another important part of estate planning is planning for incapacity–the possibility that we may be alive, but unable to understand our situations, communicate our decisions, and handle our affairs. A power of attorney can be a very useful tool in planning for such a situation.
A power of attorney is a document in which an individual (often called the “principal”) appoints someone else (often called the “agent” or the “attorney-in-fact”) to manage the principal’s affairs and make decisions on the principal’s behalf. It’s a significant power: an attorney-in-fact can generally take action as if he or she were the principal.
Powers of attorney can also be “durable,” and if you’re planning for incapacity, it’s critical that the power of attorney be durable. A power of attorney that is not durable is revoked once the principal becomes incapacitated. Durable powers of attorney under Missouri law must have certain language required by statute. A power of attorney, whether durable or not, can be modified or revoked by the principal at any time.
Powers of attorney may take effect immediately, or they can be designed to only take effect if something occurs (most likely, a doctor or several doctors determine that the principal is incapacitated). If a power of attorney requires some event take place before the power of attorney takes effect, it is sometimes called a “springing” power of attorney. Springing powers of attorney keep attorneys-in-fact from acting before it’s absolutely necessary, but they can also be inconvenient, especially if multiple doctors have to make a finding of incapacity.
It’s possible to combine health care powers and financial powers into one document, but I usually prefer to split them into two separate documents. I especially prefer to split the documents up if the principal plans on using one person as attorney-in-fact for health care decisions and another for financial decisions.
Without a durable power of attorney, a person that becomes incapacitated or disabled is more likely to need a guardian or a conservator. Guardianship involves a person having custody and taking care of an incapacitated person, and conservatorship takes care of the property of a disabled person. If a person needs a guardian or a conservator, the court will appoint people to fill those roles. Additionally, if an action is brought to get a guardian or a conservator appointed for an incapacitated or disabled person, that person is allowed to contest the guardianship/conservatorship, and has rights similar to those of criminal defendants, including the right to an attorney, a jury trial, to present evidence, cross-examination, to remain silent, and others described in Section 475.075.8 of the Revised Statutes of Missouri.
If you’re planning for the possibility of future incapacity or disability, here are some key questions to consider:
- Whom do I trust to make decisions on my behalf? Additionally, this person should know you well enough to have a sense of what you would want done, especially in health care situations.
- Am I willing to grant power now, or do I want to wait until I am found incapacitated before the power of attorney takes effect? As I mentioned above, waiting to grant the power until you’re found incapacitated prevents the attorney-in-fact from acting before you’re incapacitated, but it can be inconvenient to wait for a doctor’s finding of incapacity.
- Do I want to provide a health care directive to my attorney-in-fact? I recommend doing so; it makes it much easier on an attorney-in-fact to make decisions that might shorten your life if he or she knows that those decisions are what you would have chosen for yourself.
- Does my attorney-in-fact know what financial accounts and assets I have? It will be much harder to an attorney-in-fact (or, down the road, the personal representative of your estate) to manage your finances if he or she doesn’t know what assets and accounts you have.