A Tale of Two Documents

As we discussed in previous posts, estate planning addresses more than just post-death planning. Powers of Attorney and Patient Advocate Designations allow a person to choose who has the authority to act on their behalf in the event of incapacity. It is important that all of your estate planning documents are up to date and specifically grant authority to the designee because companies seeking to protect themselves from litigation are reluctant to allow designees to act absent confirmation they are doing so in the Principal’s interest.

Nick and Paul have almost nothing in common except that both were in situations where their loved ones needed to make use of Durable Powers of Attorney in order to manage their affairs. While both families were able to act on behalf of their loved one, their experiences while making use of a Durable Power of Attorney were very different.

While Nick and Paul both had Durable Powers of Attorney, naming people to act on their behalf in the event that they became incapacitated, there were significant differences between these documents. Both men had originally done estate plans in the early 2000's, but only Paul had taken the time to regularly update his documents so that when both were incapacitated in 2015 Paul's Durable Power of Attorney was two years old while the Nick’s had not been updated in nearly 15 years.

Paul's son, who was designated as his father's Attorney-in-Fact had little trouble managing Paul's finances, including ensuring that Paul's home and bank accounts were properly funded to Paul's Living Trust. Paul's updated Durable Power of Attorney contained specific enumerated powers as well as the provisions that exculpated third parties who acted in reliance upon good faith that Paul's son had the authority to act on his father's behalf. Between these specific provisions regarding the powers the Attorney-in-Fact could exercise and the provisions for protection from liability, it was relatively easy to manage Paul's affairs during his incapacity.

Unlike Paul, Nick had not taken steps to ensure that his estate plan was up to date. Since the time Paul executed is Durable Power of Attorney, the person Paul named as his primary Attorney-in-Fact had died and Nick’s son needed to acquire additional documentation in order to prove his authority under his father’s Power of Attorney. In addition, Nick's Power of Attorney lacked significant detail with respect to the powers the Attorney-in-Fact could exercise. Instead of enumerating specific powers, Nick’s Power of Attorney only stated that his Attorney-in-Fact had broad authority to act in Nick's best interests, including a much smaller number of activities than Paul's more up-to-date documents contained.

Contrary to the relative ease with which Paul's son was able to manage his father's affairs, Nick’s son repeatedly needed assistance in establishing that the primary named attorney-in-fact could no longer act, that he had authority to act in his father's behalf with respect to particular activities, and that despite the amount of time which had elapsed since the execution of Nick’s power of attorney, no contradicting document existed. Fortunately we were able to provide sufficient assistance to keep these inconveniences from rising to the level of significantly interfering with Nick's care.

Keeping all estate plan documents up to date so that they reflect the client’s current wishes is important and not just because those wishes may change over time. Ensuring that documents provide sufficient guidance to designees and institutions allows the documents to be used efficiently and effectively when needed. While it is possible to guide designees through these matters, and we are happy to do so, it is much preferable, as with most estate planning, to know that the documents will work as intended and not encounter additional problems while attempting to cope and deal with obviously difficult circumstances.

Matt and Al