Making Choices 2.0

Since relaunching the blog, much of our focus has been on ability for an individual (the Principal) to choose other people (the Designees) to have the ability to make decisions in the event that the Principal becomes incapacitated. For almost every client this gives rise to the question, "who should I choose?" As with all of the decision-making aspects of estate planning, the answer to that question lies with the person who is creating the plan. As advisors and counselors, we can provide some insight into that decision, but ultimately it is one that must be made by the client.

Many of our clients struggle with choosing a single individual to name as a Designee, sometimes out of concern that the responsibility will create too heavy a burden for one person to handle. The good news in these circumstances is it is possible to appoint multiple Designees to work together to serve in any given role. This means that two or more people may be named to work together, either by unanimous consent, by majority rule, or each acting independently, in order to manage the responsibilities of serving under a Power of Attorney, Will, or Trust. While naming multiple Designees is always an option, it may not be the most efficient way of managing affairs, as naming multiple Designees normally requires those individuals to work together to achieve results. Further, with respect Designees named to make medical decisions under a Patient Advocate Designation, we generally recommend that our clients name a single person to serve as the Patient Advocate at any given time, in order to avoid creating a situation where multiple Designees cannot agree on a course of medical treatment, so doctors require that the Probate Court name a Guardian to remove uncertainty. The goal of implementing a Patient Advocate Designation seeks to avoid the Probate Court, not create a situation that requires it.

We make clients aware that they have the freedom to name anyone they desire to serve as a Designee, but all too often clients delay estate planning decisions due to concerns about their Designees. A common worry is someone who is not named will feel disappointment or even anger because of their omission. In those circumstances we find it helpful to remind our clients it is in their own best interest to choose the people that they believe have the capacity to fulfill the responsibilities of the role, especially as it pertains to them. If that means that a single child is named as the primary Designee in all of the documents because the child is more responsible, so be it, because that child has the ability to manage the responsibility. If the person named as the Designee in the Power of Attorney for making legal and financial decisions is different from the Designee in the Patient Advocate Designation for making medical decisions, that too is acceptable because the goal of naming Designees is to have the people best equipped make decisions making those decisions. Ultimately it is important to consider the consequences of naming someone less capable simply to avoid hurt feelings. Under those circumstances most people are able to trust their instincts, name the individuals who will do the best job and have enough peace of mind to set aside the worry that someone not named will be offended.

The bottom line in all of this is that the Designees named in an estate plan are essential to the success of that plan. While it is possible to name multiple individuals to work together, that is not always the most efficient way to administer a plan. The success of the plan is the result of naming the best people for the job. These decisions are not always easy and every planning situation is unique, which is one reason why it is especially useful to work with an attorney experienced in estate planning. That attorney should take the time to assist and guide you through the process of choosing Designees that meet the standard.

Matt and Al

How do Powers of Attorney and Patient Advocate Designations Fit into an Estate Plan?

While people generally understand that a Power of Attorney and Patient Advocate Designations protect them if they become incapacitated, many people are confused about how these documents work and what their designees are obligated to do.

     Often, after signing their estate plan documents, our clients will ask, "now that I have a Durable Power Of Attorney and Patient Advocate Designation, what does my designated person have to do?” The simplest answer is they do not need do anything, nor can they do anything unless and until the client is declared incapacitated under the definition normally set forth in the document. The definition we use in our documents requires that two doctors certify in writing that the client is unable to care for his or her "financial or physical well-being". Once the designated person obtains those certifications, only then are they authorized to act on behalf of the incapacitated client. Upon obtaining the authority to act, the designees gain the authority and responsibility to make decisions that are in the client’s best interest.

     Under the Durable Power of Attorney, the designee should determine the assets of the incapacitated person and take action to protect those assets. This may include such actions as meeting with an investment advisor to ensure the assets are properly invested, paying bills, maintaining the house or other real estate, and making sure the incapacitated person receives care. While performing these tasks, the designated person should also keep complete financial records to show what actions they took and how they spent funds. In the course of the designee’s actions, any party shown the Durable Power of Attorney can rely on the fact that the designated person has authority to act with respect to all of the legal decisions the incapacitated person might otherwise have been able to make. 

     The person designated under the Patient Advocate Designation has the authority to make any necessary medical decisions, including treatment, selection of doctors and facilities, rehabilitation, and decisions regarding end-of-life care. We recommend that clients discuss what care he or she wants or does not want with their designees so that those people are better able to make decisions should the time come. Often, a Living Will is executed in conjunction with the Patient Advocate Designation as a declaration of those desires, especially of the intent not to be kept alive by heroic measures if it would merely artificially prolong the dying process.

     The responsibility given to another person under a Power of Attorney or Patient Advocate Designation is significant and should not be taken lightly. However the designee does not need to handle matters alone, they are allowed to employ professional advisors to assist them in caring for the client’s interests. As we always tell our clients, if it ever comes time for your designees to act, we will be there for them just like we are here for you.

Planning without Offending

     Occasionally a client will choose to name all of their children as administrators of their estate plan by placing different children in charge of different aspects of the plan. That can become a problem if children do not have the skill or ability to properly act as an administrator or have certain moral values that will prevent them from making a decision, for example a “pull the plug” decision under a Patient Advocated Designation. Another problem may arise when the client names all of their children to share in the administration duties equally, for example as co-trustees. While occasionally multiple co-trustees can better facilitate achieving the client's goals, a more common occurrence is the inability of those co-trustees to agree on actions, thus delaying the administration of the trust. An even number acting in any capacity has the possibility of creating a deadlock on decisions.

      We never tell the client they cannot do something with their estate plan. Instead, we inform the client of the potential consequences of their actions and attempt to find a solution that alleviates the client's concerns and achieves the estate plan's goals. Frequently that solution involves naming different children to different positions, where their real life experience is most advantageous. For example, a child with experience in the medical profession will serve as Patient Advocate, while a child with business management experience serves as the representative under a Durable Power of Attorney. Alternately, naming multiple, but not all of the children, to act together in a role allows the client to involve their family members without creating an administration scheme that is so complex it derails the whole process. Occasionally clients will name an independent party to cast a deciding vote only if the children are unable to agree on a course of action.

      Avoiding offending any of their children becomes more complex when a child with personal issues such as substance abuse problems or financial problems can benefit from having a strong trustee to oversee distributions, but the client wishes to avoid overtly treating their children differently. In these cases, we can use a combination of distribution provisions and/or an objective third-party co-trustee to achieve this goal and avoid hurt feelings. For example, the provisions of a Trust can name a trusted family friend as co-trustee with each child over that child's share of the Trust. The Trust then provides the co-trustee with the authority to make outright distributions at the co-trustee's sole discretion, allowing the co-trustee to distribute assets to children who do not have personal issues while allowing that co-trustee to retain assets in trust for the other child while working with them to overcome their life challenges before making distributions.

     Ultimately, the decision of who to name in an estate plan falls to the client and occasionally we find that it helps to remind people that by the time anyone may be offended with their actions they will no longer be around to listen to the complaints.

        On Thursday, we will discuss the often difficult decision of naming guardians for minor children, and how to avoid offending family members who are not named in this role.

Matt Ferrara