In addition to writing a will as part of the estate planning process, people are becoming increasingly concerned about being certain that they are able to make their own decisions regarding life-prolonging medical treatment and planning for property management in the event of incapacity. There are various legal devices available to assist clients in dealing with these matters.
Living Wills
A Living Will is a document which allows an individual who is terminally ill and is otherwise unable to make or communicate responsible decisions regarding medical care to request that artificial life-sustaining procedures be withheld or withdrawn. Although sometimes controversial, the statutory right to make a living will really amounts to nothing more than state recognition of the basic legal right that each person has to decide what may be done to his or her body. This includes the right to refuse medical care or treatment, even when that care or treatment is necessary to sustain life.
The authorized form of Living Will varies on a state-by-state basis. Under current Colorado law, a living will only becomes effective when two physicians certify that a patient is terminally ill, and for a period of at least seven days, that patient has been unconscious, comatose, or otherwise unable to make or communicate decisions regarding care. When these preconditions are met, the patient has the right, through a previously executed Living Will, to direct that all life-sustaining procedures, including artificial nourishment, be withdrawn. The key is that the living will represents a clear and unequivocal communication of the patient's desires regarding the use of advanced medical technology to sustain life in such circumstances.
Durable Healthcare Power of Attorney
A power of attorney is a written instrument by which one person, as principal, appoints another as his or her agent, and it gives the agent authority to act in place of the principal for the purposes stated in the instrument. A Durable Healthcare Power of Attorney is a document through which an agent is appointed to make healthcare decisions for the principal in circumstances in which the principal is otherwise unable to make or communicate such decisions. If the principal has a terminal condition or illness, a Durable Healthcare Power of Attorney may serve as a supplement to his or her Living Will, and it may allow the agent to reinforce the personal decisions of the principal reflected in the Living Will. However, a Durable Healthcare Power of Attorney also authorizes the agent to make or communicate healthcare decisions for the principal in circumstances in which the principal is temporarily or permanently incapacitated, but is not terminal. Thus, a Durable Healthcare Power of Attorney may be applicable in circumstances in which a Living Will is not effective.
The agent appointed in a Durable Healthcare Power of Attorney may be given broad discretion to make decisions for the principal using his or her best judgement as to the desires of the principal in any particular set of circumstances. However, if one of the options available to the agent is intended to be the right to decline medical treatment on behalf of the principal in certain circumstances, a better alternative to the use of a completely discretionary Durable Healthcare Power of Attorney would be to use the Durable Healthcare Power of Attorney as a form of "Medical Directive." In such a document, the principal may state specific wishes and directions regarding the use of various types of medical treatment in several representative fact situations, and request that the agent follow those wishes and directions if the circumstances described in one of those situations actually arise. The agent could then be given discretion to make independent judgements if circumstances fall outside those described in the representative fact situations.
Two options to consider in conjunction with planning for property management in the event of incapacity are use of a Durable Power of Attorney or a Revocable Living Trust.
Durable Power of Attorney
By execution of a Durable Power of Attorney, the principal authorizes the agent to act on behalf of the principal in dealing with financial affairs. The keys with such a document are that it is prepared and signed at a time when the principal has the necessary mental capacity to understand its nature and significance and that it contains the necessary language to allow it to continue to be valid and effective during any period of time that the principal is incapacitated.
A Durable Power of Attorney may be made effective immediately, or if the principal is concerned about the possibility of prematurely losing control of his or her financial affairs at a time when he or she is not incapacitated, it may be written in such a fashion that it only becomes effective when the principal is, in fact, incapacitated. Also, the powers given to the agent to deal with financial matters may be narrow, such as the authority to act on behalf of the principal at a real estate closing, or broad, including the authority to handle all of the financial affairs of the principal.
The most flexible and efficient type of Durable Power of Attorney is one which becomes effective immediately upon its signing (rather than upon the incapacity of the principal) and which grants the agent broad powers to handle all financial affairs of the principal. When this type of Durable Power of Attorney is used, it is especially important that the agent be someone in whom the principal has great confidence and trust.
Revocable Living Trust
A Revocable Living Trust is a trust entity created by a competent person (the "grantor"), during his or her lifetime, which may be amended or revoked by the grantor at any time. Typically, the grantor of such a trust would also be its initial trustee, with provisions in the trust agreement designating a successor or alternate trustee in the event that the grantor becomes incapacitated, or is otherwise unable to act. Ownership of all, or some portion of, the assets of the grantor is transferred to the trust, subject to instructions contained in the trust agreement regarding management and disposition of such property, both during the life of the grantor and following his or her death. In most cases, the grantor is the primary beneficiary of the trust during his or her lifetime, and the trust agreement contains instructions for distribution of the trust assets to other beneficiaries only following the death of the grantor.
A Revocable Living Trust is a useful vehicle for allowing the grantor to retain control of his or her assets while competent, yet provide for management of such assets by the successor or alternate trustee in the event of the grantor's incapacity. It also may have some benefit in protecting assets of the grantor from creditors, and upon the death of the grantor, it serves as a will substitute, allowing the trust assets to be transferred to the grantor's beneficiaries in a simple and private fashion, outside of the probate process.
In some circumstances, it may be appropriate to use both a Revocable Living Trust and a Durable Power of Attorney. A trust is created, but the grantor either transfers no assets, or only a nominal amount of assets to the trust. Provision is then made in the trust agreement for the transfer of all of the assets of the grantor to the trust in the event of the grantor's disability. The transfer upon disability is accomplished through a Durable Power of Attorney executed at the time the trust is created.
Gary S. Joiner is a shareholder in Frascona, Joiner, Goodman and Greenstein, P.C., a Colorado law firm. His practice areas include Real Estate, Association Law, Business Law, Corporations, Securities, Partnership Agreements, Finance, Taxation, Estate Planning, Wills & Trusts, and Probate. He can be reached at Gary Joiner.
Disclaimer -- Content is general information only. Information is not provided as advice for a specific matter, nor does its publication create an attorney-client relationship. Laws vary from one state to another. For legal advice on a specific matter, consult an attorney.