Candy, who is now retired, is the relief society president in her LDS ward. That means she is in charge of the women in her church group. Last week, one of her very healthy neighbors was walking next door to visit and, for some reason, went down in a face plant. Her brain was so damaged that she was essentially brain dead. The next day the family unplugged her, and she died a few hours later.
Candy was upset to see one of her ladies just go down like that and leave an invalid husband. This all happened so fast. Life can change in an instant. Are you and your family prepared?
The need for a will, living revocable trust, durable power of attorney, and medical directive is critical. The pieces can probably be picked up by family if a spouse is still alive and competent, although physical help may still be needed.
Many times the caregiver in a couple dies before the invalid partner. Caregivers often destroy their own health trying to take care of the other partner. When someone is totally paralyzed, moving them incorrectly can destroy the caregiver’s back. Using proper tools may be slower, but it can protect the caregiver’s health.
The Muscular Dystrophy Association, ALS Association, and many other groups have warehouses full of electric wheelchairs, Hoyer lifts, walkers, and other equipment. They may or may not help even if the person does not have MS or ALS, but they are often generous. There are also other associations with equipment and helps.
You need both the physical tools and the legal tools. You also need the financial tools. Beef up the medical insurance. Organize the financial resources. For example, if there is a life insurance policy, there is a good chance it has a provision that will let you claim most of the death benefit in an end-of-life situation. You do not always have to wait for the death.
If the person is younger and not yet on Medicare or Social Security, get them immediately qualified for disability if they go down. The qualification takes six months after the month in which you apply, so start immediately.
The article recounts applying for disability within days of an ALS diagnosis. An early call from a Social Security office warned that waiting until the next month would delay benefits by almost seven months. The article also notes that the application includes a box asking whether the applicant has been diagnosed with renal failure or ALS, and checking that box greatly simplifies the process.
Get the disability going, then see what assets there are. Could all or part of the house, probably the biggest asset, be rented to produce income? You could sell the house and use the money to pay expenses, but it may be better to try to keep the house and generate income with it. The house may continue to appreciate as long as it is kept.
Can the money be moved around to get a bigger return? Could it be moved to a higher-interest savings account or CD? Could cryptocurrency be staked to earn interest? These are all issues and questions you will probably be addressing for someone other than yourself.
If you are the sick person, you need to find help because you often are not thinking clearly, especially if you have just been diagnosed with a devastating condition.
Obviously, Candy’s friend needed her will and trust in place, but the fact is that people are much more likely to need a durable power of attorney for themselves, a spouse, parents, or even adult children. The article argues that everyone is far more likely to need a durable power of attorney next week than they are to need a will.
It further states that statistically, everyone will be incompetent for 90 days or longer before they die. An example is given of signing papers while in ICU isolation with cancer at age 27 and later proving incompetency when one signed document became part of a huge lawsuit with possible criminal charges.
A standard power of attorney, such as one used to authorize someone to manage things while a person is out of the country, automatically terminates when the person becomes incompetent. Beginning in the early 1980s, states started adopting laws allowing a power of attorney to endure beyond a person’s incompetency.
During incompetency is when a person really needs someone to have power over their affairs. State laws are fairly uniform, with Florida noted in the article as an exception. The article says the durable power of attorney in the Accumulation and Preservation of Wealth materials should work for each state except Florida, and it notes that a Florida-specific durable power of attorney is included in the electronic files for that program.
The article also recommends going to a state website to see whether it offers a model durable power of attorney form that can be downloaded and used. It suggests signing the state’s version and a more detailed version as well, since some financial institutions may require a particular power to be specifically listed in the document.
The article explains that Florida changed its law so that an agent’s power to act under a durable power of attorney must be immediate. In other states, the agent’s powers may spring into existence when the principal is declared incompetent.
A durable power of attorney should include a provision stating how the principal will be determined to be incompetent. The article describes one approach in which the principal’s spouse and children each sign a statement saying the principal is incompetent, and a doctor also signs that statement.
In Florida, the statement is not required because the agent is empowered when the durable power of attorney is signed and can immediately act. That means the principal needs to choose an agent who can be trusted to start acting only when needed.
Any criteria the principal wants may be included in the document to define how incompetency is determined. Without the durable power of attorney, the family may face a nightmare because the person has to be declared incompetent by the court.
The article gives an example of a man who had a stroke and was brain dead, but lived for years non-responsive while breathing on his own. The family eventually had to have him declared incompetent in order to sell assets, which required transporting him by ambulance to appear before a judge.
States are said to be starting to require durable power of attorney documents to be current. California is cited in the article as requiring a person to sign a durable power of attorney every five years. The article recommends printing and signing a new copy every few years so banks and others do not reject an older version.
It is not unusual, according to the article, for a principal to activate a durable power of attorney while still competent. For example, a parent who remains mentally competent but needs help paying bills and handling business can sign a statement authorizing the agent to act immediately.
The article also describes how the author’s wife activated him as her agent several years before her death because she was totally competent but could not physically act for herself.
Durable Power of Attorney and Your Trust
The agent has power over everything except trust property. The trustee has authority to deal with trust property. To avoid probate, a living revocable trust should own all assets that require a signature to transfer.
The trust should have a provision similar to the durable power of attorney that dictates how a trustee can be declared incompetent. It should also have language stating that the successor trustee can act as trustee when the original trustee is declared incompetent.
The successor trustee will probably be a spouse or one of the children. Once the successor trustee becomes the primary trustee, that person has full power and authority over all trust property. Similar to an agent under a durable power of attorney, a successor trustee can be made principal trustee by a signed statement transferring authority, without waiting for a declaration of incompetency or death.
A trustee has no authority over matters that do not relate to trust property. That is why both the trust and the durable power of attorney are needed. The durable power of attorney covers matters the trustee does not have authority to handle, such as dealing with a cell phone company, power company, and other non-trust issues.
A good durable power of attorney will also give the agent authority to deal with the trustee of the trust and authority to move assets into the trust. That way, when a person becomes incompetent and someone starts managing their affairs, assets that would otherwise require probate can be moved into the trust.
The durable power of attorney instantly becomes invalid upon the principal’s death. The agent loses all power upon the death of the principal. However, the article advises not to immediately destroy the durable power of attorney because some institutions may still ask whether a child had power of attorney for a parent after death.
The article gives a storage-unit example and argues that if a facility lets a person in based on a durable power of attorney after death, that is the facility’s mistake rather than the family member’s problem. It further notes that the storage unit ideally should have been rented in the name of the trust because it requires a signature to access and terminate the lease.
Anything requiring a signature should be in the trust. That includes LLCs, corporations, limited partnerships, and other businesses that require signatures to sell or control. The article explains that while the assets inside the business entity do not need to be individually owned by the trust, the ownership of the business itself should be held by the trust to avoid probate and business problems after death or incompetency.
The article also says the durable power of attorney in the Accumulation and Preservation of Wealth materials includes provisions for health care. It recommends getting health care power of attorney forms and living will forms from a local hospital and signing those in addition to any other forms already on hand.
Everyone in the family who is over 18 should sign these forms. The article references Karen Ann Quinlan and notes that her case helped establish the right-to-die discussion and the beginning of living wills in the United States.
Print a durable power of attorney for each adult in the family and have each person sign it. The article notes that the durable power of attorney in the Accumulation and Preservation of Wealth materials is signed in three places: once around page 19 and then twice near the end.
It does not take much time to print off these documents and get them signed, but doing so could save significant money, time, and frustration later. These things are easy to do today but may not be possible after death or incompetency, so the message is to prepare today.
