Fundamentals of Estate Planning - Part 1: Power of Attorney (Legal and Medical)
This article is the first of a multi-part series to address some of the more fundamental concepts of estate planning; addressing the core principals that a necessary to understand to begin building a full-fledged legal plan. This article addresses important documents that go into effect during a principal’s lifetime to ensure that someone has legal authority to act on their behalf, when they are unable to act for themselves.
Why Powers of Attorney and Medical Directives Matter for every Mainer
As we all know, life has a way of throwing curveballs when we least expect it. Illness, injury, or simply the challenges of aging can make it difficult, or impossible, for someone to manage their own affairs. In Maine, there are two key legal tools that can make all the difference in those stressful times: the Power of Attorney and Advance Medical Directive. These are powerful documents that allow you to choose the people you trust most to step in and make decisions for you if you cannot make them yourself. Without them, families often find themselves in guardianship or conservatorship court to be appointed to make those same decisions.
What is a Power of Attorney? A Power of Attorney (POA) is a document that authorizes a person, called an agent, to act on your behalf. The agent can make financial and legal decisions for you. A common misconception we hear is that if a person is married, their spouse already has the power to make those decisions. However, this is not the case. Only you can file your own taxes. Only you can access and control your retirement accounts. Only you can write checks out of your account, so on and so forth. Thankfully, in the event that you need it, your POA Agent would be able to act on your behalf to make sure that you and your affairs are taken care of.
This Agent would be able to handle everything from everyday activities like paying bills and managing bank accounts to more complex tasks like filing your taxes, applying for state benefits, and handling real estate transactions. In Maine, a POA can be tailored to grant broad powers or authorize someone to do specific tasks (like go to a real estate closing).
What is an Advanced Medical Directive? An Advanced Medical Directive (AMD) is sometimes referred to as a “healthcare power of attorney”, in which you can assign an agent to make medical decisions for you. This person would be able to speak directly with your physicians and care team to make medical decisions for you on your behalf. The AMD agent can follow your living will to withdraw you from life support, consent to surgery or ventilation, consent to organ donation, or simply make a doctors’ appointment for you. Authorizing an AMD agent before your incapacity keeps your agents out of guardianship court.
What happens with a Power of Attorney and Advanced Medical Directive in place?
A person becomes legally incapacitated when they do not have the ability to understand and manage their own affairs. When a power of attorney or advanced medical directive is executed before the person loses capacity, that POA and AMD can stay in effect through the person’s incapacity. Their agent will immediately be able to make financial, legal and medical decisions on their behalf without having to go to court. The POA agent can access financial accounts, make Required Minimum Distributions (RMDs) from retirement accounts, file taxes, manage property, file MaineCare applications, the list goes on. The AMD agent can speak with doctors, make appointments for you, consent to care, put you on or withdraw you from life support, and make informed decisions regarding your medical care.
What happens without these documents?
If you do not have a POA in place and you lose capacity for any reason (even if it is temporary), your loved ones may find themselves in guardianship court or conservatorship court to have authority granted to them by a judge. Decisions still have to be made for you, even if you are incapacitated. Unfortunately, the IRS does not care if you were in a car accident or are permanently in a nursing home, they still want you to file your taxes. If you needed to file for state benefits because of a permanent or temporary disability, nobody else would have the authority to submit that application besides yourself.
Similarly, if you do not have an AMD in place, your doctors still need consent to treat you, operate on you, or withdraw you from life support.
If there are no POA or AMD documents in place before a person loses capacity, the court will have to grant someone the authority to make those decisions through conservatorship and guardianship court.
Your spouse, partner, loved ones, family members or friends would have to petition the court on your behalf in order to have that same authority granted to them that could have been assigned by a POA or AMD document. There would be a court case with each party hiring an attorney to represent them, including yourself. There are court fees, attorney’s fees, and of course, the waiting period for the court to make its decision. On top of avoiding the unnecessary contention and stress, the power of attorney is a cost-effective document that eliminates the need to go to court to grant your Agent(s) the property authority.
Who needs a Power of Attorney and Advance Medical Directive?
These documents are not just for seniors or those dealing with health concerns, they are for everyone over the age of 18, because life throws curveballs. When a child turns 18, they are a legal adult for all intents and purposes. They can go vote, join the military, get married, etc. They also lose the protections and benefits of having a parent or guardian be able to make decisions for them.
How long do these documents last?
A Durable Power of Attorney and Advanced medical Directives stay in effect even after you become incapacitated, so your Agent(s) can ensure your life is running smoothly outside of your incapacity. The Durable POA only terminates upon your passing, or until you revoke it.
Some Powers of Attorney are written to terminate after a certain date or after a certain amount of time has passed. If you have a POA or AMD in place, make sure to review your documents to ensure they are up to date and effective.
- Attorney Allison Dean
