Cohen & Oalican discuss Elderlaw Planning and the UPC

Cohen & Oalican, LLP; Medicaid, MassHealth and Elderlaw Attorneys in Boston, Andover, Raynham.

Welcome to the Uniform Probate Code cont'd

ADVANCED DIRECTIVES

There are simple steps that clients can take while they are healthy to ensure that their wishes regarding their finances and health care decisions are respected in the event that they become incapacitated by illness.

A. Power of Attorney

In 1990, the Massachusetts legislature enacted the Uniform Durable Power of Attorney Act, enabling Massachusetts' citizens to execute a court recognized durable power of attorney. Since then, 27 other states, including the District of Columbia and the U.S. Virgin Islands have adopted durable power of attorney statutes based on the Uniform Act. A power of attorney is a document that allows a client to appoint an individual to act as the client's agent ("attorney-in-fact") on financial matters should the client ever become incapacitated. Given the broad authority typically granted under a power of attorney, it is obviously important that the client be confident that the agent will act in accordance with the client's wishes.
There are few formalities to creating a power of attorney. However, it makes sense to have the power of attorney notarized so that it can be used to transfer real estate if necessary. Also, as some States require that the power of attorney be witnessed, it makes sense to have witnesses so that the document would be honored in other States.
If a client wants to appoint more than one person the client can require that they must act together or permit them to act separately. If you want the agents to be able to act separately, the form must state this explicitly. However, clients should at least appoint alternates to avoid the problem of the attorney-in-fact not being available. In deciding who to appoint the client should obviously consider whether the person is trustworthy. Although, the person does not need to be a financial expert, it makes sense to appoint an agent who has some experience with financial matters and who has the common sense to hire professionals when necessary. Finally, be careful not to appoint anyone who has a history of financial problems. The pressures of debt or other financial strain may cause even the most trustworthy person to use the client’s funds for their own needs.
It is important to be sure that a client's power of attorney is "durable," meaning it remains in effect should a client become incapacitated. M.G.L. c.201B §1(a). To create a durable power of attorney the document must contain specific language referencing that the client's future disability will not effect the power of attorney. M.G.L. c. 201B §1(a). A client should also consider including gift-giving powers which would allow the client's attorney-in-fact to take advantage of estate planning strategies. Without specific language regarding gifting, future gifts made by the attorney-in-fact may be disallowed.
Most powers of attorney take effect when executed, even though the usual intent is for them to be used only in the event of the incapacity of the grantor. A client has the option of executing a "springing" power of attorney that will only become effective when the client's physician signs it stating that in his or her opinion the client has become incapacitated. However, our office has found that banks and other financial institutions don’t like springing powers of attorney as they raise questions of whether the client is really incapacitated. Or a client can enter into an escrow agreement with the lawyer who drafted the document under which they will hold the power of attorney until the client's physician tells the lawyer the client has become incapacitated. Clients always retain the option of directing their lawyer to release the power of attorney.
A client can revoke a power of attorney at any time. All the client needs to do is send a letter to the attorney-in-fact informing them that their appointment has been revoked. The client should also write any financial institution where the power of attorney might be used, putting them on notice that the document has been revoked. A conservator or guardian can also revoke a power of attorney, but the appointment of a conservator or guardian does not automaticallyrevoke a power of attorney. In fact, in Guardianship of James A. Smith, 684 N.E. 2d 613 (1997), the court held that a principal's nomination of his future guardian through a durable power of attorney mandates that the court appoint such nominated guardian in the absence of good cause or disqualification.

The attorney-in-fact owes a fiduciary duty to the person who appoints them. M.G.L. c.201B §3

(a). According to the Uniform Probate Code a fiduciary duty consists of a legal duty to: (1) account; segregate assets; make trust assets productive in accordance with a reasonably, prudent person dealing with other people's money; not delegate the responsibility to someone else; and not to self deal. U.P.C. §5-202. It is very important that the attorney-in-fact keeps good records of his or her actions under the power of attorney. Finally, the attorney-in-fact does not have any responsibility to use their own personal funds to pay bills of their principal. However, it is important that whenever the attorney-in-fact signs their name, they always clarify that they are doing so in their capacity as agent rather than individually.

This series, brought to you by Boston Attorneys Cohen & Oalican, LLP, specializing in Guardianship and Conservatorship Attorneys in Boston. Posted by Elder Law Boston Lawyer