Planning For
Incapacity Or Illness
by Tina Triano, Attorney

In my law practice, I have the opportunity to review many different estate plans. One issue that frequently stands out is missing parts of a complete plan. Merely having a trust document does not mean you have a complete estate plan. One of the most important components of a complete estate plan is a document that addresses potential incapacity or illness known as a durable power of attorney.

 A durable power of attorney is a document in which you appoint someone as your “attorney in fact,” usually your spouse or a close relative, to have the power to take care of your affairs should anything happen to you, either temporarily or permanently, during your lifetime. There is no requirement that an “attorney in fact” be an actual attorney. A power of attorney can be “general” or “special.” When you give someone a general power of attorney, then that person has the power to manage a broad range of your affairs. If you give someone a specific power of attorney, then that person has only the specific power that is given to him or her within the document, such as the sale of real estate or health care when you become incapacitated.

 A properly drafted durable power of attorney becomes effective upon incapacity or incompetence. One of the major flaws of an inadequately drafted power of attorney is that the document becomes valid only when your incapacity or incompetence is recognized by one or two physicians. The imperfection in this power of attorney is that there may be times when you are not mentally “incapacitated” or “incompetent,” but merely unavailable, such as out of the country or extremely ill. Obviously, no physician is going to sign off if you are merely unavailable or of sound mind. A good example of this situation is a cancer patient undergoing regular, but physically and mentally debilitating chemotherapy. In this situation, the personal is neither mentally incapacitated nor incompetent, but is certainly unavailable to manage their personal affairs. When you have a power of attorney that requires physician letters, the document is invalid until these letters are obtained. It can also be very difficult to get a physician (let alone two of them) to write you letters of incapacity. Without this “trigger,” the power of attorney has no effect and no bank, financial institution or title company will accept it and you will still have to go through legal maneuvers for the document to become effective.

Consider the possible situation – you are extremely ill and in no mood to pay bills or do any banking. Instead, you would like your brother or sister, or mother or father to take care of this for you while you convalesce. Your doctors will not write letters of incapacity because you are not mentally incapacitated. Another possible situation is that you take a trip out of the country and, for whatever reason you have difficulty returning home perhaps due to terrorist threats or political pressures. You certainly could have difficulty paying your bills from overseas and you clearly are not incapacitated, only unavailable. A properly drafted durable power of attorney would allow your attorney in fact to manage your finances until your return. Proper estate planning is supposed to make your life easier in times of difficulty. It is not supposed to create more work for you and your loved ones.  

When I draft a power of attorney, I make sure that the document does not require a trigger for it to be effective. They are effective the moment that they are signed and notarized. This also means that you should take great care in selecting your “attorney in fact” as you are giving them full control in the event of your temporary or permanent incapacity.

Your homework: If you have a power of attorney, read it to see if there are any “triggers” required for the document to take effect. If there are, you may want to consider replacing your power of attorney with a new power of attorney that does not require these triggers in the event of an illness or unavailability. If you don’t have a power of attorney, you should have one in the event of temporary or permanent incapacity or unavailability as part of a complete estate plan.

~Tina Triano Esq. is a California licensed attorney with over 15 years of trust and tax planning experience. Tina is available for group lectures and private consultations.