It is not uncommon for individuals to execute a will and other estate planning documents for themselves and to make sure that aging parents also have these documents in place. But unfortunately, we seldom see parents reminding their adult children to engage in this type of planning, including those children who have only just recently reached majority age.
It is critically important for us to plan for the possibility of a loss of capacity. A loss of capacity can occur under some very unexpected circumstances such as a car accident or as a result of a fairly common illness, such as the flu. It is an error for us to only associate lack of capacity with age-related illnesses, such as Alzheimer’s and other forms of dementia.
The federal Health Insurance Portability and Accountability Act (HIPAA) forbids a health provider from disclosing patient data without authorization from the patient. Those who violate this rule may be subject to civil or criminal penalties. If the principal is unable to communicate with the provider and if a health care proxy is not prepared, a close relative (i.e. parent, etc.) may be precluded from receiving vital medical information or authorizing treatment on behalf of the patient.
As such, everyone over the age of 18 (age of majority in NY State) should arrange for the preparation of a Health Care Proxy and Power of Attorney. These documents allow the principal to appoint a trusted adult as an agent, to make medical decisions and to act on his behalf should the principal be unable to do so.
A Health Care Proxy is a document whereby an individual appoints an agent to make health care decisions on his or her behalf in the event the individual is unable to do so. In general, a Health Care Proxy empowers an agent to make any and all health care decisions which may include issues relating to medication, therapy, the change of treating physicians, and any other issues that arise in the course of medical treatment. Under New York State law, unless your agent knows your wishes about artificial nutrition and hydration (feeding tubes), the agent will not have the authority to make decisions about these measures. For those with religious considerations, a halachic Health Care Proxy might also be considered.
A Power of Attorney is a legal document that allows an agent to act on behalf of another individual (the principal) with regard to financial matters. The Power of Attorney is essential, especially if the principal becomes incapacitated or is otherwise unable to handle his or her affairs. It is also useful to have a Power of Attorney if the principal is planning to be away from home for an extended period of time.
For all Powers of Attorney executed on or after September 2, 2009, The Power of Attorney must be signed, dated and duly acknowledged, not only by the principal but also by the agent. Further, major gifting by the agent on behalf of the principal requires a second form, called a Statutory Gifts Rider which has additional signing requirements.
A Power of Attorney (POA) can be customized by the principal as to when it will take effect. A “general” Power of Attorney becomes effective immediately after being signed. A “durable” Power of Attorney becomes effective immediately after being signed and continues if the principal becomes incapacitated. A “springing” POA becomes effective only upon the occurrence of a specified event or a contingency as defined by the principal (e.g. incapacity). The single most important planning document that all adults with the requisite capacity must execute is a durable Power of Attorney. The principal may appoint separate agents with regard to different duties and/or provide the agents the authority to act together or separately. The POA is not just for the elderly. All adults above the age of 18 should have this document appointing someone else to manage financial affairs.
Failure to plan for the possibility of a loss of capacity can result in a heartbreaking and very expensive guardianship proceeding. This can easily be avoided by ensuring that all of your loved ones over the age of 18 have a properly executed Power of Attorney and Health Care Proxy.
Ronald A. Fatoullah, Esq. is the principal of Ronald Fatoullah & Associates, a law firm that concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, trusts, wills, and real estate. Elizabeth Forspan, Esq. is Managing Attorney of the firm. The law firm can be reached at 718-261-1700, 516-466-4422, or toll free at 1-877-ELDER-LAW or 1-877-ESTATES. Mr. Fatoullah is also a partner with Advice Period, a wealth management firm, and he can be reached at 424-256-7273.
By Ronald Fatoullah, Esq.
and Elizabeth Forspan, Esq.