LIFE PLANNING
Life Planning Documents
A will is an essential way of making certain that decisions relating to your property are honored after your death.
However, there are several other documents normally prepared by estate planning professionals which deal with important aspects of a person’s life prior to their death. These documents include: healthcare proxies, durable powers of attorney, and living wills.
Health Care Proxy & Living Will
When a person lacks the ability to understand and appreciate the nature and consequences of health care decisions, Massachusetts law allows a duly appointed “health care agent“ to make health care decisions for the principal.
However, in order for the designation of a health care agent to be valid, the party who wishes to appoint them must execute a health care proxy document which complies with Massachusetts General Laws Chapter 201D. This chapter identifies the mechanisms for creating health care agent, and describes the scope of their responsibility.
The document must be signed at a time that the principal is mentally competent. It must be witnessed by two other adults who also sign their names to the document. The witnesses must affirm that the principal appeared to be at least 18 years old, of sound mind and under no constraint or undue influence.
The principal may also designate an alternate health care agent, if the designated agent is unavailable to make decisions, and is not expected to be available in time to make a timely medical decision for the principal. The health care agent cannot be an employee of the treating medical facility, unless they are related to the principal.
The written document must explicitly state the agent will have a “authority to make health care decisions on the principal’s behalf.” The designation becomes effective when an attending physician certifies that the principal lacks the capacity to make or to communicate healthcare decisions.
Once the determination is made, a healthcare agent is required to make health care decisions in accordance with the agent’s assessment of the principal’s wishes, including their moral or religious beliefs. If those wishes are unknown, then the decision shall be made in accordance with the agent’s assessment of the principal’s best interests.
If the principal would like to avoid aggressive medical intervention when the agent is acting on their behalf, these desires should be expressly set out either in the health care proxy, limiting the agent’s authority, or in an accompanying document commonly known as a “Living Will.” Many people create living wills as part of their estate planning documents. These documents typically request that pain medication be liberally administered even if that may hasten the timing of their death. It is also common to request that aggressive medical interventions such as feeding tubes not be used when there is no chance for the patient to recover and resume a meaningful life.
If a patient regains capacity to make decisions then the health care agent’s authority terminates. No agent acting in good faith can be held liable for any medical decisions made on behalf of the principal. And health care facilities who carry out the agent’s instructions are also protected from liability.
Durable Power of Attorney
In order to protect yourself at a time of diminished mental or physical capacity, it is important to designate a person who is authorized to make decisions on your behalf. This document is known as a Durable Power of Attorney.
The decisions that your agent may make on your behalf may include financial management, and disposition of property and other actions unless alternate instructions limiting the authority are contained in the document.
A Durable Power of Attorney may come into effect immediately, or it may contain language which creates a “springing power of attorney“. A springing power of attorney becomes affective only upon the disability or incapacity of the principal. If you decide to execute a springing power of attorney it will be necessary for your agent to obtain a medical certification of your incapacity and inability to understand and make decisions before that person can act on your behalf. Because this process introduces a certain degree of ambiguity and delay in the process, most people choose to execute a Durable Power of Attorney that is immediately effective, provided of course that they trust the person whom they are appointing to act fairly and honestly on their behalf.
All actions taken by an attorney in fact pursuant to a Durable Power of Attorney are binding upon the principal. However, if you want to grant your agent the authority to engage in transactions which personally benefit the agent, such as transferring a house in your name to the agent’s name, the power of attorney must specifically state that the agent is authorized to engage in “self dealing“ transactions.
Although there is no specific statutory requirement for execution of a Durable Power of Attorney, it is recommended that a Durable Power of Attorney form be signed not only by the principal but at least two witnesses and a notary public to assure its validity.
Your agent will have broad authority to act on your behalf. They will have authority to receive and deposit funds in bank accounts and brokerage accounts, to have access to safe deposit boxes, to make loans in your name and borrow funds. The agent will have authority to apply for government benefits, make contributions and withdrawals from retirement plans, to sign tax returns, and manage life insurance and health insurance policies. Your agent will also be allowed to purchase, exchange, lease or sell real and personal property. The agent will have authority to make gifts, forgive loans, and to complete any charitable pledges that the principal may have made.
In view of the fact that many people can be expected to experience a long period of declining mental competence later in life, or shorter terms of incapacity while undergoing hospitalizations or medical treatments, the Durable Power of Attorney is an essential component of careful life planning.