In addition to a Durable Power of Attorney for Finances, one way to help ensure that your bills will be paid and your bank account effectively managed if you become mentally incapacitated is to establish a multiple party account without right of survivorship. Also called a “convenience account,” this is a type of bank account that lets you designate a trusted friend or loved one to have access to the account, without making him or her a co-owner of the account.

This type of account is similar to a joint account, in that it provides a method for a trusted individual to make deposits into your account, withdraw funds, and write checks. However, it has some significant differences that can provide protection to you and avoid interference with the distribution of your estate when you pass away.

Unlike a joint account with right of survivorship, when you designate a loved one to have access to a convenience account, that person is added to your account as an agent. So, he or she is limited to using the account for your benefit. Since your agent is not a co-owner, he or she is not allowed to use the account funds for his or her own purposes. There are also no gift tax concerns, and your agent’s creditors cannot access the account in payment of his or her debts.

Plus, with no right of survivorship, the account will pass to your estate at your death, and be distributed according to the terms of your will. This avoids an often unexpected snag that comes along with traditional joint accounts. It’s easy to add an adult child or another loved one as a traditional joint account holder during your lifetime, without realizing that upon your death, that person will inherit your entire account. The effect of this is to divert the account funds away from any other beneficiaries named in your will.

Of course, even if you opt for a multiple party account without right of survivorship, you’ll still want to be sure to have an effective Durable Power of Attorney for Finances. This document allows you to appoint an agent to manage your financial affairs beyond your bank account.

Your estate planning attorney can help you determine whether this type of account is right for you, and help you establish a comprehensive plan for making sure you’re taken care of in the event that you become mentally incapacitated.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

When you designate someone as your agent under a Financial Power of Attorney, how long does that person have the authority to act on your behalf? If it’s a Durable Power of Attorney, then your agent’s authority continues even if you become mentally incapacitated, and it terminates under a limited number of circumstances.

Revocation

Of course, as the person who appointed your agent, you have the right to revoke your Power of Attorney, terminating your agent’s authority, at any time during your life. Assuming, of course, that you are mentally competent to do so. Once you revoke a Power of Attorney, your agent’s power to act on your behalf is cut off. If he or she knowingly continues to use a revoked Power of Attorney, your agent can be held personally liable for his or her actions.

Termination by Court

Under certain limited circumstances, your agent’s authority to act on your behalf can be terminated by way of court intervention. This generally happens for one of two reasons; either your Power of Attorney itself is not valid, or your agent is abusing his or her authority.

Death

Your Financial Power of Attorney terminates when you pass away. At this point, the authority to access and manage your bank accounts; buy, sell or rent property on your behalf; pay your bills and transact other business in your name passes from your agent to the Executor of your Will or the Trustee of your Living Trust.

Your estate planning attorney can help tailor a Power of Attorney that will give your agent the authority he or she needs to accomplish your financial and incapacity planning goals.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

Part of putting in place an effective estate plan is appointing trusted friends or loved ones to act on your behalf in case you become disabled during your lifetime. This is called incapacity planning, and it involves making use of several different documents to cover your financial and personal needs.

One of the documents you’ll put in place as part of your incapacity plan is an Advance Medical Directive, with which you’ll name a healthcare agent to make medical decisions for you if necessary. Once you’ve named a healthcare agent, this person will have the authority to communicate with your doctors and to make broad-ranging and sometimes difficult decisions on your behalf if for any reason you can’t make medical decisions for yourself.

It goes without saying that the person you appoint as your healthcare agent should be someone you trust a great deal. What other qualities are important for someone serving in this capacity?

• Agreement with Your Treatment Preferences. Your healthcare agent will be your voice if you’re ever disabled or in a situation where you can’t communicate with your doctors. So, it’s important that your agent be in agreement with the treatment preferences you’ve expressed, and that he or she be willing to carry out your wishes for you. If your agent has trouble with your wish to not be resuscitated, for example, then you’ll likely want to find someone who is more comfortable with doing things your way.
• Ability to Advocate for You. Hopefully, your healthcare agent will be able to act on your behalf and not meet with any resistance. However, on occasion, medical staff or even family members might disagree with the wishes you’ve expressed for yourself. In this situation, you’ll want an agent who will stand firm and act as your advocate in the face of resistance.
• Proximity and Availability. Does your agent live nearby? You’ll want to choose someone who lives close enough to you to be able to step in on short notice and begin acting on your behalf. An agent who lives too far away to quickly get to the hospital in case of an emergency is likely not the best choice. The same holds true of someone who is difficult to get in touch with or who is extremely busy. You’ll want to select an agent who is easy to reach and who will be able to drop everything in case of an emergency.
• Willingness to Serve. Acting as a healthcare agent is a weighty responsibility, and it’s not a job that everyone is willing or able to take on. Before you finalize your Advance Directive, you’ll want to talk to your prospective healthcare agent and make sure that he or she has the ability and the desire to take on the task.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

If someone close to you has executed a Power of Attorney appointing you attorney-in-fact, you should feel honored. That person – called the “principal” – has placed a great deal of trust and confidence in you.

You might also be a little concerned. After all, one of the things you’re authorized to do, as attorney-in-fact, is to sign for debts on behalf of the principal. In fact, the Power of Attorney might even authorize you to buy property and sign for a mortgage in the name of your friend or loved one. And, a lot of people who sign such documents worry that they’ll be obligated to pay back the debt.

Acting Within Your Authority

The good news is that, generally, as attorney-in-fact, you’re not personally responsible for the principal’s debt. Of course, this is as long as you’re acting within the authority and instructions given to you by the Power of Attorney document. What does this mean?

• You have to act honestly
• You have to act in the interests of the principal
• You have to faithfully and completely follow the instructions of the Power of Attorney

Acting Outside Your Authority

Plus, you need to be aware of when your authority to act as attorney-in-fact ends. If you use the Power of Attorney to sign for a debt when you don’t have the authority to do so, you could be held personally responsible for that debt. For example:

• If the principal has revoked the Power of Attorney, then, of course, you no longer have the authority to act in his or her name.
• Once the principal dies, the Power of Attorney is automatically revoked.
• In Texas, if you were married to the principal but get divorced, the divorce automatically revokes the Power of Attorney.

And, of course, if you’re otherwise personally responsible for a debt, then you’ll have to pay it. For example, if you’re married to the principal and the two of you took on the debt together, then you’re on the hook.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

As you make your estate plan and update it over the years, you’ll need to nominate several fiduciaries. What exactly is a fiduciary? It’s a person or an institution who will have the power to act on your behalf (or on behalf of your beneficiaries) in carrying out different elements of your estate plan. A fiduciary is responsible for acting in the interests of another person – and not necessarily in his or her own interests. Here are a few examples:

• Executor: An executor is the person appointed in your will to administer your estate when you pass away. He or she will have to follow the terms of your will, as well as the requirements of state law, in distributing your assets to your beneficiaries. He or she will also be responsible for making sure that all of your valid debts are paid, as well as any necessary taxes.
• Trustee: A trustee is the person or institution responsible for managing the assets in your trust. The trust property is actually titled in the trustee’s name, but the trustee is responsible for following the terms of the trust agreement, and managing the property on behalf of the beneficiaries of the trust.
• Guardian of Minor Children: You’ll nominate someone to care for your children, in the event that both you and the other parent pass away before the children reach adulthood.
• Health Care Agent: As part of your incapacity plan, you can appoint someone to make medical decisions for you in the event you’re terminally ill or severely injured, and can no longer make those decisions for yourself.
• Attorney-In-Fact: An attorney-in-fact is the fiduciary you appoint, under your Financial Power of Attorney, to manage your financial affairs and investments on your behalf, under the instructions contained in your Power of Attorney.

You can name one person to serve in many different fiduciary capacities, or you can choose different people (or institutions, like your bank’s trust department) to fulfill different roles. Your estate planning attorney can fully explain the duties of each fiduciary role, and help you choose the right person for each job.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

What is the purpose of an estate plan? At its most basic, an estate plan ensures the smoothest, most orderly transition possible at the time of your death. This means that your loved ones know where you want your property to go – and how to get it there. It also means that, if you have young children, your loved ones know who is supposed to take care of your children, and what your expectations are for how your kids are to be brought up.

A comprehensive estate plan also includes a plan for what will happen if you’re mentally incapacitated. So, your loved ones know what your wishes are for the managing of your medical care and for the handling of your finances – and they can effectively and efficiently carry out those wishes.

An estate plan can also minimize the amount of property that gets handed over to the government in the form of taxes, while preserving that portion of your estate for your family members or for favorite charities. There are countless ways that an estate plan can help bring order and peace to an otherwise dark and distressing chapter of your family’s.

On the other hand, consider what can happen if you neglect to put an estate plan in place. If you become mentally incapacitated; say, in a car accident – not only does your family have to deal with the trauma of your injuries and inability to communicate, they also have the added stress of the living probate process. They’ll need to hire a lawyer and go before a judge to have a guardian or conservator appointed for you.

If you pass away, it’s state law, and not your wishes, that will dictate who gets your property – and possibly who ends up raising your children. And the process of determining all this can be incredibly time consuming and expensive.

As the old saying goes, failing to plan is planning to fail. When it comes to estate planning, this means unnecessary turmoil and uncertainty for your family during an already traumatic time.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

So much of estate planning involves preparing for the unexpected. This is certainly the case when it comes to putting your incapacity plan in place. An essential part of your incapacity plan is having an Advance Directive. This is a document, such as a Living Will, that lets you communicate ahead of time your preferences for the type of care you want to receive – and don’t want to receive – if you’re gravely ill or seriously injured and can’t communicate your own wishes. Advance Directives also include the Durable Healthcare Power of Attorney. This document lets you appoint an agent to make medical decisions on your behalf if you’re unable to make these decisions for yourself.

The timing of putting these documents in place can be crucial. Often, it’s easy to put off the task of incapacity planning because we don’t think anything bad will happen to us. It can also be tough to think about what kind of medical interventions and end-of-life care you might want; the subject is admittedly uncomfortable and unpleasant.

But, people young and old find themselves in situations every day where an Advance Directive is necessary. And without it, their family members are subjected to the emotional pain, financial burden, and loss of privacy that comes with going to court to have a guardian appointed to make the necessary medical decisions.

When should you create an Advance Directive? The sooner the better. An effective Advance Directive can only be made while you’re mentally capable of understanding what you’re doing and expressing your wishes for your future medical treatment. None of us knows what tomorrow has in store. So, early planning is key.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

A Living Will, unlike your Last Will and Testament, is used while you are still alive. Your Living Will goes into effect when your doctor states you are no longer able to make medical decisions for yourself.

What It Does

Your Living Will is a place to state all of your wishes regarding your medical care. You can dictate what types of treatment you are willing to accept if you should become terminally ill or unable to speak for yourself due to injury or incapacitation. You can use your Living Will to leave instructions regarding how long you wish to be left on life support, your accepted terminal illness treatments, and your desires regarding resuscitation.

What It Doesn’t Do

A Living Will is cannot speak for any medical circumstance that you have not included in this document. If you wish to have an actual person make medical decisions for you in the event of your mental disability or other incapacity, you may use a Medical Power of Attorney instead. One advantage to using a Medical Power of Attorney is that your POA can make real time decisions regarding your care. This allows your loved ones to seek medical treatment advances that have occurred since you last updated your estate documents. Your power of attorney can seek new treatments if they may be beneficial to you.

Why Use a Living Will

Family members may hold onto hope of your recovery even when it is not feasible. When you use a Living Will to dictate your medical wishes, you can avoid terminal illness treatments that may be more harmful or painful than good. You can also dictate removal of life support when chances of recovery are slim. Terminal health care decisions can be hard for your family in their time of grief. A Living Will allows you to make these tough decisions for your loved ones.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

Many people mistakenly believe that if they become ill or injured and are unable to manage their own affairs, their spouse will be able to step into their shoes and take care of things for them. While this is partially true – your spouse can continue to manage your joint bank account, for example – you still need to consider disability planning even if you’re married.

Here are just a few of the things your spouse can’t do for you:

• Sign for you during real estate transactions;
• Sell your vehicle (even if it’s jointly owned);
• Sell jointly-owned stocks;
• Handle legal claims on your behalf.

In order for these and other things to be taken care of in the event that you’re incapacitated, you’ll need to have a plan in place. Your plan will need to include documents such as a Durable Financial Power of Attorney or a Revocable Living Trust.

Under a Durable Financial Power of Attorney, you name an agent – often your spouse – to handle your financial affairs in case you’re unable to. You can give your agent broad power to control all of your affairs, or you can specify limited power over certain, finite affairs.

Under a Revocable Living Trust, you name yourself as initial trustee, and transfer your property into the trust. You also name a Disability Trustee, again, often your spouse, to take over in the event you’re incapacitated. You specify in your trust how you’d like your Disability Trustee to handle your trust property if you’re unable to take care of it yourself and he or she takes over when the time comes.

Without some type of disability planning, your family will likely need to go to court to have a conservator appointed in order to manage your finances for you in the event of your incapacity.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

When many people hear the term “long-term care facility”, they automatically think “nursing home”. But while nursing homes are certainly one type of long-term care facility, there are a variety of other options that come under the umbrella of long-term care.

A long-term care facility is one that provides medical and/or non-medical care and assistance to people suffering from a chronic illness or injury. A person who has had a serious accident and needs intensive rehabilitation after a hospital stay for example, is likely to use the services of a long-term care facility.

On the other end of the spectrum, an elderly person suffering from Alzheimer’s will also need long-term care, but in a different type of facility.

The first step in finding an appropriate facility is to figure out what type you’ll need. There are three main varieties of long-term care facility:

• Skilled Nursing Facilities. These may or may not be associated with a hospital, but they are generally designed to provide extended recovery time to those who need it. At a skilled nursing facility, patients receive intensive care by trained nurses. A stay in a skilled nursing facility can typically range from a few days to several months.
• Intermediate Care Facilities. This type of facility can also provide long-term rehabilitation, but not the type of intensive medical care that a skilled nursing facility requires.
• Custodial Care Facilities. Nursing homes fall under the “custodial care facility” category. Residents generally move into a custodial care facility for very long, or permanent, stays. At this type of facility, there’s medical assistance available, but it isn’t the focus of care. The focus is on assisting residents with their personal care needs, and often, on creating a community for residents to belong to.

When you’re choosing a long-term care facility, a good starting point is to get recommendations from friends, family members, clergy, or other people you know who have had experience with the type of facility you’re looking for. It’s also essential to go and visit the facility, talk to the staff, and pay close attention to how it is operated.

Taking the time now to investigate all your options before committing a loved one to a long-term care facility ensures that your family member will get the best care possible.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.