Necessary Tools for Avoiding Guardianship

Many people do not realize that when it comes to incapacity there is no default plan. In general, when someone is no longer able to manage their financial and medical affairs, Texas law requires a guardianship for the long haul. Guardianships tend to be intrusive, time-consuming, and expensive. Luckily, individuals may utilize a power of attorney for financial and medical decisions as an alternative to guardianship. With a power to attorney, the client authorizes an “agent” or “attorney-in-fact” in advance of disability to make financial and medical decisions on the client’s behalf—sidestepping the need for a guardianship altogether in most cases. That is why a power of attorney for financial and medical decisions is an essential component of a complete estate plan.

Durable General Power of Attorney

When your client executes a general power of attorney, they authorize another person to manage financial matters on their behalf. These financial matters typically encompass a broad range of activities, including, but not limited to, banking transactions, managing stocks and bonds, real estate transactions, and gift-giving authority.

A durable general power of attorney means that the power of attorney continues after the client becomes disabled or incapacitated. As a practice matter, an attorney should almost always draft a durable general power of attorney for the client over a non-durable general power of attorney. If a general power of attorney is not designated as a “durable” power of attorney, it will be automatically revoked in the event of the client’s disability or incapacity. If this happens, a guardianship proceeding may be necessary in the future. Moreover, a durable general power of attorney should expressly define what it means to be “disabled” or “incapacitated” and whether it only becomes effective upon incapacity or disability (known as a “springing durable power of attorney”). A non-springing durable power of attorney becomes effective immediately upon its execution, and it may be used instantly by the person appointed. In contrast, a springing durable power of attorney does not become effective until some later event (i.e., incapacity) or after a certain period of time.

A durable general power of attorney remains in effect as long as the client is alive or until it is revoked. A durable power of attorney may be revoked at any time by the client as long as the client is competent. Usually, each time a client signs a new durable general power of attorney, they will revoke any previous durable power of attorney. Upon revocation or alternation, the client should provide notice to the attorney-in-fact who may be currently relying upon it. The client should keep a list of people who have a copy of the client’s durable power of attorney.

Medical Power of Attorney

A general durable power of attorney typically does not allow an agent or attorney-in-fact to make any healthcare or medical decisions. When the client needs non-life-threatening medical care, the doctor is required to obtain the client’s permission before beginning treatment. That permission can be difficult or even impossible to obtain if the client is incapacitated or unconscious. Many times, hospitals will require a signed document authorizing a third person to make decisions on the client’s behalf.

A medical power of attorney can be a useful tool for those with a physical disability or long-term care needs. A medical power of attorney—called a “medical proxy” in some states—empowers an agent to provide or withhold informed consent on the patient’s behalf regarding any form of medical treatment. A medical power of attorney authorizes an agent to make medical decisions beyond the end stages of life (i.e., artificial nutrition, hydration, and life support). It may also provide details regarding the patient’s preferences for certain forms of medical treatment and quality of life.

HIPAA Release or Authorization

Finally, it is equally important for a medical power of attorney to include the most recent HIPAA language, or the client should execute a standalone HIPAA release or authorization. In 2003, the U.S. Department of Health and Human Services enacted regulations under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The law includes privacy provisions that ensure patients’ confidential medical information is properly protected. Medical providers may be liable for serious sanctions and monetary fines if they fail to adhere to the stringent rules regarding the release of unauthorized “protected health information” (PHI). Because definitions under HIPAA are very broad and the penalties for violating them are so severe, most health care providers are stringently reluctant to release PHI to anyone other than the patient, without legal authorization. Therefore, it is imperative to have a valid medical power of attorney with current HIPAA language or a standalone HIPAA release or authorization so that, in the event of incapacity, family members or an appointed trustee, power of attorney, or guardian will be able to access medical records and make informed decisions on the client’s behalf.