You Can’t Prepare for Incapacity After the Fact
by Craig C. Reaves
Most of us spend our days making countless decisions and communicating with others. Have you ever thought about what would happen if you lost your ability to do this?
Who would have the authority to act on your behalf? You may find it surprising, but if you have not planned ahead, a judge or a stranger might fill that role.
We can lose our mental capacity in a split second, such as from an accident, heart attack or stroke. Or it may be more gradual as a result of dementia, Parkinson’s or Alzheimer’s. In any event, unless you have planned for the possibility of this event, no one will have authority to make decisions for you without first going to court and being appointed as your guardian (to make personal decisions) and your conservator (to manage your assets).
This is true even if you are married. In most states, including Missouri and Kansas, neither your spouse nor your adult children automatically have this authority, although they are high up on the list to be considered. If you are in a committed relationship, but not married, your domestic partner will have even less chance of ever having the ability to make decisions for you.
And even if a court appoints someone close to you as your guardian and conservator, they will not have carte blanche to make any decisions on your behalf. Instead, they must often first get approval of the court. Also, they must account to the court for every penny of yours that is received, invested and spent. This is not only very time consuming and expensive, but it is a huge intrusion into your life.
All of this can be prevented if you have adequate durable powers of attorney. These documents allow you to delegate
authority to a person of your choice (your “attorney-in-fact” or “agent”) to make decisions for you if you ever become incapacitated.
There are two types of durable powers of attorney that you should have. One is for health-care decisions and often includes directions concerning life support. Whether you want life support stopped or sustained, your wishes should be in writing. The other (a “general” or “financial” durable power of attorney) is for legal and financial decisions.
A durable power of attorney can be effective when you sign it or after you lose your mental capacity. While a health-care durable power of attorney is usually effective only after incapacity, a financial one is often made effective when signed, so your agent can step in and assist you immediately without the necessity of proving you are incapacitated.
It is not unusual for a financial institution to refuse to honor a durable power of attorney unless it specifically describes the action the agent wants to take. Also, any durable power of attorney you sign must comply with the laws of the state in which you reside. They are technical documents that should only be prepared by an estate-planning or elder-law attorney. Forms from office supply stores and Internet sites should be avoided, because they usually do not comply with unique laws in Missouri and Kansas. Nor are they specific or broad enough to cover many of the contingencies that
may come up. For example, it may be helpful for your agent to be able to give some of your assets away in order to support your family, pay your child’s college tuition or reduce your estate. Unless your durable power of attorney authorizes such gifts, they normally cannot be made.
As with any legal document, however, you must have sufficient mental capacity to understand what you are doing when you sign a durable power of attorney. In other words, they must be signed at a time when you really do not need them. This is probably why many people do not have them when disaster strikes.
A properly prepared durable power of attorney is an integral part of a complete estate plan. While a living trust is an important estate planning tool, it alone is not enough. A trustee can only manage assets owned by the trust. While you are living, many of your assets, such as retirement accounts, cannot be transferred into your trust. Also, the trustee cannot make personal decisions for you, such as where you will live, health-care decisions, or signing your income-tax returns. Only a durable power of attorney or guardianship and conservatorship will allow someone else to step in and do these things for you.
Adding a person to your accounts as a joint owner may allow them to access the accounts and, hopefully, use them for your benefit. But it still does not allow the person to make personal decisions for you. Worse yet, it makes the accounts susceptible to creditors of the joint owner, and gives the accounts to the joint owner upon your death, which may not be what you wanted. Durable powers of attorney are a vitally important document for any adult. Do you have up-to-date durable powers of attorney? 
Craig C. Reaves is an elder-law and estate-planning attorney with Reaves Law Firm, P.C. in Kansas City.
P | 816.756.2100
E | info@reaveslawfirm.com