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Powers of Attorney and Health Care Directives | Okura & Associates - Hawaii Estate Planning Attorneys

Who Decides What Happens To My Remains Anyway? (March 2014)

WHO DECIDES WHAT HAPPENS TO MY REMAINS ANYWAY?

–THE NEW 2013 HAWAII LAW

By

Ethan R. Okura

“Thou know’st ’tis common; all that lives must die,

Passing through nature to eternity.”

-William Shakespeare (Hamlet)

            Death.  This is a difficult topic to think about.  Most of us spend most of our lives enjoying work, hobbies, friends and family.  We engage in diversions to avoid thinking about this inevitability.  And yet, this is a bridge that we all must cross someday.  Some of us are meticulous planners and dictate exactly what should happen upon our passing, such as where to hold a funeral service, what type of food to serve, what pictures to display, and even what type of music will be played.  While most of estate planning is usually focused on what happens to your financial estate after you pass away, today I want to discuss what happens to your physical estate—your body and its final honors as it is laid to rest.

One of the biggest decisions is whether to be buried or cremated.  Although there is no right or wrong answer to this question, there are many factors that can influence your decision on this matter.  Religious beliefs, financial resources, ecological concerns, and family traditions are all important considerations.  However, once you’ve decided how to dispose of your remains and what type of memorial service you would like to have held on your behalf, how do you make sure that your wishes are carried out after you are gone?

In the past, you could indicate your wishes as to the treatment of your remains in an Advanced Health Care Directive or in a Last Will and Testament.  However, those documents were not designed primarily for that purpose and there wasn’t a good system in place to ensure that your wishes would be carried out.  The Advanced Health Care Directive is primarily a document that lets you designate an agent to make health care decisions for you in the event of your incapacity and it also lets you make your end of life decisions—such as whether or not to pull the plug or receive tube-feeding.  The Last Will and Testament is primarily for the purpose of naming your Personal Representative (formerly known as an Executor) and designating who should inherit your property or become the guardians of your minor children.  In addition, there wasn’t a clear rule about who has the right to ultimately decide about your body’s fate.

Last year, the Hawaii State Legislature passed a new law called the “Disposition of Remains Act.”  According to the new law, a person over age 18 may specify the location, manner, and conditions of disposing of their remains in a Will, in a pre-need funeral contract, or in a written, signed, and notarized document.  Under the law, these written directions take precedence over any other person’s wishes or directions—including your surviving spouse or children.

If you don’t specify how you want your remains to be disposed of, you can appoint someone to make those decisions for you in your Will or in a separate document that identifies who you are naming to fill that role.  In the event that you don’t specify whom you would like to have authority to make decisions about your remains, the law gives priority to your surviving spouse, partner, or reciprocal beneficiary, if you were married, in a civil union, or in a reciprocal beneficiary relationship when you passed away.  If not, the majority of your children would have the right to make such decisions.  The law goes on to name your parents, and then your siblings if they happen to be surviving, and then more remote family members or other legal representatives.

An interesting point is that the law goes so far as to point out that if your named representative, or family member who has priority under the law, is charged with murder or manslaughter in connection with your death, then their right to decide about the disposition of your remains is forfeited.

This new law is especially helpful for the funeral homes who were often stuck in a situation where they had conflicting instructions from different family members and didn’t know who to listen to, or had to deal with the body of someone who had no close family members and didn’t have instructions at all as to what to do.

If you haven’t taken care of specifying how you would like your memory to be honored and what to do with you remains, you should see an expert estate planning specialist attorney right away to update or create your estate plan including what your wishes are regarding the disposition of your remains.

© OKURA & ASSOCIATES, 2014




Different Types of Agency: Attorney-in-Fact VS. Trustee (October 2013)

DIFFERENT TYPES OF AGENCY:

ATTORNEY-IN-FACT VS. TRUSTEE

By

Ethan R. Okura

 

Clients often come to me confused about the different ways their loved ones can act for them if they become incapacitated (or how they can act on behalf of their family members).  Today I’ll explain the different types of agency and fiduciary relationships that are common in estate planning and how they apply to your important life decisions and estate planning documents.

First, let’s start off with some important definitions.  When we talk about an “Agent” in the Law of Agency, we’re not talking about James Bond, Jason Bourne, the FBI, or CIA.  An “Agent” is someone who acts on behalf of another and whose actions are subject to the other’s control or restrictions.  A “Principal” is someone who appoints an agent to act on his behalf, subject to the control of the principal.  So a principal and an agent are always a pair.  You can’t have one without the other, and the principal can’t appoint an agent without the agent’s knowledge.  The agent has to agree to accept the role of agent in order to be accountable to the principal.  An agent is a “Fiduciary”, meaning he has a legal and moral responsibility to manage the assets of the principal for the benefit in the principal and according to the instructions given by the principal, not for the agent’s personal benefit.

An “Attorney-in-Fact” is an agent appointed under a “Power of Attorney” (sometimes called a Durable Power of Attorney, a General Power of Attorney, or a Limited Power of Attorney).  The Attorney-in-Fact has authority to make business decisions and investments, sign legal documents, enter contracts, and otherwise manage the finances of the principal.  A Power of Attorney can be effective immediately when the principal signs it (so the Attorney-in-Fact can act for him right away), or it can be a “Springing” Power of Attorney which doesn’t take effect until the principal becomes incapacitated.  However, an Attorney-in-Fact can only act on behalf of the principal using the power of attorney while the principal is still alive. From the moment the principal passes away, the Attorney-in-Fact cannot legally use the power of attorney anymore.  After the principal dies, we must have the Court appoint a “Personal Representative” (in some States called the Executor) to represent the estate of the deceased principal and manage the assets of the estate.

Another type of agency is under a Health Care Power of Attorney.  In Hawaii, this document has been legislatively combined with a Living Will to become a document known as the “Advance Health Care Directives.”  In the Advance Health Care Directives you name a person (or several people) who can act as your agent to make medical or health care decisions for you.  This person will be known as a Health Care Agent, Agent under Health Care Power of Attorney, or Agent under Advance Health Care Directives.  The type of agency allowed is limited by the document so the health care agent has no right to manage your finances or access your bank accounts just because he’s your health care agent (unless he is also your Attorney-in-Fact).

Now the biggest confusion that I see among clients and their agents is a misunderstanding in the difference between the roles of an Attorney-in-Fact and a trustee.  With every trust, there are three parties: The Settlor (sometimes called Grantor or Trustor), Trustee, and Beneficiary.  The Settlor is the person creating the trust and putting his or her assets in the trust.  The Trustee is the person who receives the assets, manages and invests the assets, and distributes the assets in accordance with the terms of the Trust.  The Beneficiary is the person who benefits from the Trust—the one whom the Trustee gives the trust assets to or spends the trust assets on.  If you create a revocable living trust, you are usually the Settlor, Trustee, and Beneficiary during your life while you’re still mentally competent.  However, a Successor Trustee can step in as the Trustee to manage the Trust whenever you become incompetent or pass away.  The common misunderstanding comes in when people think they can use the power of attorney to manage the assets in their family member’s trust.  A power of attorney only lets the Attorney-in-Fact manage the assets in the principal’s individual name. Any assets owned by the principal in her revocable or irrevocable trust can’t be accessed using a power of attorney.  Only the Successor Trustee has authority to deal with and manage the Trust assets.  Although both the Attorney-in-Fact and the Successor Trustee are both fiduciary agents of a sort, their roles are NOT interchangeable.  Another difference between Attorney-in-Fact and Trustee is that while the Attorney-in-Fact may not manage the principal’s assets or conduct business and sign documents for the principal after the principal’s death, the Successor Trustee can continue (or start) to manage the Trust even after the death of the Settlor (principal).

Another way that some people choose to allow family members to manage their assets is by create a Joint Account at a bank or other financial institution. I usually do not recommend using a Joint Account as a means of allowing someone to help manage funds. The main reason is that the Joint Account owner is not a fiduciary and owes no legal obligation or duty of loyalty to the other joint owner. It does not create a principal-agent relationship.  Even if all the assets belonged to one person initially, once the account is put into joint names, either joint owner has full access to use all of the joint account assets for himself or herself.  Also, if either joint owner gets sued or divorced, it doesn’t matter who contributed the assets initially—all of the joint account assets could be lost to a creditor.  Finally, if the joint owner dies before the original owner, the assets may have to go through probate when the original owner passes away.  For these and other reasons, I don’t recommend using a joint account when an agency relationship might better serve the needs of the client.  Having the account owned by a revocable living trust or an irrevocable trust is usually the best solution.

Finally, you may heard of a POD or TOD account (they’re two different names for the same thing).  POD means “Payable on Death,” and TOD means “Transfer on Death.”  A POD or TOD Beneficiary will receive the account assets upon the death of the account owner.  However, it does not allow a named beneficiary to access the account at any time prior to the death of the owner.  If those funds need to be accessed to pay bills for the owner, his agent will need to have a valid financial power of attorney (not one for health care only) that is accepted by the financial institution in order for the Attorney-in-Fact to access those funds and pay his bills.  Also if the POD or TOD beneficiary dies before the owner, the funds in that account might have to go through probate.        Hopefully this clears up some of the misconceptions that are out there about powers of attorney, the differing roles of the Attorney-in-Fact and Trustee, and Agency Law in general.

 

© OKURA & ASSOCIATES, 2013




The Durable Power of Attorney – Part 2 (June 2012)

THE DURABLE POWER OF ATTORNEY – PART 2

 

Not all Powers of Attorney are of equal quality.  You need a carefully written Power of Attorney which contains special wording for estate planning situations.  A Power of Attorney does not give the attorney-in-fact the power to make gifts unless there is special wording which permits the making of gifts.  For example, suppose that your husband becomes incapacitated and has to go to a nursing home.  When he qualifies for Medicaid to pay the nursing home expenses, the Medicaid office will give you 90 days to transfer all except $2,000 of assets from your husband to you.  If the Power of Attorney does not contain special wording allowing gifts, you may not have the power to legally transfer your husband’s assets from him to yourself.  The Medicaid benefits could be lost because the Power of Attorney was not written correctly.

Also, if you are wealthy, it is very important to have the gifting power worded correctly.  I have seen Powers of Attorney written in such a way that they create unexpected estate tax problems.  For example, if father owns $2,000,000 of assets and son owns nothing, and father gives son a Power of Attorney with the wrong wording in the gifting power, if the son dies in 2013, the son could be taxed $435,000.00 because of the assets the father owns!  I have seen this mistake in the Power of Attorney form used by one of Honolulu’s most famous estate planning attorneys.

A financial institution does not have to honor your Power of Attorney.  Here is an experience we had.  An elderly man was in the hospital, paying $1,000 per day for staying there!  He had to be moved to a nursing home, to reduce the cost from $30,000 a month to $7,000 a month.  The nursing home required financial information.  The wife’s brother, who was one of the attorneys-in-fact, took the Power of Attorney to the three financial institutions where the elderly couple had bank accounts and C.D.s.

At first, one of the financial institutions said they would honor the Power of Attorney for obtaining information about accounts, but not to withdraw money from accounts.  The two other financial institutions would not honor the Power of Attorney.  They said they have their own Power of Attorney form which they wanted signed.

After receiving a phone call from our office, the first financial institution agreed to honor the Power of Attorney for withdrawal of money from accounts.  Today, that financial institution does not honor Powers of Attorney. Our contact with the second financial institution resulted in their attorney reviewing the Power of Attorney, after which he instructed the branch to honor it.  I have been told that financial institution today does not honor Powers of Attorney. Our office contacted a Vice President of the third financial institution, who then instructed the branch to honor the Power of Attorney. Whenever I meet with clients, I warn them of which financial institutions will likely not honor their Power of Attorney, and discuss options of how to avoid that problem.

Some businesses are more comfortable about honoring a Power of Attorney if it was made recently.  Therefore, you may want to consider updating your Power of Attorney from time to time.  One large financial institution will honor Powers of Attorney less than 5 years old; one title company likes Powers of Attorney to be less than 3 years old; and one health insurance carrier likes it to be less than 1 year old.

Check with every financial institution at which you have an account. Find out whether they will honor your power attorney if you become incapacitated. If they will not honor your power of attorney, you could have your revocable trust be the account owner, because banks seem to allow successor trustees to access accounts.  Other options are to sign their form to appoint an agent for that account, or to change banks.




The Durable Power of Attorney – Part 1 (May 2012)

Every adult should have a Durable Power of Attorney.  A “Power of Attorney” is a legal document in which one person gives another person the power to act for him, including the power to sign papers for him.  The person who is giving the power is called the “principal.”  The person who is getting the power is called the “Attorney-in-Fact” or “agent.”  “Attorney-in-Fact” doesn’t mean the person who is getting the power has to be a lawyer.  Any adult such as your husband, wife, son or daughter, brother or sister, or friend can be your Attorney-in-Fact.  A “General Power of Attorney” gives broad powers to the Attorney-in-Fact, such as the power to buy and sell real estate, open and close bank accounts, sign checks, sign contracts, and in general, do anything the principal can do.  A “Special Power of Attorney” gives the power to do only one or more specific things, such as the power to buy or sell a certain piece of real estate for the principal.

A “Durable” Power of Attorney is one which will continue to work even if the principal becomes disabled or incapacitated (unable to handle his own financial affairs).  To be “durable,” a Power of Attorney must contain these words: “This power of attorney shall not be affected by the disability of the principal.”  A “Springing” Power of Attorney is one which will start to work only when the principal becomes incapacitated.

Most Powers of Attorney which people have are Durable General Powers of Attorney.  That is, they give broad powers to do anything, they can be used while the principal is still healthy, and they can be used even if the principal becomes disabled or incapacitated.  However, you cannot tell by the title.  Some Durable General Powers of Attorney are called “Durable Power of Attorney.”  Others are called “General Power of Attorney.”  Still others are called “Power of Attorney.”  You have to read the actual words of the document to find out whether a Power of Attorney is “general” or “special”, “durable” or not, and “springing” or not.

A Durable Power of Attorney is an important part of every estate plan.  If a person becomes incapacitated, the Attorney-in-Fact can withdraw money from accounts to pay bills for the principal, open and close bank accounts, sell stocks or mutual fund shares, sell or rent out real estate, and do whatever else is necessary to handle the financial affairs of the principal.  If a person has any assets in his or her own name and does not have a Durable Power of Attorney, there will be a problem if that person becomes incapacitated.  The family members will not be able to withdraw money or pay bills for the incapacitated person.  One of the family members will have to hire an attorney, go to court, and ask the court to appoint a “conservator” of the property of the incapacitated person.  (The conservator used to be called a “guardian.”)  After the court officially appoints someone to be the conservator, the appointed conservator will be able to withdraw money, pay bills, and handle other financial matters for the incapacitated person.  However, the court will order the conservator to keep careful records of every penny that comes to the incapacitated person and every penny that is spent for the incapacitated person.  The conservator will have to go back to court every year, or as often as the court orders.  Each time the conservator goes back to court, the conservator will have to provide an accounting of all the money that came in and went out since the last accounting.  There will be more attorneys fees and costs each time the conservator goes back to court.  The conservatorship hassle and expense can easily be avoided by having a good Durable Power of Attorney, which will allow the Attorney-in-Fact to handle finances for the principal without an exact accounting and without court supervision or attorneys fees.




Advance Health-Care Directives (Part 2) (August 2011)

ADVANCE HEALTH-CARE DIRECTIVES (PART 2)

In last month’s column I explained that Advance Health-Care Directives have two parts.  One part is a “Durable Power of Attorney for Health Care Decisions.”  It lets you name the person who will make medical decisions for you if you can’t make your own decisions.  The other part is a “Living Will.”  It lets you decide whether you want your life prolonged after you are no longer able to communicate.

I often see a problem with Advance Health Care Directives.  By signing the standard form without customizing it, you are saying that your agent can make all decisions for you, but you are also making your own end of life decisions.  That is a conflict.  You should either have your agent make the end of life decisions, or you should make them, not both of you.  That is why we prepare the Advance Health Care Directive for our clients, rather than having them sign one at the hospital.

I once read an article entitled “Living Wills Don’t Always Work – Or Get Followed.”  The article mentioned a physician in the mainland who had a heart attack.  He had a living will.  His wife, who also was a physician, knew it was too late to save him.  She told the emergency room doctor to stop resuscitation attempts.  He wouldn’t listen to her.  It took her 29 hours to convince them to remove the life supporting equipment. 

If this happened in Hawaii, I believe the result would be the same.  The standard living will says: “I do not want my life to be prolonged if . . . I have an incurable and irreversible condition that will result in my death within a relatively short time.”  When paramedics first arrive to help someone who has collapsed, they don’t know if the condition is “incurable.”  They don’t know if the condition will result in death “within a relatively short time.”  Therefore, the living will does not apply.  They will do all they can to help the person to live.  Even in the emergency room, it may take some testing and some time before they can determine whether the condition is incurable.  That is why they ignore the living will.  They have to.  They don’t want to sit back, let the person die, then risk being sued by the family for not saving the person’s life.

Therefore, you should not expect the living will to be followed until the crisis is over and the doctors are reasonably sure that the patient will never regain consciousness.

If you do not want to be revived when your heart stops beating, then you need a document different from a living will.  You need a “comfort care only” document.  The law used to provide that you can get this only if your doctor certifies that you are terminally ill.  However, in 2006 the Hawaii legislature changed this law.  Now, you can have a “comfort care only” document even if you are not terminally ill.  It has to be signed by you (or, in some cases, by your agent) and by two adult persons who personally know you.  The “comfort care only” document says that you should not be given chest compressions, rescue breathing, electric shocks or medication if your heart stops beating or if you stop breathing.  The old law also required that you wear a “comfort only” bracelet or necklace, but the new law only requires the legal document.  When emergency personnel or other health care providers see the document, they are not supposed to revive you.  But the law gives them an out.  If their own safety or the safety of others requires them to revive you, they may do so.  Also, if a health care provider’s own conscience requires him to revive you, he may do so. 

It is possible that many doctors don’t know about this “comfort care only” law.  If you want to be sure that your Advance Health Care Directive is followed, tell your loved ones to insist that the doctors honor it.  If you have a “comfort care only” document, you might even tell your loved ones to delay calling the rescue squad if your heart stops beating.  We have a right to leave this life peacefully.  We need to ask our loved ones to help us enforce that right.




Advance Health-Care Directives (Part 1) (July 2011)

ADVANCE HEALTH-CARE DIRECTIVES (PART 1)

Everyone should have Advance Health-Care Directives.  “Advance Health-Care Directives” are instructions which you are giving now (while you can still make decisions) about how you want doctors and hospitals to take care of you when you can no longer make your own decisions.

Most Advance Health-Care Directive forms have two main parts.  The first part is a Power of Attorney for Health-Care.  The second part is a Living Will.

A Power of Attorney for Health-Care is different from an ordinary Power of Attorney.  In an ordinary Power of Attorney, you give someone the power to sign legal papers for you, and to handle your money and property.  In a Power of Attorney for Health-Care, you give someone the power to make medical and other health-care decisions for you.  This person is called your “agent.”  It is wise to name alternate agents.  For example, if you are married, your spouse could be your agent.  One of your children could be your “alternate agent” in case your spouse dies or becomes incapacitated.  If you don’t have a spouse or children, brothers or sisters or friends could be your agent and alternate agents.  It is possible to name more than one agent to serve together at the same time as “co-agents.”  If you name two or more agents as co-agents, it is very important to specify whether any one of them can make decisions for you alone, or whether they have to make decisions by majority vote.  If there is any possibility that two or more agents could disagree on their decisions, then it is best to have only one initial agent, with alternate agents listed one at a time.

In your Power of Attorney for Health-Care, you get to choose whether your agent can start making decisions for you immediately, or only after you become incapacitated.  If you have complete trust in your agent, my opinion is that you should let the agent have the power to make decisions for you immediately.  If the Power of Attorney for Health Care says that the agent can make decisions only after the person is incapacitated, then, in order to make decisions for the person, the agent will have to prove that the person is incapacitated.  This is done by having a physician examine the person and then sign a certificate stating that the person is incapacitated.  It may take time to make arrangements for a physician to sign the certification of incapacity.  In the meanwhile, the agent will not be able to make medical decisions for the person.  Therefore, if you totally trust your agent, the safest thing to do is to say in your Health-Care Power of Attorney that your agent can make decisions for you immediately, even if you are still healthy.  You can always override your agent’s decisions while you are mentally competent.

The other main part of the Advance Health-Care Directive is the Living Will.  The Living Will is different from a Living Trust.  A Living Trust is used to avoid probate.  In the Living Will, you make a choice about how you want to be treated if you are in a coma or otherwise unable to communicate, and if there is no reasonable chance for recovery.  These are your choices: 1) you want them to “pull the plugs” and let you die naturally; 2) you want them to keep you alive as long as possible; 3) you want your agent to decide whether they should “pull the plugs.”  You also get to decide whether you want tube feeding of water and nutrition or whether you want tube feeding to be removed if there is no reasonable hope for recovery

The Advance Health-Care Directive Law changed in July, 1999.  If your Living Will or Power of Attorney for Health-Care was made before July, 1999, it is still legal as long as it was legal at the time it was made.  However, if your Advance Health-Care Directive is not in the form approved by the Legislature in the 1999 law, you may want to update your document.  The new form is more complete.

You can get an Advance Health Care Directive form at no cost at most hospitals, but I recommend getting one through an estate planning attorney, because I have seen many filled out incorrectly.




Do Not Resuscitate

“DO NOT RESUSCITATE”

With an Advance Health Care Directive, you can make “end of life” decisions.  You can choose to die naturally, without life support.  However, if your heart stops beating, emergency medical personnel will resuscitate you, even if you have an Advance Health Care Directive.

Some people who suffer pain or have a terminal illness would rather not be resuscitated.  To allow people to refuse resuscitation, the “comfort care only” law was created in 1994.  It provides a way for others to know quickly if a person does not want to be resuscitated when his breathing or heart stops. It requires wearing a special bracelet or necklace.  When emergency medical personnel see the bracelet, they provide only “comfort care,” without trying to resuscitate.  However, there is a problem with the law.  Even if you are wearing the special bracelet, a person can resuscitate you if his conscience requires it.  You can learn more about this law on the Department of Health’s website at www.hawaii.gov/health.  At that website, do a search for “comfort care.”  You can request forms for the comfort care only document and the special bracelet or necklace (which costs $9.50) by phoning (808) 733-9210.      

On July 16, 2009, House Bill 1379 became law without the Governor’s signature.  This new law is called Physician Orders for Life-Sustaining Treatment (POLST).  These Physician Orders cover tube feeding, like an Advance Health Care Directive, and also cover resuscitation, like a “comfort care only” document.  You can request not to be resuscitated if your heart stops beating.  It also covers “medical interventions.”  You can choose comfort measures only, limited additional interventions, or full treatment.  These are actual doctor’s orders, which both you and your doctor sign.  It is a two-sided form, with information on both the front and back.   These orders must be followed by medical personnel, if they know that you have a POLST form.  Under the “comfort care only” law, medical personnel can resuscitate you against your wishes, and are protected from lawsuits.  Under POLST, if someone knows you have a POLST form and resuscitates you against your wishes, you could probably sue that person.  Therefore, if the emergency medical personnel know about your POLST form, they are more likely to follow your “do not resuscitate” wish than if you have a “comfort care only” document.

However, there is a problem with POLST.  It does not provide for a special bracelet for emergency medical personnel to know that you have a POLST form.  In order to make the POLST form clearly visible, it is usually printed on bright lime-green paper.  It is recommended that you post a copy where it can easily be seen, such as on your refrigerator, bedroom door, or on a bedside table.  If you are in a hospital or nursing home, perhaps it should be posted near your bed. You should tell your relatives and friends that you have such orders, and what your wishes are.   

The POLST form may be downloaded from the Kokua Mau website at www.kokuamau.org.  On the homepage you will see where to click to download the POLST form.  Kokua Mau is an organization concerned about end of life care.  They played a major role in getting the POLST law passed in Hawaii.  They recommend printing out the form on 8 ½” x 11” paper, with the color being Lime No. 102053 from Kaleidoscope at Fisher Hawaii.  A black and white form is legal, and even a copy is acceptable, but the bright lime green color will make it easier for people to notice in an emergency.

If you are serious about not wanting to be resuscitated if your heart stops, I recommend that you get ­both the POLST form and the “comfort care only” document and bracelet or necklace.  Then, if an emergency occurs while you are shopping or at a restaurant, emergency medical personnel will see your bracelet.  Also, keep a copy of the POLST form in your purse or wallet.

© OKURA & ASSOCIATES, 2009