SURROGATE DECISION MAKING OPTIONS

When a person is having difficulty making decisions for himself or when he is incapable of making decisions for himself, there are several options available to him or his family. Those options include a power of attorney, a conservatorship, or a guardianship. Which of these options is correct for a given situation depends upon various factors.

In most cases, having a well-drafted power of attorney is a person’s best option to enable others to make decision for him in the event that he cannot make decisions for himself. The error that I see people committing when it comes to powers of attorney is falling victim to the misconception that all powers of attorney are alike.

Whether the person picks up a form power of attorney at a stationary store or retains the services of a lawyer who is unfamiliar with elder law issues, many people mistakenly believe that an inexpensive power of attorney is a good option. Unquestionably, you could buy a form power of attorney at a stationary store for a few dollars. You might find a lawyer willing to draft the document for anywhere from $25 to $75.

But what can happen if you have a poorly drafted power of attorney? Assume the following: two men want powers of attorney; one man (let’s call him “Joe”) goes to the lawyer who represented him in a lawsuit several years ago; the other man (let’s call him “Harry”) goes to a certified elder law attorney. Three years after signing the power of attorney, both men find themselves in nursing home and the children of the men consult with an elder law attorney about preserving a portion of their fathers’ estate from the ravages of long-term care costs.

Harry’s children are told that the well-drafted, comprehensive power of attorney that their father signed allows the named agent – probably one of the children – to make any decision that may need to be made in the course of planning for their father.

Joe’s children are told that they will have to file a guardianship action and have the court approve their plan to gift some of Joe’s money to the children. The cost of the guardianship action is approximately $5,000. They are also told that the life insurance company from which Joe purchased a policy of life insurance is raising concerns about the agent’s ability to transfer ownership of the life insurance policy to the children and the transfer agent that holds the stock of the public company for which Joe worked and in which Joe owns several hundred shares of common stock is refusing to honor the power of attorney because the power of attorney fails to contain appropriate language relating to the transfer of stock.

Think it can’t happen? Think again. Let’s assume that Joe paid $25 for his power of attorney, and Harry paid $175 for his power of attorney. Initially, the one man saved $150, but because of the necessity to file the guardianship action, he netted a loss of about $5,000.

The moral, have a well-drafted power of attorney signed when you are competent.

But what about the man who is competent but simply doesn’t feel comfortable giving another person unsupervised control of his assets? Perhaps he realizes that his mind is not what it use to be, and he fears that if left unsupervised, the person he permits to make decisions for him might take advantage of him.

For people who are still competent and who have this concern, there is a conservatorship action. A conservatorship is a voluntary, court-supervised proceeding through which a person – called the conservatee – chooses another person – called the conservator – to make financial decisions for him. In order to initiate a conservatorship action, the conservatee must be competent and he must freely enter the arrangement.

The conservator’s powers can be terminated at any time that the conservatee decides he wants to terminate the conservatorship. The conservator must account for his actions to the court and to the conservatee. In many cases, the conservator must purchase and post a bond to secure the faithful performance of his obligations as the conservator.

Finally, there is a guardianship. A guardianship is an involuntary action instituted against an individual who in mentally incapacitated. In other words, a guardianship action is instituted against someone who can no longer make decisions for himself.

Guardianship actions are quite expensive. The estate of the person against whom the action was instituted pays the costs of the action. Yet, more than the financial costs, I have found that there is a tremendous amount of emotional cost involved in prosecuting a guardianship action.

While there are several options available to those who are concerned about the inability to make decisions for themselves, having a well-drafted power of attorney – and spending maybe $100 to $150 more for such a document – is by far the best solution.