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Time to Inspect Your POA

Not long ago, when I took my spare car for inspection, I was told the tires were showing signs of dry rot.  The car was driven barely 3,000 miles a year.  What I recalled as being “new tires” were actually six years old.

I would not have known that my tires were unsafe if my car had not been inspected.  My mechanic has earned my trust over the years and become a trusted friend.   He has an open-service order to do what is needed when I take our cars for service.  Since I am not a car expert, it is reassuring to know that my safety is protected by a trustworthy expert.

My tires were once the premium package of tires from the chain-store at the mall, which offered me a guarantee that was good anywhere in the nation and assured me that I would get at least 40,000 miles!   I only got 20,000!  Why didn’t they last?”

My mechanic friend explained that my tires deteriorated from regularly parking my vehicle outside on a concrete driveway which was exposed to the heat and sun.  Other factors which contributed to the need for change were that I did not drive the car often and I might have neglected to check the tires’ air pressure regularly.  Knowing those circumstances, my friend suggested a tire that would best meet my needs.

So, what does having my car’s tires replaced have to do with estate planning?  When is the last time you had your estate planning documents inspected?  Getting your estate planning documents inspected is not required by the Governor; and it is not paid for by health insurance or Medicare.  So why bother?

If I had not replaced my tires, possibly no blowout would ever have happened. But experience warns that a combination of heat and speed can trigger the blowout of a rotted tire.  If you are a macho guy who feels confident that you can handle a blow out, consider that your wife or grandchildren could be passengers while your reflexes are being tested such a sudden crisis while driving at a high speed in heavy traffic.

Every now and then, we see a family in our office that is a bit like the family of the guy who did not replace his dry-rotted tires.  One sudden crisis is when dementia occurs suddenly after a stroke, resulting in the spouse or parent no longer having capacity to express his or her wishes.  Other times, Alzheimer’s disease starts gradually, but results in the irreversible incapacitation of its victim who has ignored the warning signs.

The dementia victim who has never bothered to create a durable Power of Attorney (POA) document is a candidate for an expensive guardianship process.  Those who work with infirmed elderly refer to this scenario as a “train wreck;” but for this analogy, you can imagine the guardianship process to be like a blowout.  Instead of calling 911 for a tow truck, the family must petition the Orphan’s Court to declare their loved one to be an incapacitated person, which can be a costly and time-consuming process.  

A technically inadequate POA document can be contested by a dissenting family member or resisted by a financial institution.  The sale of a home or transfer of an investment asset can be delayed.  Given the cost of nursing care, every day of delay can cost $200 or more.    The inconvenience and lost economic opportunity of a delay can be more expensive than having a solid POA document in the first place.

Sometimes a well-intentioned but inadequately counseled parent makes the mistake of not wanting to select one child to act as the agent out of fear of insulting another.  Other parents might hope that the best way to fulfill their wish to have a harmonious family is to encourage their child to learn how to get along by a need to agree on the parent’s care.   Either reason is a mistake and a bad reason to appoint multiple, simultaneous agents.

Suppose a parent blissfully names their POA agents as George and John and Paul and Ringo.   What if for an unimaginable reason, those four could no longer get along together?

If Sony or Cher have been appointed, what if Sony and Cher stop speaking regularly and are not aware of what the other is doing? How can a third party feel assured relying on either one of them?

The flexibility of appointing Peter and/or Paul and/or Mary can create even worse problems.   The lack of a specific POA appointment can be like a tire’s dry rot and become the root cause of an ugly and expensive eruption within your family during the heat of discussions about how to best use assets for your care.   Family disagreements among multiple POA agents can delay your care, be expensive and painful to litigate, and become an obstacle to asset protection.

Parents have an opportunity to appoint a business agent and a healthcare agent.  We can help our clients decide who would be best, then explain the choice to the family if diplomacy is needed.

Just as some tires are suitable for normal driving but not inclement weather, some POA documents work for middle-aged persons, but do not allow the flexibility, such as the right of unlimited gifting, to protect assets from the cost of long-term care.   Such customized documents with necessary “hot powers” are not available on the internet or from most general practice attorneys.

October is Estate Planning Awareness Month. You might benefit from a legal checkup if you do not have a POA document, had it inspected since 2010, or have early stage of dementia.   You deserve the peace of mind of knowing that your affairs will be navigated safely without avoidable distress to your family.

Dave Nesbit, Attorney