Controlling the “Inevitable” Loss of Control: Planning for Disability
by Christopher J. Godfrey, Esq.
Have you planned for a period of extended mental disability? Many would respond “I plan on signing a power of attorney” But, is signing a power of attorney planning? Often clients sign a power of attorney with little or no counseling about when it will become effective, who will be acting on their behalf, and the responsibility the helper will take on.
This article explores a counseling based, planning approach to preparing for mental disability from a “when-who-what” perspective. “When” would you be comfortable giving up decision-making control? Most would say “when I can’t do it.” Granted, no one can control when they will lose decision-making capacity; but we can control who should make that
decision. By creating within our estate plans a “disability panel” of trusted, competent people to make that decision for us.
By naming a panel of family members and trusted medical
advisors to make the “when” decision, giving up control is no-longer a cold, clinical decision. The people closest to us are best positioned to see how our condition differs from “normal”. We pick who we are most comfortable with to make the decision of when control shifts. It can be multiple family members, with majority or unanimous control.
Physicians can verify the client’s lack of capacity, and also provide information on how your situation is likely to proceed. A disability resulting from an accident raises very different scenarios than from a degenerative
disorder like Alzheimer’s or Parkinson’s disease.
Once you have determined “when” the time to transfer control of financial assets has come, you next need to decide “who” will take over for you.
People usually name “helpers” with very little professional counseling beforehand. Married couples usually name their spouse to serve as the agent under the power of attorney or successor trustee of a revocable trust. Single
clients usually name adult children, often in the order of their age. However, after a counseling experience, few clients take this approach. Effective disability counseling “transports” people into the disability experience itself by asking such questions as: “Would you tell me who’s there with you in that situation?” and the follow-up, “Would you describe what types of things they’re doing?” The key perspective-altering question is, “What is life like—for you and for those around you?”
It is then that we realize the full extent of our helper’s responsibilities to provide for both our care and to properly manage financial resources. People who proactively “experience” their disability situation quickly conclude that their spouse will need help. The glib response “My spouse will handle it—don’t know how, but that’s what they’re there for!” is quickly revealed as unrealistic. How many spouses are prepared to handle both the caregiver and financial stewardship roles - and have the stamina to do
it all by themselves?
Through this thinking exercise, people soon realize their spouse will need help. This help can be provided by naming two or more co-trustees within their living trust, and it can be done while keeping the spouse in charge if disagreements arise. Attorneys call this “spousal control” language and have found clients appreciate it as a way to put their spouse in control while also providing the help their spouse may need. In such instances, the spouse can have helpers for financial issues “just in case” and can call on the appropriate amount of help when needed with no question about “who’s the boss.”
This disability counseling experience also works for single clients, too. Here a parent looks at what life will be like for their children. After the “what’s life like” thinking session, single people will have a better grasp of how tough the disability situation can be on all concerned. They begin to evaluate the strengths and weaknesses of potential “helpers,” and thus better able to build effective teams.
The final piece to this counseling centered approach to disability planning is looking at “what” your helper can do with your assets during the period of disability. Many “stock” powers of attorney or revocable living trusts provide helpers with no instructions of “what” to do in their new roles. They simply state “my agent may do whatever I could do if I was there.” Similarly, revocable trusts state “during my disability my trustee shall distribute principal and income to me in my trustee’s discretion.” How is the helper supposed to know what the client wants, or prefers?
A complete definition of estate planning would include; “plan for me and my loved ones if I become incapacitated.” Therefore we might assume that our helpers would be able to use our assets to take care of our
spouse or other family members, too. But expectations are often not met in estate planning. The limited language in “stock” documents, may expose our helper to a lawsuit if they use our assets for the benefit of anyone other than just ourselves!
Counseling for “what” our helpers may include such questions as “should my helpers be able to spend money on my spouse’s care, my children’s care, or grandchildren’s care? Should distributions to family members be limited to health care needs, education needs, etc? People with young children may want helpers to be able to make distributions to children for education, until the child reaches a certain age.
Another important aspect of disability planning is preparing a helper to make healthcare decisions for us when we are not able. This is different from the financial decisions we have been talking about. The most important thing we can do is to have a good conversation with our helper and then to create the legal documents necessary to empower your helper to carry out your instructions. It is also good practice to tell other family members that you have appointed such a helper and request that they support him or her in that role.
Even when people do express their desires in medical advance directives, there is often no direction for helpers regarding health care spending in either a powers of attorney or living trusts. Is it important for the client to know that assets will be spent to keep them in their home as long as possible, even if it is more expensive than moving to an assisted living center? Without instructions for that in the living trust, a helper may feel obliged to move the client and minimize costs, even though it is not what the client wanted.
Hopefully this series has increased your awareness of
disability planning and its limitations. We have found that people’s desire for a smooth transition and a complete implementation of the “when-who-what” approach works best when they engage an attorney through an ongoing maintenance and education program that includes family member involvement.