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Estate Planning Issues

I. Wills and Living Trusts

A. Will - A will assures that a person's intents and wishes as to the distribution of property at the person's death are honored and administered. If a will or trust is not in effect, and a person passes away, and the persons individually-held assets are larger than what would be allowed to be administered through a small estate procedure, the person's property would mostly likely be distributed pursuant to a probate procedure that distributes assets in accordance with intestate laws of the state of Indiana rather than the person's own wishes and intents. A will becomes effective and is empowered when it is probated in court. At a minimum, for estate planning purposes, a person should have a will.

B. Living Trust - A living trust can accomplish the intent and wishes of a person as to the person's distribution of property after death in the same manner as a will. A will, in order to be effective must be probated in court, under a court proceeding. Under a living trust, if a person's assets are transferred to the trust prior to death, or by operation of law at death, through the naming of the trust as beneficiary of appropriate assets, the assets can be distributed without a court proceeding by the trustee after death. The trustee would generally be the same person as an executor under a will.

II. Powers of Attorney and Guardianships

A. Powers of Attorney – A person appointed under a Power of Attorney is an attorney-in-fact.

1. Importance – If a person becomes incapacitated, by reason of dementia, Alzheimer's, or other reason, and the person does not have a Power of Attorney, health insurance companies, life insurance companies, banks in which checking accounts, saving accounts, and CDs are held, investment firms in which mutual funds, annuities, stocks, and bonds are held, and parties with whom contracts have been entered with the person, may not, and are not required to, converse with an individual acting on behalf of the person without a Power of Attorney

2. Terms of Power of Attorney Should Match Intent

a. A Power of Attorney should include terms that are in the best interests of the person appointing the attorney-in-fact. Certain powers, such as authority to gift, need to be specifically stated, even though there may be broad language incorporating "all powers". If there is a need for full encompassing powers, the general "all powers" clause should be included, as well as an appropriate listing of specific powers.

b. Limited Authority – If a person only desires an attorney-in-fact to take limited action, such as the execution of a deed, sale of real estate, or investment advice, the Power of Attorney can be expressly limited for such purposes.

c. Effective Date - A Power of Attorney can be effective immediately or upon the incapacity of the principal (the person who appoints the attorney in fact). If it is reasonably foreseeable the Power of Attorney could be used in the near future, it may be advisable to make it effective immediately, to avoid the necessity of proving incapacity to entities that require such proof before honoring the Power of Attorney.

d. Capacity – A Power of Attorney cannot be enforceable unless at the time the person signed it, the person has sufficient capacity to understand and know what is being signed. The fact that a person has been diagnosed with dementia or Alzheimer's does not prohibit the effectiveness of a Power of Attorney if the person has sufficient lucidity to understand the Power of Attorney and present their intent to sign the Power of Attorney. A meeting with the individual and knowledge of the diagnosis is helpful in determining whether the person understands and has sufficient capacity to sign the Power of Attorney.

e. Incapacity – If it is determined that a person does not have capacity to sign a Power of Attorney, and representative authority is needed for a representative to act on behalf of the person, a guardianship is needed.

B. Guardianship Issues

1. Importance – The reasons a Power of Attorney is needed are applicable for a guardianship when a person for whom the guardianship is sought does not have capacity to sign a Power of Attorney.

2. Procedure - If there is an immediate need for a guardian, a temporary guardianship, which is effective for sixty (60) days, can be obtained relatively quickly. A permanent guardianship, after a guardianship hearing is held on the petition for guardianship, can usually be held within forty-five (45) days. At the hearing, the Court may enter an order of permanent guardianship. Prior to the entry of an order for permanent guardianship, the spouse and adult children of the person, and if none, the parents of the person, and if none, closest known relatives, and, any person that has care and custody of the person, must receive notice of the hearing. Also, the person for whom guardianship is sought must be provided notice of and an opportunity to attend the hearing.

3. Powers from Guardianship Orders - A temporary guardianship order, which is in effect for sixty (60) days generally must state all powers that are desired, as a temporary guardian generally does not have powers that are not specifically stated in the temporary guardianship order. The permanent guardianship order should state special powers that are sought; the general authority of a permanent guardian may not encompass such special powers.

4. Orders of Guardianship and Letters – The temporary guardianship order will provide the temporary guardian with authority stated in the order for sixty (60) days, and the permanent order will provide the permanent guardian permanent authority. A copy of the order as well as letters of guardianship, which are also issued, provide conclusive evidence of such authority.

C. Performance by Power of Attorney and Guardian

1. The Power of Attorney and guardian are each required to perform acts that are in the best interests of the attorney-in-fact.

2. A guardian can be generally only liable for gross misconduct, and an attorney in fact can generally be liable for negligence, in regard to performance of responsibilities.

3. An attorney-in-fact, under a Power of Attorney, if requested, by the principal or a guardian for the principal, needs to file to provide an accounting of his or her handling of property of the principal. A guardian, within ninety (90), needs to file an inventory of the assets over which the guardian has obtained authority, with the Court, and must every two (2) years thereafter provide an accounting as to the property over which the guardian has managed.

D. Healthcare Issues

Healthcare Representative Appointment – A Power of Attorney can refer to general healthcare powers. It is recommended that a Healthcare Representative Appointment be signed in conjunction with a Power of Attorney. A Healthcare Representative Appointment specifically grants broad healthcare powers should the person be unable to make healthcare decisions for him or herself. A guardianship generally includes healthcare powers that would be in a healthcare representative appointment.

E. Intermingling of Power of Attorney and Guardianship

If a valid Power of Attorney is in effect, a guardianship where a guardian is appointed would not be valid against a Power of Attorney, unless the order establishing the guardianship specifically invalidates the power of the attorney-in-fact.

III. Living Will and Do Not Resuscitate Order

A. Living Will - A Living Will allows a person, should the person be certified with a condition that will result in death within a short period of time, and life prolonging procedures would serve only to artificially prolong the dying process, to direct that such procedures be withheld and that artificial nutrition and hydration be either provided or withheld.

B. Out of Hospital DNR - An out of hospital Do Not Resuscitate declaration may be signed by a person that has a terminal condition or medical condition, such that, if cardiac or pulmonary failure occurs, resuscitation would be unsuccessful or within a short period, the person would experience repeat cardiac or pulmonary failure. The declaration states that should cardiac or pulmonary failure occur outside the hospital setting, the declarant requests resuscitation procedures be withheld. When such declaration is signed, an out of hospital do not resuscitate order may be issued by the declarant's attending physician if such physician has determined the person is qualified, and the patient has executed the applicable out of hospital Do Not Resuscitate declaration.

Contact the Firm

If you have questions regarding estate planning issues, contact the law office of Paul D. Eash to schedule an appointment. We are open from 8 a.m. to 5 p.m., and are available for home, hospital or nursing home visits when absolutely necessary. We accept MasterCard, Visa and Discover for payment of most services.