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New clients often ask us to prepare wills and we prepare wills for most of our estate planning clients. We tell clients that wills are important to deal with the business of dying, but death is not usually the biggest issue. A debilitating stroke or other illness can make a power of attorney (often called a “POA”) much more important than a last will and testament.
A last will and testament directs how a person’s personal representative should conduct the person’s business after the person’s death, but expenses of hospital treatment, ambulance transportation, and nursing home care can deplete a person’s assets, leaving no business for a last will and testament to address after the person’s death. An appropriate power of attorney allows a patient’s family or friends manage the patient’s health care and protect some of the patient’s assets during a health crisis.
Some people think they can wait to make their powers of attorney later in life. We have heard too many people say that they do not need powers of attorney yet. Of course, that logic is almost as senseless as waiting to buy life insurance until after you die or waiting to buy health insurance until after you get sick.
Powers of attorney differ in quality and effectiveness like almost everything else. Regardless of television advertisers’ claims, no Internet-based forms vendor can keep up with estate planning issues and state healthcare policies that change without warning almost every month. Likewise, regardless of how many best-selling books America’s favorite financial advisors may sell, most of them offer misleading estate planning advice.
Most Indiana lawyers prepare powers of attorney that refer to the Indiana Power of Attorney Act, which appears in Indiana Code Article 30-5. Unfortunately, many experienced lawyers do not know the importance of overriding an obscure tax law provision in the Power of Attorney Act intended to protect very wealthy families with a disruptive asset transfer restriction (a limit of $14,000 in 2015). That hidden restriction strands many nursing home residents’ spouses and other family members without planning options. It is easy to override the Indiana statute, but a lawyer must know when and why to do so.
It is increasingly common for naïve people to rely on estate planning software from retail stores or Internet sites to create powers of attorney. A downloaded power of attorney can do the trick occasionally, but most downloaded powers of attorney lack important details that elder law attorneys use to help manage nursing home residents ‘assets. When someone relies on a downloaded power of attorney, it is like taking someone else’s prescribed medicine – it may work or not work, but it may make the situation worse.
Retail stores and the Internet are great places to buy computers and underwear because you can return them if they don’t work, but what good is a refund or exchange policy to someone disabled by stroke or Alzheimer’s disease if the power of attorney is underpowered or defective? There is a right way and a wrong way to prepare for future problems, and a skillful elder law attorney with estate planning expertise can make all the difference. Many people never change their estate plans after the ink dries, so they only give themselves one chance to get it right.
Jeff R. Hawkins and Jennifer J. Hawkins are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers and active members of the Indiana State Bar Association and National Academy of Elder Law Attorneys. Both lawyers are admitted to practice law in Indiana, and Jeff Hawkins is admitted to practice law in Illinois. Jeff is also a registered civil mediator, a Fellow of the American College of Trust and Estate Counsel and the Indiana Bar Foundation; a member of the Illinois State Bar Association and the Indiana Association of Mediators; and he was the 2014-15 President of the Indiana State Bar Association.
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