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Category Archives: Incapacity Planning
Assisting Aging Parents with Their Finances
While it may not be easy for an aging parent to admit they may need help managing their affairs, it is best to have the conversation before that parent’s capacity is diminished. By having the conversation about incapacity planning before it becomes an issue there is still time to execute financial power of attorney and health care power of attorney thereby avoiding the need for a separate legal proceeding.
Options Are Different Depending on Capacity
The specific option you may take to assist a parent with his or her finances depends on their level of competency and understanding of his or her own financial matters. If your parent does not have memory or competency issues, and want to maintain some level of financial independence, then options such as a power of attorney or signatory authority on accounts may make sense. However, if you are concerned that a parent may be showing signs of dementia or has significant memory problems, then you may need to seek appointment as his or her conservator through a court process.
Conservatorships in Montana
If your parent or parents already have significant memory or capacity problems, but do not already have a power of attorney in place, then you (or another trusted family member) would need to seek appointment as that parent’s conservator through a court order. A conservator is an individual appointed by a court with a duty to make financial decisions and manage finances for an incapacitated individual.
The appointment of conservator in Montana requires the filing of a petition with district court. This includes a general statement of property owned by the alleged incapacitated person. A hearing in district court is required to determine the issue of incapacity, as well as to determine the appropriate individual to act as conservator. Notice of the hearing and petition must be served on all interested parties, which includes spouses, children and other family members.
The process of seeking appointment as a conservator through the court system, can be time consuming and expensive. The process also can be confusing and overwhelming for an incapacitated individual, so it is not often a first choice. However, if a parent already has significant memory or capacity problems and has not planned appropriately with a financial power of attorney, then a conservatorship is likely your only option for assisting a parent with his or her finances.
Financial Power of Attorney
If your parent has previously executed a financial power of attorney appointing you or another family member as an agent in fact for financial matters, then you may be able to avoid the conservatorship process. Similarly, if your parent has sufficient capacity to appoint an agent to make financial decisions for him or her through a power of attorney, your family may avoid the need for a conservatorship.
A power of attorney is a document whereby you appoint another individual (called an “agent”) to make financial or heath care decisions for you or transact business on your behalf in the event you are unable to do so for yourself. A power of attorney can be an immediate grant of authority or only used in the event of incapacity or disability. Unless the powers are specifically limited in any way, an agent appointed under a general financial power of attorney can make all types of financial decisions and transact all business on your behalf. These general powers include authority for check writing and banking, real and personal property, taxes, stocks and bonds, business transactions, insurance, legal claims and all other general financial matters.
A power of attorney can be a useful tool for financial management and simplify the process for assisting a parent with his or her finances. They also let a parent choose the individual that they want to assist with their finances without the need for a public court process.
Duties of an Agent
If you are appointed to act on behalf of one of your parents, whether through a power of attorney or conservatorship, you have a fiduciary duty to act in the best interest of that parent. This means that you have a legal duty to act solely in the best interests of your parent. You must manage and protect his or her property in an impartial manner. If you fail properly manage and account for your parent’s assets you may be subject to liability.
Organization is Essential
The best way to assist an aging parent with his or her finances, while protecting your parent’s best interests is through organization. Start by creating an inventory of your parent’s financial assets, accounts and ongoing expenses. Use the inventory to create a monthly budget. Once you have a clear idea of the budget and ongoing expenses then utilize options such as automatic payments for utilities and other regular expenses. Once you have determined a budget and set up payment systems, keep updated records of these payments.
Discuss with Your Siblings and Other Family Members
Discussing a parent’s financial matters may cause disagreements between siblings, but it is important that you keep your family involved from the beginning. It is critical that you discuss these issues together before you take any specific action on behalf of a parent . This allows you to address any potential objections and make sure everyone is on the same page. If you don’t inform or involve your family from the start you may be prone to potential challenges, or even legal action at a later date.
Seek Advice
Before you begin to assist an aging parent with his or her financial matters seek legal advice to make sure you are proceeding properly. If you have any question about your parent’s capacity to make decisions make sure you involve your family, health care providers and legal counsel in the process. By seeking the proper advice and involving key advisers and family members from the beginning you may be able to avoid disputes and will be assured that you are taking the right steps to protect your parent.
With questions about assisting your parents with their financial matters, Montana powers of attorney, conservatorships in Montana, or general estate planning questions contact Kelly O’Brien at Measure, Sampsel, Sullivan & O’Brien, P.C. at (406) 752-6373/ www.measurelaw.com
A Power of Attorney- What is it and Why Might You Need One?
What is a Power of Attorney?
A power of attorney is a document whereby you appoint another individual (called an “agent”) to make financial or heath care decisions for you or transact business on your behalf in the event you are unable to do so for yourself. A power of attorney is typically used in the event of incapacity or disability. However, a power of attorney can also be used simply for convenience in limited circumstances, such as signing legal documents when you are out of the country. A power of attorney can be a useful estate planning tool for individuals of all ages, but it can be especially helpful to have in place as you age. If you wait to execute a power of attorney until your physical or mental condition may be declining, it may be too late.
Types of Powers of Attorney
Power of Attorney for Financial Decisions
A power of attorney for financial decisions allows you to appoint an agent to make financial decisions on your behalf in the event that you are unable to make these decisions yourself due to incapacity or disability. A financial power of attorney can provide immediate powers to your agent. In the alternative, you may execute a financial power of attorney that is not effective until you are determined to be legally incapacitated. Typically the determination of incapacity is made by a licensed physician in your state of residence.
Unless the powers are specifically limited in any way, an agent appointed under a general financial power of attorney can make all types of financial decisions and transact all business on your behalf. These general powers include authority for check writing and banking, real and personal property, taxes, stocks and bonds, business transactions, insurance, legal claims and all other general financial matters. These general powers can be expanded upon to include the powers to make gifts, execute wills or trusts, or change beneficiary designations. The powers can also be specifically limited to include only a particular authority, such as authority to sign real estate documents. All of the specific duties, responsibilities and authorities of a power of attorney in Montana are set out in the Montana Uniform Power of Attorney Act.
Power of Attorney for Heath Care Decisions
A power of attorney for healthcare decisions allows you to appoint an agent to make medical and health care decisions on your behalf in the event you are unable to make these decisions yourself. This includes decisions regarding all types of medical consents and life support issues, as well as decisions regarding medications and health care facilities.
While the appointment of an agent for health care decisions under a power of attorney might include broad powers to make health and personal care decisions, these appointments most often are not effective until you are disabled or incapacitated to the point that you are unable to make or communicate your health care decisions. A power of attorney for health care will typically require the agent to follow your desires as you specifically set out in the power of attorney document itself, or as known to your agent. Typically your agent is required to attempt to discuss the proposed health care decision with you to determine your desires if you are able to communicate in any manner.
What Happens Without a Power of Attorney?
Guardianships & Conservatorships in Montana
If you were to become incapacitated without a power of attorney in place, either suddenly as a result of an accident or due to a long-term disability or mental incapacity, a family member would need to seek appointment as your guardian and conservator through a court order. A guardian is an individual appointed by a court with a duty to manage personal and health care decisions for an incapacitated individual. A conservator is an individual appointed by a court with a duty to make financial decisions and manage finances for an incapacitated individual.
The appointment of a guardian or conservator in Montana requires the filing of a petition with district court. The petition is filed by the individual seeking appointment as the guardian and/or conservator. The petition must state the need for appointment, the specific interest of the petitioner, and set out certain factual allegations regarding the physical and mental state of the alleged incapacitated person. If a conservatorship is sought, then the petition must also include a general statement of property owned by the alleged incapacitated person. A hearing in district court is required to determine the issue of incapacity, as well as to determine the appropriate individual to act as guardian and/or conservator. Notice of the hearing and petition must be served on all interested parties.
In addition, the petitioner must request appointment of a physician, visitor and a separate attorney for the alleged incapacitated person. The physician appointed by the court must examine the alleged incapacitated person and submit a report in writing to the court to explain the mental and physical state of the alleged incapacitated person and whether or not a guardianship and/or conservatorship is appropriate. The court appointed visitor must visit and interview the alleged incapacitated person at their home or residence, as well as interview the petitioner, and submit a report in writing to the court. The attorney is required to represent the alleged incapacitated person to ensure that the guardianship and conservatorship is in his or her best interests.
The process of seeking appointment as guardian and conservator can be time consuming and expensive. Moreover, since it is subject to the court process, it is public, and held in open court. This process can often be confusing and overwhelming for an incapacitated individual.
However, one of the most significant drawbacks of guardianships and conservatorships is that the individual that is appointed by the court may not be the individual that you would have chosen to manage your financial affairs or personal care decisions. By appointing an agent to make financial and health care decisions for you through a power of attorney, you can avoid the need for a guardianship or conservatorship through the court system. A power of attorney allows you to appoint the individual of your choosing to conduct your personal and financial affairs.
Choosing an Agent to Appoint under a Power of Attorney
Choosing an agent to conduct your financial affairs or make your health care decisions requires careful consideration. Your agent has a fiduciary duty to manage your affairs in a manner that serves your best interests according to Montana law. Obviously you want to choose someone that you trust with your utmost personal decisions. The decision of who to appoint also requires consideration of the nature and value of your assets and the relationships between your family members.
Typically, a married individual will nominate his or her spouse as the agent for both the financial and health care power of attorney. However, for a single individual or widow(er) it can often be difficult to determine who to appoint as an alternate agent.
Many people choose to appoint either one or all of their children as alternate agents. If your finances are fairly simple and you have a relatively small family with solid relationships, then appointing one or all of your children may be a good option. Your children are familiar with your assets and intentions, but there is potential for conflict between siblings or misuse by one of your children that oversteps his or her authority or acts in a manner that is counter to your best interests.
Instead, you may decide to appoint a relative or close friend that is not one of your children and not a beneficiary of your estate. Appointing a relative or a close friend can be beneficial because they are familiar with your family dynamics and your assets and intentions. However, relatives and friends may lack experience managing financial assets and may not be immune to family disputes.
As an alternative to your children, relatives, or close friends you may choose to appoint a professional fiduciary. While I do not recommend appointing a professional fiduciary to make personal and health care decisions, the appointment of a professional fiduciary for financial decisions through a financial power of attorney can help to reduce family conflict and can provide neutral management.
Ultimately the choice of who to appoint as your agent under a financial or health care power of attorney is personal. The decision depends on your particular financial assets, health care needs and family dynamics. It is important to consider the factors mentioned above and choose an individual or institution that is responsible, has an ability to work with your family, and is willing to seek the advice of professionals such as physicians, health care providers, estate planning attorneys, financial planners, and CPAs.
Seek Advice
A power of attorney can be a useful tool for estate and incapacity planning. A power of attorney allows you to choose an individual to manage your financial matters and make health and personal care decisions on your behalf, instead of subjecting you and your family to a public court process. Discuss your thoughts and concerns about choosing and appointing an agent with an estate planning attorney and your family members to ensure you make right choice for you and your family.