This blog post was written by Dara Cohen, an estate planning attorney, and owner of DR Cohen Law. Dara has been a great resource for our clients when it comes to estate planning. Medicus Wealth Planning has no financial relationship with Dara or DR Cohen Law.
Rocket Lawyer? Legalzoom? Any number of online do-it-yourself estate planning tools? They are common names and often appealing for individuals motivated to set their estate in order, but reluctant to pay for professional attorney services. As an estate planning attorney, I am skeptical of the quality of the estate plans these services provide. I do not endorse them. However, I have no qualms about their availability in the marketplace. Consumers have all manner of different services available at all manner of different price points – that’s the beauty of a free market.
On the other hand, several do-it-yourself estate planning options exist which I fully endorse and which are woefully underutilized by the general public. These are Utah’s statutory Power of Attorney and Utah’s statutory Advanced Health Care Directive. Utah’s statutory Power of Attorney is a great tool in many cases. Utah’s statutory Advanced Health Care Directive is a great tool in every case. Yes, every.
The Utah legislature adopted the current statutory Power of Attorney in 2016. A Power of Attorney allows an individual, “the principal”, to nominate another person, “the agent”, to act on the principal’s behalf in financial matters. The availability of a statutory/standardized form does not mean other Powers of Attorney are invalid. Powers of Attorney which use a different form, as well as those created prior to the 2016 law remain effective. The advantage of the standardized form is it gives people the ability to execute a Power of Attorney easily, quickly, and cheaply. The form is available online through the Utah court’s website: https://www.utcourts.gov/howto/family/power_of_attorney_general/. The website includes a detailed, reader-friendly explanation of the document.
When a client’s circumstances are simple, creating a do-it-yourself Power of Attorney using the statutory form without an attorney may be the best option. Be aware that financial institutions may only accept their own, internal Power of Attorney form. You can inquire at your bank, credit union, or investment service if the institution has their own Power of Attorney. If so, request a copy and submit it to the institution.
Despite the ease and accessibility of the statutory Power of Attorney, there are circumstances when consulting with a professional may be more prudent.
Those circumstances include when the principal’s cognitive capacity may be in question. If the principal has a diagnosis such as dementia, Alzheimer’s disease, or other cognitive impairment, the Power of Attorney may come under attack by family members who disagree with the principal’s decision to name an agent. A red-flag in my practice occurs when an adult child escorts their impaired parent to my office to execute estate planning documents in the child’s favor. Questions inevitably arise with other family members regarding the child’s intentions, the parent’s susceptibility to undue influence, and the parent’s capacity to knowingly execute documents. In some instances, even with mild cognitive impairment, a client can execute a Power of Attorney. When a person does possess sufficient cognitive abilities to knowingly and independently execute a Power of Attorney, though lacking 100% intact cognitive abilities, executing the Power of Attorney with an attorney lends strength to the document against potential challenge. Concerned or disgruntled family members may rely on the attorney’s assessment that the principal did, indeed, possess sufficient capacity to execute the document. Personally in my own practice, I will not aid a client to execute a document if it is clear that doing so will lead the family to litigation. Some clients with diminished, though sufficient capacity, are well served by executing a Power of Attorney with professional guidance.
Another circumstance in which attorney consultation is advisable in executing Powers of Attorney is when the powers granted will be a little bit different. A little bit different might be time limited when the principal is traveling and unavailable to manage their affairs; the principal wishes to grant only specific, narrow powers to the agent to deal with a specific transaction or specific asset; or when the principal wants the agent to deal with a large, complex transaction which needs to be explicitly addressed in the Power of Attorney in order for other parties to the transaction or financial institutions to accept the agent’s authority. These circumstances can be roughly addressed in the statutory Power of Attorney. When explicit, precise detail is required, an attorney can assist with crafting provisions to clarify and enforce the principal’s desires.
OTHER CIRCUMSTANCES FOR ATTORNEY IN POA
The circumstances in which individuals should rely on the statutory Advanced Health Care Directive are much simpler: Always. Every time.
The Advanced Health Care Directive specifically refers to the Utah form. Similar estate documents may sometimes be called a Living Will or Medical Power of Attorney.
If an individual has capacity to execute a medical directive, that individual should use the standardized form. The standardized form is designed to not require professional assistance. It is available with instructions at: https://ucoa.utah.edu/directives/.
If a person does not have a medical directive or has an outdated medical directive, I urge everyone to create a new one. A medical directive may be outdated as a result of being executed in another state with different execution requirements, drafted using an attorney’s own internal template before the statutory form was available, or drafted using the statutory form but require new agent or contact information. Regardless of the cause, a new one can be created immediately. Many medical offices and hospitals have them printed and available for immediate completion during patient visits. The form is 4 pages and readily printed. Unlike the Power of Attorney, which the principal can elect to take effect immediately or only upon incapacity, the power conferred by the Advanced Health Care Directive only takes effect upon incapacity. As long as the person executing the form can speak for themselves, medical professionals will rely on communication with that person, not on instructions from the persons named as decision-makers in the document.
I often hear the question of whether an old medical directive or a medical directive from another state is effective. It is, but is not ideal. The advantage of the standardized form is doctors and hospital legal departments are already familiar with the document. There is no delay in medical professionals interpreting the provisions and mandates contained in the form, unlike creatively and independently drafted medical directives which do not follow the standardized form.
Cognitive capacity required to execute an Advanced Health Care Directive is minimal. So long as an individual understands that who they nominate will make medical decisions on their behalf, the individual has sufficient capacity to execute the Directive. Advanced Health Care Directives are difficult to challenge on the grounds that the individual executing the document lacked capacity, since so little capacity is required. A claim of undue influence, on the other hand, is more commonly used for challenging an Advanced Health Care Directive. In this case, the contesting party claims the individual executing the document was pressured into signing against the individual’s actual desires.
When in doubt about whether or not to consult with an attorney when executing planning documents, find a trusted advisor and seek assistance. When not in doubt move, full steam ahead with the cheap, easy, accessible options. They exist for a reason. You can take control of your affairs and name a person with authority to speak for you in the event of incapacity.