Most people engaged in estate planning know they have to appoint an agent to administer a financial power of attorney. They also know they must designate a personal representative to deal with health care providers when they cannot give instructions themselves. And they know it is important to designate who has the power to make end-of-life decisions under an advance directive (living will). People also know how important it is to designate the right people for each of the documents. Good organizational skills, trustworthiness, compassion and practicality are some of the traits your representatives must have so that they can handle your affairs as you would do so if you still have the capacity to do so.
“Why do we need to appoint successors?” ask a husband and wife who are 85 and 86. The law of averages says that our 50 year-old son will out live us. Unfortunately, the “law of averages,” which in this case is a person’s “statistical life expectancy,” is useful only when insurance companies are underwriting insurance policies and when we are doing Medicaid planning. Although it is true that an 50 year-old son will outlive his 85 year-old parents, it’s not guaranteed. We are looking for as much of a guarantee as we can get, not a mere probability.
I had clients, a couple a year or so short of age 85 whose 50-something year old son died unexpectedly about two years after the parents completed their estate planning. There was no need to re-execute documents because they had designated back-ups to take over. It was a good thing they did, because, at the time of the son’s death, his father was suffering from dementia and did not have the capacity to execute new documents.
Let me give a more current example, one that is now in play. A Bill and Edna, both in heir mid-80's, and married to each other for 30+ years, executed wills, powers of attorney, medical powers of attorney and living wills. Edna had a son from her previous marriage. Bill had a son and a daughter. When it came time to pick agents and representatives, Edna designated her son as the person to be in charge and her daughter-in-law as the successor. Bill made the same choice because he and Edna lived closer to Edna’s son and relatively far from his own children. He rejected the idea of designating his own children as additional successors.
As you might have guessed. Bill and Edna both became ill. The decision was for Edna to live with her son and his family. Unfortunately, because of Bill’s dementia, he needs assisted living and in the not too distant future, he will need skilled nursing home care. His children stepped in and have moved him to a facility near them so that they can take care of his during his remaining years. They are about to execute the necessary paperwork for assisted living and have realized that the only person who can sign for Bill is Edna’s son - - who wants to focus on his mother’s needs and plans to resign his responsibilities for Bill. Although he can sign the entrance papers for Bill, that is a short-term fix. For the long run, there will be no one legally in charge. Bill’s children have no choice but to make application for guardianship of their father. Although they will eventually be in charge, it will be at a cost of $7,000-$8,000. For no additional cost, Bill could have designated his children as successors, in which case, the transition would have been seamless.
Bill violated the cardinal rule of elder law planning: THINK AHEAD. PLAN AHEAD. ACT NOW!
Don’t be caught unprepared. Make sure your estate planning documents designate the right people to act for you and also make sure there are successors named in case your representative(s) cannot, or will not, continue to serve.