Estate Planning: It Pays to Plan Ahead

Jim Gianelli
By Jim Gianelli December 15, 2008 13:33

Let me tell you a sad but true story that carries an important message: It pays to plan ahead.

Two brothers sought my advice when their parents were severely injured in an out-of-state automobile accident. The father was in extremely critical condition. The mother was also critical but expected to live, albeit with brain injuries.

The brothers, two of five siblings, asked how they could gain control of their parents’ finances and get them returned to California for medical care. The accident occurred in a very rural area with limited health facilities.

I asked if their folks had done their estate planning – specifically, if they had a “health care advance directive” and a financial “durable power of attorney.” They told me there had been no such planning. I explained that certain states would allow for one sibling to be deemed a health-care advocate for the parents without a written directive. As an advocate, that child could make binding health-care decisions for the parents.

But with respect to financial decisions, without a durable power of attorney document (or a revocable trust document, another option) they would be forced to file for conservatorship, a costly, complex process requiring court approval.

The brothers had not talked to their three siblings in years; there was a bitter rivalry between the factions. In fact, the brothers said, their siblings would certainly contest their being named health-care advocates or conservators.

This was unfortunate. For the brothers, a court battled loomed over who was to be conservator of the person (regarding health care) and the estate (regarding finances). A court would ultimately decide who would best serve the interests of the parents. Both sides would hire attorneys, and the process would take valuable time, money and energy at a time when all were in short supply.

In this case, the court process lasted six months and cost tens of thousands of dollars. The parents could not be moved in that time and, unfortunately, the father died. In short, an agonizing process for all concerned.

There are two lessons here.

First, with respect to health care decisions, an advanced health care directive properly executed in discussion with one or more of the children, would have avoided this entire situation. The parents, not the courts, would have chosen who they believed had their best interests at heart (perhaps a friend and not even one of the children in order to avoid a heated battle). The parents also would have made other decisions clear in the document, such as:

  • When to remove life support
  • When to treat for pain
  • Whether to consent to a medical procedure
  • Whether to permit an autopsy if the law did not require one
  • Whether to permit donation of organs or donations for educational research
  • How to treat remains
  • Adherence to special beliefs (i.e. Jehovah Witness or Christian Scientist clients)
  • Desire to stay in one’s home as long as is reasonably possible
  • Other vital health-care related matters, including allowing the health-care agent to obtain the patient’s medical records

With a health-care directive, there would have been no argument, and immediate action by the agent named in the directive (not an expensive six-month court battle). The family would have been spared all of the drama, not to mention that the father’s life perhaps could have been spared.

Second, a durable power of attorney for finances would have likewise appointed a person the parents consider the best choice for taking care of their finances in the event of incapacity. Perhaps again, this might have been a third party, avoiding the squabbles that would have ensued if one of the siblings was chosen.

This durable power of attorney could have been set up to be effective immediately upon signing or with the opinion of physicians that the principal was incapacitated.  It could provide for the following:

  • Paying parents’ bills during their period of incapacity
  • Dealing with insurance companies and/or Medicare
  • Managing investments
  • All other financial matters during the period of incapacity (authority terminates at death)

The financial durable power of attorney would have provided a mechanism for taking care of the parents’ financial matters without the time, energy and money that is required in a conservatorship proceeding.

Attorney Jim Gianelli is a founding partner in Gianelli & Polley (533-2233), a Sonora law firm.

© 2008, Friends and Neighbors Magazine

Jim Gianelli
By Jim Gianelli December 15, 2008 13:33
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