If you become incapacitated, who will make financial and health care decisions for you? If you have a durable financial power of attorney and a health care power of attorney, the persons named in those documents can make these decisions for you. If you don’t have these documents, the court will appoint a guardian to make these decisions for you.
Durable Financial Power of Attorney. A financial power of attorney (“FPOA”) is a written document in which a person, the “principal,” authorizes another person, the “agent,” to make financial decisions on the principal’s behalf. A FPOA is “durable” if it is effective even if the principal becomes incapacitated. A FPOA created in Wisconsin after May 26, 2009, is automatically “durable” unless it expressly states that it is terminated by the incapacity of the principal. However, a FPOA created before May 27, 2009, is “durable” only if it contains the words “this power of attorney shall not be affected by the subsequent disability or incapacity of the principal,” or similar language. If your goal is to avoid having a guardian appointed for you, it is essential that your FPOA be “durable.”
Any competent adult (e.g., spouse, child, sibling, friend, etc.) can be the agent. However, the agent should be someone who (1) is honest and trustworthy, (2) is capable of making and handling investments wisely, (3) lives (if possible) near the principal and his or her assets, and (4) is likely to be able to serve when needed (i.e., is not likely to predecease the principal).
Health Care Power of Attorney. A health care power of attorney (“HCPOA”) is a written document in which the “principal” appoints a “health care agent” to make health care decisions for the principal if the principal is unable to make health care decisions for himself or herself.
The health care agent must be a competent adult. However, the health care agent cannot be any of the following: (a) the principal’s health care provider, (2) an employee of that health care provider, (3) an employee of a health care facility in which the principal is a patient or resides, or (4) a spouse of any of these providers or employees, unless that person is also a relative of the principal.
The health care agent is typically granted broad powers so that he or she can make any health care decision that may arise, including the decision to withhold life-sustaining treatment. However, there are certain decisions that a health care agent cannot make such as admitting the principal on an inpatient basis to certain facilities for the treatment of mental illness, consenting to experimental mental health treatments or procedures, or admitting a principal to a nursing home over the principal’s objection.
Guardianships. A guardian is a person appointed by a court to act for a person, called the “ward,” whom the court has found to be incompetent. Before it makes its decision on the competency of the proposed ward, the court will hold a formal hearing at which evidence is presented to show that the proposed ward needs a guardian. If the court finds the proposed ward to be incompetent, the court will appoint a guardian for the ward. In selecting the guardian, the court will consider the preferences of the proposed ward and his or her relatives and friends.
There are two types of guardians: (1) the guardian of the estate, and (2) the guardian of the person. The guardian of the person is responsible for the ward’s care and custody. The guardian of the estate is responsible for managing the ward’s money and property. Some wards will only need one type of guardian, and the same person may be appointed as both the guardian of the estate and of the person.
Conclusion. A guardianship affords the most protection to a person who is unable to manage his or her own affairs because the guardian is supervised by a court. However, appointing a guardian takes time and can be expensive. In most cases, a guardianship can be avoided if an incapacitated person has a durable FPOA and a HCPOA.
If you have any questions about how the information in this article may affect you or your business, please contact Carolyn Hegge at chegge@stroudlaw.com or (608) 257-2281 or your Stroud attorney.
DISCLAIMER: The information in this article is provided for general informational purposes only, is not necessarily updated to account for changes in the law, and should not be considered tax or legal advice. This article is not intended to create, nor does the receipt of it constitute, an attorney-client relationship. You should consult with your own legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.
