by Kevin G. Harvey June, 2011
A mother of two enters surgery for a routine medical procedure, but leaves the hospital permanently disabled as the result of a stroke suffered on the operating table. A single, young father saw the train that struck his car too late to avoid the collision, and the resulting head trauma left him unable to manage his own affairs or live alone. The adult children knew their parent had been diagnosed with dementia a couple of years ago, but now that someone needed to sign the contract for nursing home admission, the parent was not competent to do so. What do these disabled persons all have in common? None of them ever planned for incapacity. Thus, the only option left for their relatives was to ask a court to appoint a guardian for their disabled loved one.
All too often, clients have no choice but to incur the expense and loss of time required to ask a judge to appoint a guardian for a disabled family member who never planned for the possibility of incapacity. One reason people fail to plan for disability is that people often underestimate the chances that they will ever become disabled. According to the Council for Disability Awareness ("CDA"), 64% of wage earners believe they have less than a 2% chance of being disabled for 3 months or more during their working career, but in actuality a worker entering the workforce today has about a 30% chance of becoming disabled before the end of his or her career. (See link to CDA website below). The statistics are not much better for workers who are employed in a "safe" work environment: According to the CDA (same webpage), a typical female, age 35, non-smoker, who has an office job, and who leads a healthy lifestyle has a 24% chance of becoming disabled for 3 months or longer during her working career with a 38% chance that the disability will last 5 years or longer. Research proves that the risk of disability only increases with age.
So what is the solution? Recognize that the risk of disability is real, and engage in thorough planning for the possibility. An important part of that planning will include a Durable Power of Attorney ("DPOA"). A DPOA is a document with which you can give another person (called the "attorney in fact") the legal authority to act on your behalf pursuant to the power granted within the document. The fact that DPOA is "durable" means that it will remain effective even after you become disabled. Indiana law allows a person to grant broad powers to an attorney in fact within a DPOA. Thus, if designed properly, a DPOA can allow for a smooth and immediate transition of the management of your financial and business affairs to the control of your chosen attorney in fact in the event of your disability. Within a DPOA, you can also give health care decision-making authority to your attorney in fact, or you can grant that authority in a separate Appointment of Health Care Representative. Combined, these two documents can eliminate the need for a court-appointed guardian in most instances.
With planning, you can thus be the one to choose who will make critical financial and health care decisions for you in the event of your incapacity, instead of leaving it up to a judge to decide. With planning, you can eliminate the headache, significant cost in legal fees, and time spent by your relatives away from work to have a guardianship instituted in the event of your incapacity. Once a guardianship is instituted, the guardian is required to file an accounting with the court every two years, and the court is thus in your family's life for as long as your loved one remains disabled. With a carefully designed DPOA, there is no court involvement in your family's affairs: You will have pre-determined whom will serve as your attorney in fact and defined the scope and extent of that person's authority.
The choices to be made with creation of a DPOA and the appointment of a health care representative are not insignificant. Giving someone else authority, in advance, to take care of your possible needs in the future is an important decision; the lack of court involvement has its benefits, but choosing the wrong person as your attorney in fact also creates certain risks. However, if you carefully and thoughtfully engage in the planning process, your family will be grateful in the event of your future disability, and you will have the peace of mind that comes from knowing it was you who will have made the choice about whom makes decisions for you - and not a judge.