The Law of Incapacitated Parties and Estate

When an estate owner requires a legal guardian assigned durable power-of-attorney (“DPOA”), the process can be complicated if advance directives are not already in place. Informed consent laws provide for guardian DPOA decisions regarding medical treatment requirements and payment for professional services. In some cases, those expenses may exceed a patient’s financial means without estate disbursement of convertible trust assets. The drafting of trust documentation or living will directives, enables an executor or trustee responsible for an estate’s trust, to make key decisions regarding distribution of funds for while an incapacitated party is still living. Without DPOA, administration of revocable trust assets for medical care or other life-sustaining support may be subject to court proceedings.

DPOA and Estate Planning

Planning an estate or trust on behalf a person who has been deemed an “incapacitated party” by the court, is a complex legal matter. In most states laws, an executor of an estate must be at least 18 years of age, and “of sound mind” not deemed mentally incapacitated by a court (N.Y. Surr. Ct. Proc. Act § § 103, 707.) Executors, guardians, and trustees involved in the formation of a living trust or living will convene, the following checklist summates requirements for representation of a trustee who is an incapacitated party during the estate planning process:

  • “Durable Power-of-Attorney” – designation of a representative guardian or trustee for by an “incapacitated party” for purposes of healthcare and financial decision making.
  • Healthcare Proxy – the document naming a medical guardian responsible for healthcare decisions, and particularly the diagnosis of “incapacitation” for the person the directive concerns.
  • Living Will – advance directive citing a person’s wishes concerning life-sustaining medical treatment, and payment for those healthcare measures should permanent incapacitation or unconsciousness interfere with informed consent decision.
  • Trust Plan – the financial plan protecting the assets and rights of beneficiaries, the trust agreement outlines guidelines for administration and distribution of assets; thus preventing lengthy probate court proceeding when the estate becomes effective.
  • Written Will – the document articulating executor or trustee guardianship in the representation of the decedent’s decedents wishes, including distribution to designated beneficiaries.

The Rights of Incapacitated Persons

Quality of life is the main priority of advance trust and will directives. The legal foundation of estate documentation where incapacitated persons are involved, is “duty to care.” While duty to a standard of reasonable care is also enforceable with fiduciary decisions regarding an estate, guardianship of an estate owner extends those decisions to medical end-of-life care in the written directives of living will and revocable living trust agreements. DPOA exceptions and limitations differ by state. For example, New York, state law permit the legal guardians of incapacitated parties to withdraw life-sustaining therapies if a patient’s wishes are met.

DPOA and Probate

The same federal tort rules apply to trustee representation of an incapacitated estate owner after they are deceased. If planning and execution of an estate is not met with proper executor or trustee DPOA, and probate administration of an estate proceeds. Estate law attorneys recommend that a trustee guardian or other representative(s) involved in the execution of the will and the estate planning process be present during probate court review. Probate court appointment of a trustee on behalf of a deceased “incapacitated party,” permits designation of beneficiaries and determines the distribution of assets in accordance with federal and state rules of estate. Planned giving specialists can find out more about probate estate transfers affecting pre-existing, nonprofit charitable giving plans.

When an appointed trustee seeks power-of-attorney to manage the valuable assets of an estate, written advance directives convey the wishes if the trust’s owner is incapacitated.

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