Name someone you trust
If you have decided to "get your affairs in order," I recommend the following "must have" legal documents:
Durable Power of Attorney
A durable power of attorney is an important legal document. By signing a durable power of attorney, you are authorizing another person or persons to act for you, the principal, without any court supervision or approval. Each person you appoint to serve as your agent should be someone you trust completely. Before you sign the durable power of attorney, you should know these important facts:
The power of attorney is a very powerful document designed to give the designated person or persons (your "agent") the ability to manage your financial affairs. For instance, your agent has the power to manage, dispose of, sell, and convey your real and personal property, to open and close bank accounts, to sign your tax returns, and to use your property as security if your agent borrows money on your behalf. These are just a few of the powers you are giving to your agent.
The powers you give your agent will continue to exist for your entire lifetime, unless you state that the durable power of attorney will last for a shorter period of time or unless you otherwise terminate the durable power of attorney.
When you sign the power of attorney, you will need to decide whether the powers you give to your agent will become effective: (1) the moment you sign the form, and they will continue to exist even if you can no longer make your own decisions respecting the management of your property; or (2) should you become disabled or incapacitated, as determined in writing by a physician.
You can amend or change the durable power of attorney only by executing a new durable power of attorney or by executing an amendment through the same formalities as an original. You have the right to revoke or terminate the durable power of attorney at any time, so long as you are competent.
You should read the durable power of attorney carefully. When effective, the durable power of attorney will give your agent the right to deal with property that you now have or might acquire in the future.
IMPORTANT INFORMATION FOR AGENT (ATTORNEY IN FACT)
When you accept the authority granted under this power of attorney, you establish a "fiduciary" relationship with the principal. This is a special legal relationship that imposes on you legal duties that continue until you resign or the power of attorney is terminated or revoked by the principal or by operation of law. A fiduciary duty generally includes the duty to:
(1) act in good faith;
(2) do nothing beyond the authority granted in this power of attorney;
(3) act loyally for the principal's benefit;
(4) avoid conflicts that would impair your ability to act in the principal's best interest; and
(5) disclose your identity as an agent or attorney in fact when you act for the principal by writing or printing the name of the principal and signing your own name as "agent" or "attorney in fact" in the following manner: JOHN FARUGIA, by (Your Signature) as Agent (or as Attorney in Fact)
In addition, the Durable Power of Attorney Act (Subtitle P, Title 2, Estates Code) requires you to:
(1) maintain records of each action taken or decision made on behalf of the principal;
(2) maintain all records until delivered to the principal, released by the principal, or discharged by a court; and
(3) if requested by the principal, provide an accounting to the principal that, unless otherwise directed by the principal or otherwise provided in the Special Instructions, must include:
(A) the property belonging to the principal that has come to your knowledge or into your possession;
(B) each action taken or decision made by you as agent or attorney in fact;
(C) a complete account of receipts, disbursements, and other actions of you as agent or attorney in fact that includes the source and nature of each receipt, disbursement, or action, with receipts of principal and income shown separately;
(D) a listing of all property over which you have exercised control that includes an adequate description of each asset and the asset's current value, if known to you;
(E) the cash balance on hand and the name and location of the depository at which the cash balance is kept;
(F) each known liability;
(G) any other information and facts known to you as necessary for a full and definite understanding of the exact condition of the property belonging to the principal; and
(H) all documentation regarding the principal's property.
Termination of Agent's Authority
You must stop acting on behalf of the principal if you learn of any event that terminates this power of attorney or your authority under this power of attorney. An event that terminates this power of attorney or your authority to act under this power of attorney includes:
(1) the principal's death;
(2) the principal's revocation of this power of attorney or your authority;
(3) the occurrence of a termination event stated in this power of attorney;
(4) if you are married to the principal, the dissolution of your marriage by court decree of divorce or annulment;
(5) the appointment and qualification of a permanent guardian of the principal's estate; or
(6) if ordered by a court, the suspension of this power of attorney on the appointment and qualification of a temporary guardian until the date the term of the temporary guardian expires.
Liability of Agent
The authority granted to you under this power of attorney is specified in the Durable Power of Attorney Act (Subtitle P, Title 2, Estates Code). If you violate the Durable Power of Attorney Act or act beyond the authority granted, you may be liable for any damages caused by the violation or subject to prosecution for misapplication of property by a fiduciary under Chapter 32 of the Texas Penal Code.
THE ATTORNEY IN FACT OR AGENT, BY ACCEPTING OR ACTING UNDER THE APPOINTMENT, ASSUMES THE FIDUCIARY AND OTHER LEGAL RESPONSIBILITIES OF AN AGENT.
Medical Power of Attorney
Who will be making your medical decisions?
What if you fell off a ladder and bumped your head? What if you collapsed from a stroke or heart attack? Who would decide which hospital is best to treat you? Which doctor? Who will speak on your behalf regarding which course of treatment is best?
What happens if you fail to name someone you trust to make these life decisions for you? Who gets to decide? The State of Texas authorizes a list of people to make those decisions for YOU.
Naming someone, you trust, can prevent discord and minimize conflict amongst your family.
Except to the extent you state otherwise, the Medical Power of Attorney gives the person you name as your agent the authority to make any and all health care decisions for you in accordance with your wishes, including your religious and moral beliefs, when you are no longer capable of making them yourself. Because "health care" means any treatment, service or procedure to maintain, diagnose, or treat your physical or mental condition, your agent has the power to make a broad range of health care decisions for you. Your agent may consent, refuse to consent or withdraw consent to medical treatment and may make decisions about withdrawing or withholding life sustaining treatment. Your agent may not consent to voluntary inpatient mental health services, convulsive treatment, psychosurgery or abortion. A physician must comply with your agent's instructions or allow you to be transferred to another physician. Your agent's authority begins when your doctor certifies that you lack the competence to make health care decisions. Your agent is obligated to follow your instructions when making decisions on your behalf. Unless you state otherwise, your agent has the same authority to make decisions about your health care as you would have had.
It is important that you discuss this document with your physician or other health care provider before you sign it to make sure that you understand the nature and range of decisions that may be made on your behalf. If you do not have a physician, you should talk with someone else who is knowledgeable about these issues and can answer your questions. You do not need a lawyer's assistance to complete this document, but if there is anything in this document that you do not understand, you should ask a lawyer to explain it to you. The person you appoint as agent should be someone you know and trust. The person must be 18 years of age or older or a person under 18 years of age who has had the disabilities of minority removed. If you appoint your health or residential care provider (e.g., your physician or an employee of a home health agency, hospital, nursing home or residential care home, other than a relative), that person has to choose between acting as your agent or as your health or residential care provider; the law does not permit a person to do both at the same time.
You should inform the person you appoint that you want the person to be your health care agent. You should discuss this document with your agent and your physician and give each a signed copy. You should indicate on the document itself the people and institutions who have copies of the signed originals. Your agent is not liable for health care decisions made in good faith on your behalf. Even after you have signed this document, you have the right to make health care decisions for yourself as long as you are able to do so and treatment cannot be given to you or stopped over your objection. You have the right to revoke the authority granted to your agent by informing your agent or your health or residential care provider orally or in writing, or by your execution of a subsequent medical power of attorney. This document may not be changed or modified. If you want to make changes in the document, you must make an entirely new one. You may wish to designate an alternate agent in the event that your agent is unwilling, unable or ineligible to act as your agent. Any alternate agent you designate has the same authority to make health care decisions for you.
HIPAA Release and Authorization
Your Authorization for Release of Protected Health Information is a document required by the Health Insurance Portability and Accountability Act (HIPAA). This document allows the identified persons to obtain protected health information on your behalf in order to make informed decisions about your care and to pay your medical bills.
Prepare for the Unexpected
Get your documents ready for the unexpected by preparing your own medical power of attorney and directive to physicians. Doctors and hospitals make these documents readily available. The law, however, prevents the doctors, nurses, and family members from being eligible to witness these documents. Your doctor may not wish to give you the legal advice needed for you to properly prepare, execute, and ensure that these documents will be honored. It is up to you to prepare for the unexpected.
Two things are certain in life: Death and Taxes. Will you be prepared?
Living Will (Directive to Physicians)
What if you have an illness or injury or you suffer from a terminal or irreversible condition? Would you prefer decide in advance on whether or not you want life sustaining treatments?
Some people decide differently depending on whether they will survive six months or not. How would you decide? Remember the "Terri Schiavo case." Doctors diagnosed Terri as being in a persistent vegetative state. The issue was whether Terri's husband had the right to stop her life support treatments or if her parent's had the right to continue life support treatment. This case was highly publicized and took seven years of delay before the decision was finally made to terminate life support. The result of Terri Schiavo not having a Living Will in place for herself, led to a long legal battle between her husband and her parents.
"Artificial nutrition and hydration" means the provision of nutrients or fluids by a tube inserted in a vein, under the skin in the subcutaneous tissues, or in the stomach (gastrointestinal tract).
"Irreversible condition" means a condition, injury, or illness:
(1) that may be treated, but is never cured or eliminated;
(2) that leaves a person unable to care for or make decisions for the person's own self; and
(3) that, without life-sustaining treatment provided in accordance with the prevailing standard of medical care, is fatal.
Explanation: Many serious illnesses such as cancer, failure of major organs (kidney, heart, liver, or lung), and serious brain disease such as Alzheimer's dementia may be considered irreversible early on. There is no cure, but the patient may be kept alive for prolonged periods of time if the patient receives life-sustaining treatments. Late in the course of the same illness, the disease may be considered terminal when, even with treatment, the patient is expected to die. You may wish to consider which burdens of treatment you would be willing to accept in an effort to achieve a particular outcome. This is a very personal decision that you may wish to discuss with your physician, family, or other important persons in your life.
"Life-sustaining treatment" means treatment that, based on reasonable medical judgment, sustains the life of a patient and without which the patient will die. The term includes both life-sustaining medications and artificial life support such as mechanical breathing machines, kidney dialysis treatment, and artificial hydration and nutrition. The term does not include the administration of pain management medication, the performance of a medical procedure necessary to provide comfort care, or any other medical care provided to alleviate a patient's pain.
"Terminal condition" means an incurable condition caused by injury, disease, or illness that according to reasonable medical judgment will produce death within six months, even with available life-sustaining treatment provided in accordance with the prevailing standard of medical care.
Explanation: Many serious illnesses may be considered irreversible early in the course of the illness, but they may not be considered terminal until the disease is fairly advanced. In thinking about terminal illness and its treatment, you again may wish to consider the relative benefits and burdens of treatment and discuss your wishes with your physician, family, or other important persons in your life.
A person's last will and testament sets forth the disposition of his or her probate estate. It also names fiduciaries, i.e., the person(s) or entity (such as a bank or trust company) who will carry out the will as the testator's executor or personal representative and/or as trustees of any trust(s) established under the will. The will should also appoint guardians of the persons and property of the testator's minor children, if any.
The will does not control the disposition of jointly held property that passes by right of survivorship (i.e., property held by the testator and another (or others) as joint tenants with right of survivorship and property held by the testator and his or her spouse as tenants by the entirety), or the disposition of assets that are paid in accordance with a designation of beneficiary such as life insurance and pensions. Accordingly, in order to ensure the proper implementation of the plan of disposition, all assets, including those that don't pass under the will should be reviewed.
In addition, the testator and the testator's adviser should review the overall plan of disposition to determine its reasonableness after considering the size and nature of the testator's assets available to implement the plan, the testator's intent, and income and death tax issues.