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Power of Attorney - An Asset Protection And Estate Plan.

By Randall K. Edwards - Email Editor

Date: Sept 14, 2006

Jim and Heather (I've changed their names and a couple of details of this story in order to protect privacy) are a young couple, newly married. Heather was pregnant with her first child, which the ultrasound showed would be a girl. During her prenatal visits to her OB/GYN, Heather had been diagnosed with high blood pressure, which had caused enough concern that she had been given a blood pressure monitor, which she faithfully used each morning to see if there was any cause for alarm.

One morning last week, in her eighth month of pregnancy, Heather called Jim at the office and said that her blood pressure levels were alarmingly high. He drove home and took her to the hospital. She was kept under observation until she was pronounced well enough to go back home with the admonition to keep a close watch on the blood pressure levels and to come back if there was a hint of a problem. While waiting for James to get the car from the parking lot, Heather collapsed in the hospital's waiting room, dropping to the floor unconscious.

A scene of chaos ensued, as Heather was given an emergency caesarean section delivery right there on the hospital floor. Heather and Jim's new daughter was hurried to the infant ICU, and Heather, now unconscious and apparently in a coma, was taken to another wing of the hospital for further observation and treatment. As things stand right now, Jim is in an awful situation. He can't get his wife's medical records, nor can he get all of the information he would like about his wife's medical situation because without a proper medical directive or power of attorney, the medical providers are limited under the HIPAA laws as to what they can, and cannot, share with a non-patient, even one who is in a coma.

Jim has been told that the chances that Heather will ever regain consciousness are extremely small, and he's now faced with some terrible questions that no young husband and father ever wants to face:

How does he find out exactly what happened to his wife?

Can he get a look at her medical records without a court order allowing him to do so?

Should he "pull the plug?"

Does he have the legal right to do so?

If Heather dies, should he order an autopsy?

Can he order an autopsy?

Where does he turn for help?

What can he do?

Jim and Heather figured that they had years before they would ever have to worry about an estate and Asset Protection Plan. They were, after all, just starting out. They had no money to speak of-just hopes and dreams of starting a family, pursuing Jim's business and buying a home.

They didn't have anything as exotic as a trust or even a will. They had no general durable power of attorney, no living will, no written medical directives and no contingency plans in the event something went wrong. They had years to live and a lot of money to make before they needed to worry about making hard decisions and divvying up their assets to their family, friends and foundations. They were, and are-just like everyone else-hoping for the best and not really considering the worst. Unfortunately, the worst has happened, and a lot of hard decisions and problems now have to be faced.

I tell this cautionary tale because everyone, including you, needs to implement your Asset Protection and Estate Plan today. You'll obviously need to sit with a professional and figure out exactly what is appropriate for your circumstances. If, like Jim and Heather, you're just starting out, you'll have a much simpler (and much cheaper) Plan than if you're a few years into your career, with some money in the bank, some equity in your home, some success in your work and some investments to take care of.

Of utmost importance, however, are the following:

A MEDICAL POWER OF ATTORNEY. This is a document that puts the authority for making medical decisions in the hands of someone you trust, in the event that you are unable to make those decisions for yourself, such as a coma, or other loss of ability, to make adequate medical decisions. It's better to leave these decisions in the hands of your loved ones rather that the hands of someone else, such as a doctor or hospital, who can only guess as to your wants and needs in the absence of decision-making authority from you.

A LIVING WILL. This is a relatively simple legal document that tells your loved ones and your doctors what are your wishes in the event that you are in a situation in which you are terminally ill and cannot make decisions for yourself. You can designate that heroic measures be taken, or not taken, to preserve your life, like whether you will be given nutrition, and whether you wish to have your life sustained in that state. You can specify that your loved ones and your medical providers may legally rely on that document as an expression of your desires.

A DURABLE POWER OF ATTORNEY. This is a document that allows someone else to carry on your business, handle your finances and otherwise undertake the day-to-day needs of your life in the event that you are unable to do so. Your designee can write checks in your name, pay your bills, carry on your corporate business and generally act in your name while you cannot.

A TESTAMENTARY DOCUMENT (WILL OR TRUST). Space doesn't permit me to review all of the alternatives for testamentary documents here - "testamentary" meaning the designation of what is to be done with your property upon your death. Depending on your circumstances, you may have a revocable trust, an irrevocable trust, a general will, a pour-over will, a QTIP trust, and a host of other structures-or, for that matter, all of the above in various combinations.

You'll need to speak with a qualified estate, financial and Asset Protection Planner in order to determine what's best for you. The point here is that you need SOMETHING now. If you don't designate what's to be done with your assets and otherwise take care of your business in the eventuality of your death, including the designation of a guardian for your minor children, the state will do it for you. That's a prospect no one should have to face.

AN ASSET PROTECTION AND TAX PLAN. Just as there are a myriad of tools for planning the distribution of your assets upon your death, there are a lot of tools for making sure that there are assets to distribute. They include insurance, trusts, retirement plans, corporations, limited liability companies, partnerships, including limited partnerships, loans, equity stripping and a bunch of other stuff-again, none of which I have space to treat in detail here. The point to remember here is that you have assets that need protection, even if the only asset you have right now is your talent and a bright future. You need to safeguard those assets, and plan for augmenting them with a minimum of risk. Don't fall victim to the idea that you don't have enough to protect. You do, even if it's not much. In fact, it's those folks who have fewer assets that need more desperately to make sure that they're not in jeopardy. There's no reason not to figure out a plan to hang onto what you've worked hard to get.

There's obviously a lot more to this subject than I can treat in this limited space. Volumes have been written about estate, financial and Asset Protection Planning, and the various tools that exist for each individual situation. I'll treat some of those issues in future newsletters.

For now, however, let me simply emphasize again: Do something now. Right now. Today. You're not too young, and you're not too healthy to put off planning for your future-even a future you don't necessarily want to face right now.

Randall K. Edwards practices law in Utah, Nevada, California and Arizona.

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