A common misconception people have about estate planning is assuming it is solely about writing wills and trusts in order to make sure that your property is distributed according to your wishes after your death. In addition to drafting your wills and trusts, estate planning attorneys also help you discuss the more difficult but equally, (or perhaps, even more) important topics of planning for situations where you no longer have the mental capacity to make personal, health care, or financial decisions for yourself. Although this topic is a difficult one, it is a conversation that is imperative to have when discussing your estate plan.

Power of Attorney/Health Care Directive

A power of attorney is an estate planning document that authorizes another person to act on your behalf in making financial decisions. These decisions can vary from signing checks and paying bills, to commencing lawsuits on your behalf, to even selling your real property. While there are different reasons of having such a document, the main purpose is to indicate who is authorized to make decisions for you in the event you are incapacitated, whether physically (i.e., Coma) or mentally (i.e., Alzheimer’s, dementia, etc.).

This legal relationship is created when a principal (you) determines how much power is assigned to the attorney-in-fact (the person you are designating to act as your representative). The power of attorney can be limited, only giving the attorney-in-fact one or a few powers, or it can be general, and give the attorney-in-fact a broad scope of power. You as the principal determine the extent of power assigned to that person.

Similar to a power of attorney, a health care directive is another important estate planning document that plans for incapacity. This document serves to appoint a person, known as a health care agent, to make health care decisions on your behalf in the event you are unable to do so.

Health care directives are essential tools in the estate plan because they ensure your wishes will be followed. The health care directive also gives your doctors and loved ones reassurances knowing that you have already laid out your wishes regarding critical and difficult care decisions should you be unable to communicate. This will not only give you peace of mind that your wishes will be followed, but it also takes stress and pressure off your loved ones during what may be a difficult time.

In most situations (though, not all) having these two documents implemented into your estate plan avoids the necessity for any guardianship and/or conservatorship, because it is clear who can act on your behalf in these capacities if you are unable to.

Guardianships/Conservatorships

In the event you do not have an effective power of attorney and/or health care directive and you are unable to make decisions independently, a guardianship and/or conservatorship may need to be sought.

While guardianships and conservatorships have some things in common, their purposes and the roles the appointed guardian or conservator play are in fact, quite different. Both a guardian and a conservator are appointed as a result of a petition being filed and series of court proceedings being held, and the initial concerns are to assist someone who is unable to help themselves. This usually happens when the person in question is incapacitated or otherwise unable to perform certain duties or make important decisions. Minnesota Statue § 524.5-102, subdivision 6 defines an “Incapacitated Person” as an individual who, for reasons other than being a minor, is impaired to the extent of lacking sufficient understanding or capacity to make personal decisions, and who is unable to meet personal needs for medical care, nutrition, clothing, shelter, or safety, even with appropriate technological and supported decision making assistance. The person bringing the petition (petitioner) may be a family member, a close friend, or even a county representative. The petitioner bears the burden of proving by clear and convincing evidence that the individual is incapacitated. Once evidence of this incapacity is established, the court will make the determination that a guardian or conservator is necessary. The person will then not have the right to make these decisions on their own behalf until their capacity to do so is proven.

The difference between a guardian and a conservator revolve around the duties that each is required to perform on behalf of another. A guardian is someone who is tasked with assisting in personal care decisions, such as with providing a person food, clothing, shelter, and health care needs. Additionally, the guardian may be required to make medical decisions on the incapacitated person’s behalf. On the other hand, a conservator is someone who is in charge of an incapacitated person’s financial affairs. Their duties range from paying bills, managing the estate of the person, and controlling investments using the person’s assets.

Costs

It is important to look at costs associated with all of these options when creating an estate plan.Generally, a health care directive and power of attorney cost a few hundred dollars and are typically “bundled” in your estate plan costs. Contrarily, pursuing a guardianship and/or a conservatorship generally incurs substantially higher costs due to drafting petitions, filing documents with the courts, and attending court hearings. Furthermore, the appointed guardian and conservator are required to submit annual reports and accountings to the court, which cost more time and money from the estate of the person subject to the guardianship or conservatorship.

In addition to monetary costs, the process of obtaining guardianships and conservatorships are often time consuming, and can be very burdensome on the family and the incapacitated person. All of these issues illustrate the value of estate planning and are taken into consideration and will be discussed when talking with an estate planning attorney.

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