Planning for Incapacity

Last month  or so I commented on why our Power of Attorneys (PAs) got longer and more expensive. The flip side, is that our Health Representation Agreements (Rep Agreement) might be getting less expensive, but not necessarily much shorter. They are both more and more looking like parallel documents with similar functions and it is getting hard to justify why the price is so different for a short form Rep Agreement to a long form PA. Of course, the long form Rep Agreement is still pricey - but it is a very hefty document.

Both are sophisticated documents but can be summed up pretty neatly. A PA is for your stuff and your money and a Rep Agreement is for you health and body.

Both documents give another person authority to deal with the respective subject matter. Both can be restricted or broad and open-ended. The local health authorities are now well versed in these documents and will sometimes recommend or request that certain patients seek advice on these matters. The banks and credit unions have long been versed in PAs and for a while, had their own form of document. I see less of those now and do not think many financial institutions are using their own version of power of attorneys anymore.

These are important tools for you to be familiar with and talk about with your lawyer.

Lastly, understanding capacity is crucial to my practice, especially with my aging clients. If the bank or health authorities are recommending that you get advice on Rep Agreements (sometimes called, "Section 7 Agreements" or "Section 9 Agreements"), chances are that capacity is already becoming an issue.

What becomes most difficult for me is when the "client" waits a little too long to realize they need one of these. This is when person is perhaps just starting to lose capacity and facing early stages of dementia. Sometimes, the client does not know what they need, but their son or daughter does and is trying to convince them to go ahead. My duty is always to the donor, or person giving up the powers, whether for health or finances. Although I may look to a doctor to give an opinion of capacity of the donor, the responsibility rests with me.

Dementia is fluid and rarely, just it happen on one day, that a person wakes up and does not have capacity. I understand there are "good days" and there are "bad days". I have to be able to get instructions from the donor and I do not want to see them on a bad day. I always recommend to the person who is starting to handle their affairs to cancel the appointment if it is a bad day and we will re-schedule. I can find other things to do during a missed appointment. But once I've seen the incapacitated donor, it will be very hard to convince me that he or she has capacity the next time I see him or her.

For one of my clients, I had a standing Tuesday morning appointment for 10 am. The driver (child of the client) had Tuesday mornings off, but the client had good and bad days. It took a few weeks, but eventually the appointment was kept and the documents were signed.

That $200 power of attorney (as it then was!) just saved the children more than $3,500 for a Committe application. (I will chat about Committees another day.)


If your lawyer is not helping you, ask yourself why not.