Because this writer is now of “that age” and the topic of senior mental infirmity seems to be a focal point of the 2024 Presidential race, I have been watching a podcast about powers of attorney and their cousins the “springing powers.” The attorney leading the discussion seemed to be quite convinced that legal documents could be drafted that would effectively cover what should happen when (as he put it) “You lose your marbles.”
Respectfully, I beg to differ based upon some litigation I have had in this area. Today, if you are planning an estate, your attorney typically addresses several topics. You schedule the appointment because you think you want to draft a will or trust. But most attorneys will also want you to discuss who will manage your affairs if you become unable to either because of physical or mental infirmity. That document is called a power of attorney and it has another younger cousin called a medical directive that allows you to appoint someone to decide just what level of medical care you might want if you can’t make or communicate that decision yourself.
These are good things to have but they can also be dangerous documents. Recently we handled a matter where a 90 year old man had given each of his children a power of attorney to act on his behalf. He did not give that power to his wife of fifty years. And things got a little sticky when the wife noticed that the bank and investment accounts were experiencing large outflows to unknown places. The kids didn’t like the wife- she was not their mom – and they weren’t much interested in seeing her inherit money from their father. The 90 year old, once a prominent physician, had quietly passed into a mental fog from which he had little hope of emerging. So, we had to file a divorce on behalf of the wife and to have a guardian appointed for her husband. Suing her husband of 50 years at a time when he could comprehend the transaction is not what she wanted but it was the only choice we had in order to try to preserve what was a substantial marital estate.
As I listened to the estate planner’s podcast what he seemed to miss was the fact that there is no bright line test for when a human “loses the marbles.” It’s a crass phrase but an apt one. The problem is that mental agility can ebb and flow. Unfortunately, as the person who is creating powers to transact business on your behalf, you may one day find yourself challenging your trusted wife or child’s assertion that they need to take over. If you forgot to pay your income taxes last year they may have a point. But if you missed paying the real estate taxes during the 90 days when you can claim a discount, should someone be taking over management of your money? You can revoke the power but that may produce a threat to bring suit to have you declared “incapacitated” by a court and guardians appointed. That’s not an irrevocable decision either but it took Britney Spears more than a decade to shake off her conservator.
The podcast described something called a springing power of attorney. The idea is that you manage your affairs until an “event” occurs like a stroke or you move to assisted living. The trouble is that many stroke victims recover quickly and many people in assisted living continue to maintain and deploy their “marbles” to good purpose. Our podcaster suggested that the power might become effective if two physicians decided you needed outside help but suppose you don’t agree to the evaluation or the conclusion. We already noted that you could see Dr. Kildare on Monday and not know who the President is but on your visit to see Dr. Welby the following week you ask him how Dr. Kiley’s son is doing at Penn State. Truth is that there is no bright line test and even if there were there’s a good chance that you might miss the bright line because some marbles got loose. Meanwhile, as we wrote at this time last year, don’t be surprised to learn that as you age, your adoring family might have “plans” for your money before you die and your power of attorney affords them direct access to that money.
Your attorney may be crafty, but she is not going to be able to draft around these problems with any will or trust I have seen. Yes, you can put it all at Glenmede or Mellon or Pitcairn or some other money manager and they will try to be objective, but they have lots of clients and their first rule of thumb in managing family money is “Avoid family conflicts.”
Bear in mind as well that the outside world is now filled with creepy people who pretend to be the IRS or Medicare calling to confirm your bank account or social security number under false pretenses. And if your guard is down, you could see huge amounts of money slip out of your hands. You may be fine today but there is danger ahead as infirmity advances and the criminals improve their fraudulent schemes.
Perhaps while the marbles remain in place you should prepare your own marbles test. Questions you can answer today but would clearly demonstrate your decline if a day came when you started to fail your own test. Among the questions would be who is President; governor; your primary care physician? What banks, pensions and brokerages hold your money and about how much do you have in each? What’s the date your kids were born and what are their telephone numbers or addresses. Today those may seem simple questions but when the answers become murky, your kids or spouse have good reason to ask for authority to help manage your finances. When the time comes, your family members can confront you with your test. But in the meantime don’t hand all your kids a power of attorney but choose the most responsible one and make clear in the power that the person who exercises the power has a duty to first confront you with the test you devised and then disclose and account for his or her use of the money not later than January 31 of each year to everyone named in your estate plan. We have seen situations where the “anointed” family member who is managing your assets tells his/her siblings to bug off when they ask how you are doing financially. And if the management of your accounts and bills is a genuine burden, direct in the power what the child or spouse designated as “attorney” should receive for doing this thankless work.
Tis’ not easy, but care exercised today may prevent your assets from being looted tomorrow.
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