We have a guest post from attorney, Kim O’Neill of Campione & Hackney, P.A. Kim recently joined Campione & Hackney as an associate. She is focusing on the areas of wills, trusts, estates, and probate. Kim recently took a look at some changes to Florida Statute Chapter 765 concerning health care surrogates (medical powers of attorney). Here is her synopsis of the recent changes:
Effective October 1, 2015 Florida state lawmakers made some significant changes with regard to the to the Florida Health Care Surrogate Laws. A health care surrogate is a “medical power of attorney” that allows you to appoint someone else to make medical decisions for you. There are two major changes every Florida resident should be aware of:
Fla Stat. 765.202(6) provides that an individual may elect to designate a health care surrogate who may act while the individual is still capable of making health care decisions, and
Stat. 765.2035 creates statutory authority for a parent, legal custodian or legal guardian to designate a health care surrogate who may consent to medical care for a minor.
Why do these changes matter? Previously, Health Care Surrogates only had the authority to act when the principal (i.e., the person appointing the health care surrogate) was incapacitated. Now, the principal has to make a decision when executing a Health Care Surrogate document:
Does the principal grant the Health Care Surrogate authority only after the principal is determined to be incapacitated OR
Does the principal grant the Health Care Surrogate authority to act while the principal is still capable of making health care decisions?
If the principal chooses the second option, the health care surrogate would still have authority if the principal is determined to be incapacitated.
But what happens if the principal has capacity and disagrees with the surrogate concerning a medical decision? The decision of the principal will control so long as the principal is still capable of making medical decisions. In other words, the appointment of a surrogate who is allowed to make decisions while the principal has capacity does not cause the principal to lose the power to make his or her own decisions.
The second major change gives statutory authority for parents to appoint someone else to serve as a Health Care Surrogate for their minor children. Previously, many were executing a power of attorney, to give a caregiver of a minor child the authority to consent to non-emergency medical care of the minor. After October 1, 2015, the only way to give the caregiver of a minor child the authority to consent to non-emergency medical care of the minor is through executing a Health Care Surrogate document. This is a great option for parents and legal guardians of minor children that travel frequently for work, are enlisted in the military, or are simply taking a vacation away from the children.
Florida Statute section 709.08 governs durable powers of attorney. A durable power of attorney is a written document whereby one person can designate another to act for them. The person who signs the document and appoints another is the “principal” and the person appointed to act is the “attorney in fact.” The attorney in fact is an agent of the principal. The term “attorney in fact” identifies him as a particular type of agent who has been authorized to act for a principal under a power of attorney. An attorney in fact can be a person who is at least 18, a trust company able to do business in Florida, or a charitable organization. The attorney in fact cannot delegate his or her authority, except that the power to transfer stocks can be delegated to a transfer agent. The durable power of attorney must be executed with the same formality as a transfer of real property. That is, it must be signed in the presence of two witnesses.
Ordinarily the authority of any agent ends with the incapacity of his or her principal. This is not the case with a durable power of attorney. In fact, that is where the term durable comes from; i.e., it is “durable” because it survives the agent lack of capacity. A durable power of attorney must contain the phrase: “This durable power of attorney is not affected by subsequent incapacity of the principal except as provided in s. 709.08, Florida Statutes”. However, “similar words showing the intent that the authority of the attorney in fact survive the principal’s incompetency may also be used. Therefore, a durable power of attorney can be useful in avoiding guardianship because the attorney-in-fact can manage property for the incapacitated person.
It is not, however, necessary for the principal to be incapacitated for the durable power of attorney to be effective. The attorney in fact can begin using the power of attorney the day it is signed. The principal does not have to be incapacitated. This makes a durable power of attorney both very useful and very dangerous. Powers of attorney can be, and have been, used to steal from the principal. For that reason, I caution clients they may not want to deliver them until needed. An other alternative is to appoint co-attorneys-in-fact in the hope that each will keep the other honest.
However, durable powers of attorney can be “springing,” which means they cannot be used by the attorney in fact until the principal becomes incapacitated. Incapacity is defined as the inability to manage property as defined in Florida Statute section 744.102(12)(a) . The exercise of a springing power requires the delivery of affidavits to the third-party. This can be problematic because a physician may be reluctant to certify someone as incapacitated as required for the usefulness of a springing power.
Any lawyer who prepares powers of attorney has probably seen instances where people waited until it is too late to seek a power of attorney. Often a parent becomes incapacitated and then a child realizes that they need to sell property or transact some business for the parent. If the parent is already too incapacitated to do it themselves, the child may seek a power of attorney so they can help the parent. Unfortunately, it is too late for an incapacitated parent to sign a power of attorney. A person must be competent to delegate their authority to another. Powers of attorney are useful for planning ahead, but you must plan ahead.
When I first heard of this case, I thought it was an interesting but isolated case– the sort of thing that happens but is not common. I may have been wrong. In one of those serendipitous coincidences, I met a lady at a speaking engagement who told me about a situation involving several of her friends. Several couples at a club that she belonged to had recently been “married” by a notary who also belonged to the club. They had ceremonies, but failed to get licenses. Apparently, the notary informed them that a license was not necessary. WRONG!
Florida outlawed common law marriages in 1967. Since then no amount of playing house together can make you husband and wife in Florida, as discovered by Kimberly Hall and Roberto Maal. Ms. Hall and Dr. Maal had the full ceremony, represented to the world that they were husband and wife, purchased a home as “husband and wife,” and even had two children. However, one small detail was never attended to; i.e., they failed to obtain a marriage license, solemnize the marriage before an acceptable official, and return the license to the clerk of the court for recording. The completed step one (i.e., they got a license), but failed to complete steps two and three. See, Fla. Stat. sections 741.01 to 741.212 Years later when trouble arose, Ms. Hall was denied a “divorce” because she and Dr. Maal were never married.
A failure to obtain a license and be properly married can have serious consequences in a number of situations besides divorces. In a divorce, it can cause a loss of rights to marital property and alimony. Moreover, in an estate, it could cause a loss of rights to a life estate in a homestead, an elective share, and family allowance. If there is no marriage, then there is no surviving spouse. If the purchasers of real property are not married, then they do not acquire the property as tenants-by-the-entireties and have no creditor protection and no survivor rights. The forgotten marriage license is the opposite of the forgotten spouse problem. Either one is serious though.
The Economic Growth and Tax Relief Reconciliation Act of 2001 substantially revised the estate, gift, and generation skipping taxes. One provision was that the estate tax and generation skipping tax would disappear in 2010. If nothing is done before 2011, the estate and generation skipping taxes go back to where they were before 2001; i.e., a lower exemption and higher rate. I’ve always maintained that this compromise was at least in part a bet by the Democrats that they would be in control of Congress before 2010 so they could rewrite the tax as they preferred. A bet that they won. No one expected the tax to actually lapse in 2010. However, health care reform has apparently distracted Congress and so no new estate tax bill has been passed. Consequently, if you’re one of the 5,500 Americans to whom the estate tax might have applied, 2010 is a good year to die. In fact, according to “The Wall Street Journal” some very ill wealthy Americans have been trying to hang on until January 1, 2010. Theoretically, Congress could try to pass a law during 2010 making the tax retroactive to 2010, but that may not pass constitutional muster.
Michael Jackson was as much a corporation as a person. Like any major celebrity or company, he had ongoing litigation and business operations. “The National Law Journal” has an article detailing the myriad suits Jackson and his company, MJJ Productions, had at the time of his death. These suits will continue being litigated by his corporation or his estate. The corporate suits will proceed with nary a hiccup. The corporation’s existence is unaffected by Jackson’s death. Unlike a very small corporation that may be little more than a one man band, MJJ Productions probably has full time professional management. That management will continue to run the company. However, there may be issues as to who runs MJJ. Assuming Jackson owned most, if not all, of the shares of MJJ, the person who controls the estate and eventually his heirs will have control of MJJ as well as his other personal assets and business.
It is unknown whether Jackson had a will or a trust (or trusts). According to one attorney,most celebrities have living trusts. If he has a will or if he died intestate, there is likely to be a delay while a personal representative (a/k/a an executor) is appointed. If he had a living trust, then the successor trustee can more or less immediately take control of all the assets in the trust. However, if he had some assets in the trust and some not in the trust, then he may still need a personal representative to manage assets outside the trust.
However, Jackson’s estate may earn even more than Jackson. Even as I write this, radio stations and TV stations are playing Jackson songs and videos and the royalties are pouring in. Itunes is probably sellng Jackson’s music at a record rate and CDs and posters are flying off the shelves at WalMart. This income is likely to go further without Jackson to spend it faster than it comes in. It is likely to support an army of lawyers and accountants and still be able to pay debt and a legacy for his three (3) children. Elvis Presley’s estate earned $52,000,000.00 last year, which may be more than Jackson earned while living. Jackson’s estate may do better than Presley’s for the next year or two. On the other hand, a rush is on for refunds of the tickets sold for his upcoming concert tour. At least some of that is insured, but one wonders whether there will be suits for the lost profits and money spent in expectation of the tour.
We won’t know for some time just how things will shake out. One thing is for certain, whether Jackson’s estate proves to be flush or broke, his confused finances and personal life are likely to be a bonanza for a cadre of lawyers on both sides of the issues.
I had some clients come in recently in need of a guardianship for a family member. The family member was a retired professional. He had all the right tools in place to avoid a guardianship — durable power of attorney, health care surrogate, and revocable living trust. So why did he need a guardianship? Because he was suffering from dementia and refused to cooperate with his family in making rational decisions that were in his own best interests. Unfortunately, it seems to me that dementia often magnifies the worst personality aspects of some people. When you combine a cantankerous, domineering personality with paranoia and delusion, it makes for a difficult situation.
A durable power of attorney lets you manage the person’s property, but not the person. Sometimes I hear people say, “I’ve got power of attorney over my Aunt Ethel.” No they don’t. They have a power of attorney that allows them to deal with Aunt Ethel’s property. A revocable living trust also allows the management of property but not of a person. In the narrow area of health care and treatment decisions, a health care surrogate or medical power of attorney does give some control over the person assuming that third parties agree and cooperate. Therein lies the rub. Without an adjudication of incapacity, third parties my be reluctant to accept the authority of the attorney-in-fact or surrogate. This is especially true if the incapacitated person insists that he or she is not incapacitated. The presumption is that people are competent unless declared incompetent.
Sometimes the alleged incapacitated person has lucid moments or is able to “fake it” for significant periods of time. This makes third parties even more leery of accepting instructions solely from the attorney-in-fact or surrogate. Third parties who do not spend a lot of time with the incapacitated person are the most easily deceived. Thus, you can plan and have all the right tools and still not avoid a guardianship. The good news is that although you may not avoid a guardianship of the person, you may still avoid a guardianship of the property if you have a properly funded living trust in place.
I recently had conversations with a couple of lawyers who also practice probate litigation. We agreed that probate litigation is often the result of poor communication. Specifically, parents tell their children what the children want to hear or use ambiguous phrases like “don’t worry you’ll be taken care of.” The same goes for other relatives and friends who might be expected to be remembered by you with money or assets when you pass away.
Here is one example of muddled communications — A decedent’s nieces and nephews sued their aunt’s beneficiaries claiming undue influence. The nieces and nephews said their aunt called the beneficiaries the “cleaning lady” and “the lawnman.” The beneficiaries said the decedent disliked her nieces and nephews, but the nieces and nephews swore the aunt loved them and promised to “take care of them” when she died. I believe both sides were telling the truth. The decedent had a prickly, cranky, insecure personality and had told each side what they wanted to hear and whatever made her feel important. Coupled with the fact that she waited to do her estate planning until she was on the way to the hospital where she died, it was a perfect recipe for a lawsuit.
Children often overestimate the wealth of their parents when they don’t know what their parents actually own. They may not realize that dad obsesses over MSNBC and Bloomberg because he enjoys it and that $100,000.00 in 10 or 20 stocks is all he has. They think he’s obsessively monitoring his millions. A phrase like “don’t worry I’ll take care of you” is ambiguous enough to cause problems. For the parent it may mean, “I’m leaving you $10,000.00,” but for the kids it may mean. “Don’t worry I’ll make sure you’re set for life.”
Here are some tips to make sure your legacy to your heirs and beneficiaries isn’t a lawsuit:
Be clear. Make sure that your children and other beneficiaries know what to expect from you at your death.
Don’t just tell people what they want to hear. You don’t have to tell people you hate them, but you shouldn’t misrepresent your relationships with others either/
Don’t wait until the last possible moment to meet with a lawyer and plan your estate.
Don’t wait until you’re incapable of making your appointments and arrangements to visit a lawyer before planning your estate.
If you remarry and have children from a previous marriage, get a prenuptial. If you later decide to ignore or revoke the prenuptial, do so in writing.
Don’t share your estate plan with someone or promise to “take care of them” and then set up all of your accounts and beneficiary designations so they pass outside of the estate plan that leaves everything to someone else.
Don’t make misleading or false promises to people you don’t intend to “take care of” in your estate plan.
This list is far from comprehensive. The bottom line is to be honest with yourself and others. Do what you can to not make misleading statements or promises or to give false hopes or expectations. You may save your heirs and beneficiaries a lot of headaches.