Planning for Disability: Durable Power of Attorney, Guardianship, or Trust? (Part One)

Assuming you are mentally and physically “vertical” when you come in for your estate and elder law plan with our office, you will be able to create your own plan for disability or chronic illness.  Legally, you call your own shots as long as you are able to.  But what about when you cannot do so any longer?  What is the best way to address that possible risk?

Florida has an updated, very broad, and very flexible Durable Power of Attorney (DPOA) act, as set forth in Florida Statutes Chapter 709, Part II (ss. 709.2101 – 709.2402).  Here’s a quick link for your further review:

Of particular note, if signed on or following October 1, 2011, your Florida DPOA is effective upon signing, and as long as expressly and specifically authorized in your Florida DPOA, and separately signed or initialed by you as to such express itemized power, you may authorize your Agent to act on your behalf to create, modify, fund, or terminate a trust; created and fund a trust for Medicaid planning purposes (i.e., a Qualified Income Trust or “Miller” Trust), change your transfer on death beneficiary account designations, make gifts or transfers on your behalf, and/or change your qualified retirement account (e.g., 401k or IRA) distribution schedule.

All of those express powers should be carefully considered and reviewed, since you are obviously putting a lot of authority in the hands of an immediately authorized agent to act on your behalf.  I assure you that on a difficult estate or elder law case, we might need every one of those express powers to be exercised by your Agent on your behalf, for proper pre-mortem estate planning or elder law planning purposes.

Guardianship is covered by Chapter 744 of the Florida Statutes.  Here’s a link to that chapter for your further review:

While Part III of that Chapter does provide for different variations on the theme, the norm that we see and fear in practice is the need for a plenary (i.e., “full authority”) guardianship, following a determination of total incapacity.  Focusing on assets, contract rights, legal entitlements, etc., we are said to have a “Guardian of the Property.”

On the other hand, the “Guardian of the Person” is responsible for health care, mental health, and related personal placement and personal social environment decisions.  Arguably a Guardian of the Person is unnecessary if current, detailed advance health care directives are in place as provided for under Florida Statutes Chapter 765, which will be the subject of a separate blog.  Since everything seems to cost money in our society, the Guardian of the Property must out of necessity work with the Guardian of the Person.

Trusts are now covered by Chapter 738 of the Florida Statutes, and there are of course other statutory provisions which often come into play in trust planning in Florida.  Here’s a link to Chapter 736 for you:

As I’ve discussed previously, a trust is a private agreement and arrangement covering your property, whereby you designate a fiduciary to legally own title to, manage, invest, protect, and distribution your property, for the benefit of yourself or others.  Trusts are effective immediately unless otherwise specified, and hence can be used to supplant or supplement the use of a DPOA or Guardianship of the Property.

The question then becomes: “How do the DPOA, Guardianship of the Property, and Trust laws work together in a particular planning case?”

Answering that question is going to require some discussion, so I’m going to stop here for this time, and continue next time to show you in detail how the DPOA, Guardianship of the Property, and Trust instruments and laws interact with one another.

Don’t be a victim of one size fits all planning.  Know your legal rights on estate and elder law planning, and act accordingly!