Power of Attorney Alternative
I advise all of my estate planning clients to have powers of attorney - both financial and medical. If you become incompetent, either temporarily or permanently, someone will need to make financial and medical decisions for you. Even if you are competent, they an be useful to allow family members to access information or handle routine transactions. (Recently, I have been preparing many powers of attorney for "kids" heading off to college to allow their parents to speak to college administrators, physicians, etc., on behalf of their children.)
Let's assume Jane's father is getting older and needs some help. Dad could sign a power of attorney naming Jane as his agent. As dad's agent, Jane would have authority to pay his bills. Financial institutions would also be authorized to speak to her if she needed to get information for dad. In addition, unless the power of attorney specifies otherwise, Jane will be authorized to handle most transactions, including those regarding: real estate; financial institutions; stocks and bonds; tangible personal property; safe deposit boxes; insurance and annuities; retirement plans; social security, employment and military service benefits; taxes; claims and litigation; commodities and options; business operations; borrowing; and estates. (Note: even if the power of attorney purports to give Jane the power to handle social security matters and tax matters, the federal government is not obligated to honor a state law power of attorney. Each of these government branches requires its own form for a person to serve as agent.)
There are, of course, many people who could use assistance for reasons other than aging or convenience, such as people with disabilities. They want to make their own decisions, but could use advice and input from a trusted friend or family member. If you have ever tried to help someone by speaking to a bank or doctor's office for them, you know no one is allowed to speak to you.
In response to this situation, in February Illinois joined several other states in passing the "Supported Decision-Making Agreement Act." The Act creates a new document that can be used by persons with "intellectual or developmental disabilities."
The Supported Decision-Making Agreement ("SDMA") provides:
My supporter is not allowed to make decisions for me. To help me with my decisions, my supporter may:
(1) help me access, collect, or obtain information that is relevant to a decision, including medical, psychological, financial, educational, housing, and treatment records;
(2) help me understand my options so that I can make an informed decision; and
(3) help me communicate my decision to appropriate persons.
"Intellectual disabilities" is not defined in the Act, but could include early dementia, alzheimers or other illnesses that affect cognitive ability. Therefore, SDMAs can be an alternative to a power of attorney for the elderly. For example, if your father has a care giver who takes him the doctor or the bank, the SDMA can allow the care giver to receive information but not allow him/her to make decisions. This would allow your father to receive help without the risk of theft that can happen with a power of attorney. However, the SDMA will not be useful if your father becomes incapacitated. For that reason, he should also have financial and health care powers of attorney, presumably naming someone other than his care giver.
This article is for informational and educational purposes only and does not constitute legal advice.