Should your Children have an Estate Plan

Occasionally, during an Estate Planning conference with clients, this question comes up.  As an Estate Planning lawyer, I should probably be more pro-active about suggesting this topic.  As a professional, however, I always feel some discomfort about coming across as just “selling” services or forms.  So, I tend to soft-peddle the selling aspect of my job, and try to focus on the needs of the client.

It is a question that should be addressed in every client relationship

But it is a good question, and one that at some point should be addressed in every client relationship.  Most of my clients have children.  Many of them are yet living at home, or are in school somewhere.  These are the children my question addresses.  Once emancipated, I think the question is an unequivocal yes.  But for children still “living at home,” whether an estate plan is appropriate is dependent on the circumstances.

As long as children are minors, the parent is generally still their legal guardian, and can make most legal and health decisions for them.  However, it often comes as a surprise to parents who are still “footing the bill” for everything for their children, that they no longer have legal rights to many important areas once their child has reached the age of majority (18 in Michigan and in most states).  And more surprisingly to some parents, in some states, their legal rights may be somewhat limited at an earlier age.

The concern here is not usually any kind of adversary relationship with parent and child.  The concern is that third parties will (and in most cases are legally required) to honor the privacy rights of children.  This means that it can be very difficult in some instances to get information, speak to people on behalf of your children, and generally remain “in the loop.”

it often comes as a surprise to parents who are still “footing the bill” for everything for their children, that they no longer have legal rights to many important areas

Particularly when they were away at college, we had our children execute Durable Powers of Attorney and Health Care Designations of Patient Advocate.  There were a number of instances during those times when those documents came in very handy – both for us and for our children.

In some instances, we have also created Trust Agreements for children who have accumulated some financial wealth.  In most cases, this wealth would be either turned back to the parent, or distributed among siblings.

As a general matter, I believe the answer to the question will often be yes, and that the question should almost always be asked as part of the Estate Planning Process.

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The Tools of Estate Planning - The Health Care Durable Power of Attorney

The Michigan Statute authorizing these specialized powers of attorney denominate them as “Healthcare Designations of Patient Advocate.” The previous blog addressed Durable Powers of Attorney, the rationale behind them and the common law and statutory law authorizing them. The Designation of Patient Advocate is a special form of a Durable Power of Attorney which restricts itself to medical and health care issues. For purposes of this blog, I will refer to them as Medical or Health Care Powers of Attorney.

The Medical Power of Attorney is often confused with another similar planning tool, the “Living Will Declaration.” The Living Will Declaration is a self-activating instruction to the Medical Community to take certain, often life-ending, actions. Unlike the Living Will Declaration, which is a direct instruction to the medical community, a Medical Power of Attorney appoints a person as your agent (just like a General Durable Power of Attorney), to act on your behalf in the process of making medical and health care decisions. These powers can range from daily care decisions to the ultimate end of life decision.

A well-drafted Medical Power of Attorney will not only specifically itemize the powers granted, but it will designate the person who has that authority. There is a specific itemized list of powers which may be granted by statute and it is wise drafting to include those statutory powers in the document.

The Medical Power of Attorney statute was passed by the Michigan Legislature in late 1990. Prior to that time, the status of the Power of Attorney in making healthcare decisions was questionable. Michigan had some very unclear statutory treatment of the meaning of “death” and how and when life could be terminated.

The medical and legal community alike embraced the advent of the Medical Power of Attorney Statute.

Unlike a general durable power of attorney, the Michigan Medical Power of Attorney statute requires the written determination by two medical professionals that the patient is unable to meaningfully participate in their own health care decision making process, before the agent is authorized to act.

In April of 2004, certain provisions in the Health Care Portability and Accountability Act (HIPAA) which critically effect these Medical Powers of Attorney became active. HIPAA, among (many) other things, provides that a Medical Provider cannot reveal “Protected Health Information” (PHI) to anyone without the prior, written authorization of the patient.

Obviously, when the patient is not competent, this is not possible. The HIPAA regulations provide for a delegation, in writing, by the patient (obviously prior to their becoming incompetent). It is critical that a Medical Power of Attorney contain HIPAA - compliant provisions.

Hospitals and Legislators offer a “fill-in-the-blank” form of Health Care Designation. In my view, while better than nothing, they leave much to be desired and do not cover with sufficient detail, the important provisions which should be in these documents.

The Medical Power of Attorney is one of the fundamental, important tools of estate planning.

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