A different kind of graduation present

Congratulations! It’s graduation season!

Before you get too misty-eyed wondering when your baby turned into the lovely young woman or man standing on stage getting a diploma, you may want to consider a different kind of graduation present for the new graduate.

An estate plan.

The hard, cold reality is that once your child turns 18, you have no legal right to access your child’s medical, financial or academic information unless your child has given you such powers in writing. If your child does not have a Durable Power of Attorney (DPOA), Health Care Proxy (HCP) and HIPAA Release granting such powers over such information, you may have a crisis on your hands if your child becomes seriously injured or incapacitated and cannot care for himself.

If your child is seriously injured or decides to study abroad, you would need a DPOA to make sure that his bank account is managed, the lease on his apartment is cancelled, get access to his mail if he forgets to change his address, deal with his car insurance, control his student loans, and otherwise control all those matters which may require his signature. The DPOA would also allow you to bring suit on your child’s behalf if he is seriously injured in an accident and is unable to direct a lawyer. The DPOA also should give explicit authority to access academic records, so that you can deal with the college or university. Without a DPOA, you will need a conservatorship from the Probate Court to manage an incapacitated child’s affairs, which is never a quick-and-easy process due to procedural requirements and the cutbacks in staff at the courthouses.

The HCP and HIPAA Release grant you access to your child’s health and medical insurance information. This access would be crucial if your child is seriously injured and unable to speak for himself. Without that access, you would be forced to seek temporary  guardianship in the Probate Court. Even though Massachusetts has an after-hours emergency system so that there is always a judge on call, precious time can be wasted while trying to get all the paperwork in place for a temporary guardianship.

And if (God forbid!) your child should die, having a basic will which nominates you as personal representative of his estate and leaves specific direction about to whom he may want to give his possessions.

The cost of a basic estate plan is usually modest, and well worth the peace of mind which it will give you once you drop off your child this fall at his dorm.

Are you sure you want to be a fiduciary?

I regularly counsel my clients to be careful about who they name as fiduciaries — personal representatives, trustees, attorneys-in-fact and health care agents. Many reflexively name a spouse. Some of my clients want to name their oldest child, thinking that this is “naturally” the role for that person. Others may want to name their favorite son or daughter.

Naming someone as your fiduciary is not doing them any favors — you are asking a loved one to take on what may be an time-consuming, thankless task — usually for no pay. I always tell my clients to talk to that person long before they ever sign the documents to be sure they are willing to take on the job.

I’ve learned from experience that sometimes does not happen.

Every estate planning and elder law attorney will sooner or later have a case where a named fiduciary elder turns out to be unsuitable for the task or simply did not want the job. That’s one reason why well-drafted estate planning documents name back-up fiduciaries. So what if you’re one of those reluctant or unwilling fiduciaries?

First,do you have difficult feelings about the person naming you? Be honest about this. No matter how well equipped you may be to handle the mechanics of the job, you may not be the right person if you harbor significant anger or resentment. This is particularly an issue where the person is still alive and you will have ongoing contact with him — for example where there is a familial history of alcoholism or emotional abuse by the parent. There is nothing shameful about admitting that you’re just not the right person for the job. Give yourself permission to say “no” if you believe you will not be able to remove your unresolved feelings from the tax at hand.

Second, understand what is being asked of you. Ask to see the document naming you as fiduciary and read it. Can you candidly say that you understand the demands which will be made of you? Do you have a good, unemotional, understanding of your parent’s situation and what the future may hold for her? Do you have the time and energy to do the job properly? If you understand the task and are truly able to do it, are you willing to identify and  delegate tasks to appropriate helpers?  Will you consult paid professionals to provide you with guidance and service as appropriate?

If you learn that a relative is thinking about estate planning, discuss your thoughts with her about who would be an appropriate fiduciary for them. If you don’t think you’re up for the task, say so. If there is no back-up and the relative no longer has capacity to nominate a new fiduciary, you may need to go to court to ask that someone else be named in your place.

Estate Plan Messes — Naming the Wrong Fiduciaries

A fiduciary is someone you’ve placed in a position of trust to act on your behalf. In estate planning, the fiduciaries are the executor (or personal representative) of your will, the trustee of your trust, the attorney-in-fact for your power of attorney, and your health care agent for your health care proxy.

Most of the time, my clients want to name one or more of their children as their fiduciary. They come in thinking that “Joe” should be a fiduciary because he is the oldest or the child holding the “most important” job or some other reason. I tell the client two important things. First, being a fiduciary is usually a thankless job — and it can be a JOB. There is no honor or glory in running from one bank to another to close out accounts or paying the bills or getting a house cleaned out and sold. It takes time, energy and organizational skills. The client needs to be sure that the proposed fiduciary is cut out for the job.

The second thing I tell — or ask — the client is how well does Joe handle his own money? Does he have a drinking problem? Can he hold down a job? A good fiduciary needs to have good character. If Joe is not responsible in his own life, the client shouldn’t assume that Joe will somehow be more careful with the client’s affairs.