Monday, June 9, 2014
Keri L Vanderwarker recently published an article entitled, Beware or be Blindsided: Avoiding Estate Planning Pitfalls, 77 Alb. L. Rev. 271-295 (2013/2014). Provided below is the introduction to the article:
Together, a power of attorney and a health care proxy are two of the most basic and essential estate planning documents for people of any age. Unlike other planning documents, the power of attorney and health care proxy are ―utilized while the client is still alive. Therefore, ensuring these documents provide properly for the client‘s wishes is ―one of the most important functions of an attorney. Through the execution of these two documents, clients provide an agent with the crucial powers needed to make the most personal healthcare and property decisions for a client, seeking to guard against the uncertainties of life.
But, do these documents really protect against such uncertainties? At first blush, it would seem so since that is the documents‘ very purpose. However, recent case law has demonstrated that the operation of these estate planning documents may not be so certain. For example, even if your irrevocable trust prohibits amendments from being made, your attorney-in-fact may be able to make amendments to it. If you are your mother‘s attorney-in-fact and health care agent, you still may not be able to decide in which nursing home she should live. If your attorney-in-fact transfers your real property to himself in accordance with your express wishes, this transfer may still be questioned. In addition, despite a lawyer‘s best efforts to meet a client‘s estate planning goals by using these documents, case law shows that the plan can also be thwarted by a family member‘s dissatisfaction. To address these situations, the lawyer may now need to anticipate the unexpected to protect the client‘s estate plan from unfavorable interpretations and family challenges.
Parts II and III of this note focus on the power of attorney and health care proxy and uses case illustrations to highlight how the operation of these documents has become uncertain. Further, Part IV explores the inherent uncertainty created by third party dissatisfaction and how it can thwart the goals of an estate plan. Part V then discusses implications of these uncertainties and how they can damage the client and the attorney. Finally, Part VI closes with some recommendations on how the estate planning practitioner can predict these potential pitfalls, and eliminate or at least minimize the associated effects.