One aspect of elder law in Maine involves dealing with the prospect of an elder person who is no longer able to manage their own affairs, including health and financial decisions. These days, people are living longer, which increases the chance that at some point, they will experience a compromise in their physical or mental ability. Ideally, people will put into place advance directives to plan for future challenges. When no plan is in place, family members may have to seek guardianship or conservatorship through the probate court process..
To speak with us about your specific concerns, please contact Nale Law Offices. With offices in Waterville, we assist clients throughout Maine to plan for incapacity, or help a family member who needs assistance.
Advance directives are documents a person signs in advance of declining physical and/or mental capabilities. The Medical Power of Attorney advance directive grants authority to another to act for you regarding health, medical, and end-of-life decisions. A Medical Power of Attorney is especially important to help your family and the probate court process to be appointed Guardian.
By executing this document in advance, you get to choose someone you trust to make decisions that align with your wishes if you become incapable of making your own decisions. The person with authority to make decisions for you is called your agent. The agent’s authority does not take effect unless and until you are incapacitated. You should make sure your chosen agent is willing to serve in that capacity and discuss your wishes with them. Give signed copies of your Medical Power of Attorney to your agent and your primary care physician.
The execution of a Durable Financial Power of Attorney grants the agent, or “attorney-in-fact,” the authority to make legal, financial, and personal decisions for you if you become unable to make them for yourself. Usually, the agent can manage the assets in any way you would be able to, such as to pay bills, withdraw funds from bank accounts, and buy or sell real estate. When you grant an agent authority under a power of attorney, they are legally and ethically obligated to act in your best interest. A person may not perform legal tasks for an incapacitated adult without legal authority.
A financial power of attorney can be made to take effect as soon as it is signed, or not until some triggering event, such as incapacity, takes place. If the financial power of attorney takes effect while you are legally competent, you and the agent can act together, but the agent cannot override your decisions. Your agent can be a close friend or family member, or a professional. You can choose to compensate your agent if you wish, but the terms of compensation should be in writing to avoid confusion. An agent should keep good records of their actions on your behalf and should never commingle their assets with yours. Running all funds through a checking account is an easy and effective way to keep track of income and expenditures.
As long as you remain competent, you can revoke a power of attorney or change agents. This must be done in writing and delivered to the agent; once the agent has received notice, their authority is ended. If not revoked, a durable financial power of attorney remains in effect even after you become incapacitated, which is why elder law attorneys recommend that financial powers of attorney be made durable.
A trust is another type of advance directive. A trust is a legal entity designed to hold and manage assets. One or more persons (the trustee) holds the assets for the benefit of one or more persons called beneficiaries. The person who puts assets in the trust is called the “donor” or the “grantor.” Assets in the trust are owned by the trust, not the trustee.
A significant advantage of a trust is avoiding the probate court process. In a trust that terminates on the death of the donor, any property in the trust prior to donor’s death passes immediately to the beneficiaries by the terms of the trust. Trusts can also be used to protect property from creditors and to help qualify for long-term care benefits such as MaineCare. Because trusts are private documents, only people with a direct interest in the trust have a right to know about trust assets and distributions.
There are several types of trusts. Revocable Trusts are sometimes referred to as “living trusts.” This type of trust is created during your lifetime rather than through your will. With a Revocable Trust, the donor retains complete control over the trust and may amend, revoke, or terminate the trust at any time. The disadvantage of a Revocable Trust is that the trust assets are subject to creditors’ claims and are countable when applying for MaineCare long-term care benefits.
An Irrevocable Trust is created during the life of the donor and generally cannot be changed or amended. Any property placed in the trust can only be distributed by the trustee according to the terms of the trust. The donor can reserve the right to receive income generated from trust assets but gives up the right to take the assets out. An Irrevocable Trust is a popular tool for MaineCare asset preservation planning.
A Testamentary Trust is a trust created in your will. It has no effect until your death and until your will is probated by the court. This type of trust does not avoid probate but can be useful in accomplishing other estate planning goals. For instance, it can be used to provide assets to your surviving spouse in a way that protects them from being used for long term care expenses and ensures those assets will be passed on to your children. Testamentary Trusts can also be used to protect beneficiaries who are not good with money (or who have personal issues that otherwise would put their inheritance at risk) from squandering assets.
Supplemental Needs Trusts can be created during your lifetime or in your will. The purpose of a Supplemental Needs Trust is to enable you to provide for a disabled individual such as a disabled spouse, child, relative or friend. The trustee will oversee the distribution of trust assets to ensure that the beneficiary will not lose eligibility for needed government benefits such as supplemental security income, MaineCare and low-income housing.
Should a person experience incapacity without proper advance directives in place, such as Medical Power of Attorney, Durable Financial Power of Attorney, or a Trust, a person may need to petition the probate court for guardianship and/or conservatorship authority. Often, a spouse or adult child becomes guardian and/or conservator. We help family members at every step of the process of petitioning for guardianship and conservatorship.
The guardianship power granted by the probate court gives an agent authority to act on behalf of the incapacitated person regarding healthcare decision making. The conservatorship power gives an agent authority to act on behalf of the incapacitated person regarding personal, legal, and financial affairs. While this authority is the same as that granted by powers of attorney, it can be more stressful, time-consuming, and expensive to pursue guardianship and conservatorship—so it is best to plan ahead with advance directives whenever possible.
To speak with us about any aspect of planning for the needs of an aging loved one or your own future needs, please contact Nale Law Offices in Waterville. We work with individuals and families throughout Maine.