(Fleming & Curti, plc, partner Leigh Bernstein spoke Mayor's Caregiver Education conference sponsored by the Alzheimer's Association Desert Southwest Chapter -- Southern Arizona Region on March 7, 2007. There was simply insufficient time to answer all the written questions submitted, and so she agreed to take the unanswered questions back to our offices and answer them online. Here are the questions, and answers, with some explanation where required. All answers assume Arizona law and programs; while the answers might be accurate in other jurisdictions, we make no promises.)

What can I do if the bank will not honor the power of attorney I have for my parent?
This is a common problem with powers of attorney. Under current Arizona law, there is no way to force a bank, title company, or government official to accept the power of attorney. Remember that even though you are acting appropriately and in your parent's best interests, powers of attorney are frequently utilized by exploiters and thieves--the bank may not be sure that your motivations are proper, or may simply have decided not to spend the energy or time to figure out whether you are using the power properly. In our experience, it is often effective to work up the chain of authority--ask to speak to the branch manager, and if she is not helpful ask that she contact her legal department. If the bank has a customer relations division, you might be able to speak with them. You might even involve an attorney--especially the attorney who originally drafted the power of attorney.

If a relative, not previously involved, comes onto the scene and attempts to take over, can a revocable living trust be contested? What about a conservatorship? A power of attorney?
Yes, all of those legal relationships can be contested. A better question might be how difficult it would be to contest each, and how expensive--because if the legal authority is more expensive and difficult to contest, then as a practical matter it might be more effective. A power of attorney is not usually "challenged" in the courts--as a practical matter, if the contesting family member lets the banks and other entities know that there is an issue, they may be less likely to cooperate with the individual named by the power of attorney, and thus make the "challenge" easier to mount. If the issue is making the agent account for his or her actions using the power of attorney, the person who originally signed the power of attorney can insist on that information and anyone appointed as conservator (of the estate) can demand a similar accounting.

A conservatorship can be contested by filing something with the court involved in the proceedings. That usually means hiring a lawyer, though it is not required. The fact of the conservatorship will mean that there is already a court proceeding, and an attorney will ordinarily have been appointed to represent the subject of the conservatorship, so the framework for a challenge is already in place. It is also necessary for a conservator to account to the court at least once a year, so there will be an annual hearing date by which anyone objecting to the conservator's actions could file an objection. The court does not, however, routinely audit conservatorship accountings or the conservator's actions--if someone wishes to challenge the conservator, they will need to initiate the proceedings to do so.

A trust is not usually monitored by the courts, and so anyone challenging the trustee's actions will probably be required to file a proceeding to do so. The fact that the challenger must initiate a court review probably means that in most cases the trust is the most difficult to contest, but of course the circumstances in each case, including the meaning of the term "contest," will be different.

What is the difference between a "guardian" and a "conservator"?
Not every state makes the same distinction between the two terms, but Arizona uses "conservator" to refer to an individual who has been appointed to manage the money of a minor or an adult needing protection. A "guardian," on the other hand, is someone who has been appointed to make personal, living arrangement and health care decisions for an incapacitated adult or a minor child (assuming, in the case of a child, that the parents are not available to make those decisions). In some other states the terms are used differently, so be careful about terminology outside Arizona.

Is it true that the patient's photograph must be attached to a "pre-hospital medical care directive"?
Arizona is the only state to have adopted the concept of a directive that can be signed by the patient himself or herself, directing the withholding of CPR or other resuscitation measures outside the hospital setting. The Arizona form must be in exactly the language provided by the statute, must be on orange paper (hence it is commonly referred to as "the orange form") and must be signed by the patient, guardian or health care agent, witnessed, and signed by a health care provider. And yes, the form must have a picture attached--or include a physical description that makes it possible for emergency medical workers to ensure they have the correct patient before deciding to forego resuscitation.

What happens to funds in a "Miller" or "Income Cap" trust after the death of the patient?
Arizona, like a lot of other states (but not all of them), requires long-term care Medicaid patients with too much income to establish a special type of trust to qualify for assistance with their care costs. These trusts are usually called "Miller" trusts, and must follow some very specific rules. One of those rules is that upon the death of the patient all money left in the trust must be turned over to the State to be paid toward the Medicaid costs advanced during the patient's life. This is usually not a very large problem, since almost all of the money flowing into the Miller trust during life must immediately be paid back out to the institution where the patient lives--leaving very little in the trust from month to month. Miller trust accounts can, however, build up; when they do, we recommend that the trustee spend excess accumulations on items that will benefit the patient. While the trust can not pay for burial expenses after the patient's death, it is permissible to prepay burial expenses with some of that accumulation during the patient's life--ask an elder law attorney for help with that to make sure that there is no problem with continued Medicaid (ALTCS) eligibility.

What assets can be "taken" in the event that the patient and spouse can no longer afford one spouse's care? Particularly, what about wages of the community spouse, Social Security benefits and both spouse's IRAs and other retirement accounts (like 401(k)s)?
This is actually a very difficult question, and leads to many possible qualifications, exceptions and differing interpretations. Please be very careful to take our advice here as general and not specific to particular circumstances--we hope to give you some direction, but you should contact a qualified elder law attorney for more information before relying or acting on this information.

That said, there are a few general rules that will apply in most cases. Once eligibility for ALTCS (Arizona's long-term care Medicaid program) has been established, the community spouse's income--that is, income in his or her name alone--is not subject to any claims. So the community spouse's wages and Social Security, and any annuity payments (as from a pension or IRA account that has been "annuitized") will not be "taken" by the system. The institutionalized spouse's income, however, will be subject to the "share of cost" calculation that may result in some or even most of the income being paid to the care provider each month.

Retirement accounts pose a different set of issues, however. An IRA or 401(k) which has not yet been annuitized is an available resource for ALTCS eligibility purposes. That means that even the community spouse's retirement account may have to be annuitized before eligibility can be obtained. The good news: although most people believe that it is not permissible to take money from a retirement account before age 59 1/2, there is a special provision that allows annuitization even for younger beneficiaries. More good news: State Retirement and other defined-benefit retirement assets are usually not reachable, since they have no current value and can not be collected unless the employee retires, and ALTCS can not (and does not) require the community spouse to retire just to begin collecting on the account.

My father lives out of state and is in good health. Do I have to wait until his health deteriorates before getting a Power of Attorney?
Absolutely not! In fact, now is the time to talk to him about signing a power of attorney; if he waits until his health is poor, he may also have lost the ability to even give you or anyone else the authority to make decisions on his behalf. Remember that a power of attorney requires the signer to have sufficient competence to understand what is being asked of him or her; if you wait until your father's health deteriorates, you may have no alternative but the guardianship/conservatorship route to secure sufficient legal authority to manage his affairs. For those who are reluctant to give a power of attorney to someone, in most states it is possible to make the power of attorney a "springing" power--so that no authority will be given until a physician certifies incapacity or some other triggering condition is met.

Can I give a power of attorney to my stepdaughter? I have no children of my own.

Yes, you can. There is no requirement that the principal (the person who signs a power of attorney) and the agent have any familial relationship. You can name a stepchild, a trustworthy neighbor, a more distant relative or a professional care manager as your agent. Two things we suggest you watch out for, however:

• In our experience, appointment of non-relatives tends to require more frequent review. In other words, you are somewhat more likely to lose touch with a non-relative than with a child or other close relative--and the relationship is somewhat more likely to strain, as well. Every power of attorney should be reviewed once every three to five years, at least; powers of attorney naming friends, professionals or even step-children should be reviewed more frequently.
• Appointment of an agent who lives out of state, or even out of the country, is not usually a problem. It is relatively easy to transact business long distance by fax, e-mail, overnight delivery and telephone, and of course most of the work of an agent can be accomplished by regular mail. One exception to this general rule: your health care agent may need to be physically available to visit you and assess your condition. That one role calls for someone who either lives nearby or is able to travel when necessary. If that is simply not a possibility, your health care agent should be instructed to hire local care managers if that is what it takes to check on your condition.

Has the "health care power of attorney" ever included mental health powers?

Arizona, like a growing number of other states, permits appointment of a "mental health care" agent to authorize psychiatric treatment. The mental health power of attorney can even provide that it becomes irrevocable during your psychiatric treatment, so that your agent has the authority to admit you to a locked inpatient facility. While this power is very potent, it can also save considerable cost and anguish if you must be treated psychiatrically in connection with future development of a growing dementia, for instance. Arizona permits the mental health care power of attorney to be included in your regular health care power of attorney. If you prefer, they can be two separate documents. Most people will probably name the same agent for both purposes, and it makes good sense to combine the two powers. If you do not include specific mental health powers in your general health care power of attorney, your agent will still have the authority to consent to psychiatric medications and treatment--but not to locked inpatient psychiatric assessment or treatment.

My husband and I have joint checking and savings accounts. Does this give me the important financial rights you recommend?

Yes, but with some limitations. A joint tenancy bank account (and that is probably what you have set up) will allow either joint tenant to write checks, make withdrawals and transfer funds. But if the well spouse on a joint tenancy account should die or become unable to handle finances, the account will not automatically devolve to a new manager. A well-drafted power of attorney can name a backup agent in the event that the primary agent becomes incapable of handling financial matters, and so provides better protection than just joint tenancy accounts. Assuming, however, that your husband has become disabled, the current joint tenancy arrangement will provide adequate authority for the rest of your life. We do not, incidentally, recommend adding your children to your accounts as additional joint tenants--our experience has been that joint tenancy arrangements with children too often become the source of family friction or even financial loss.

How will I know when it is time to seek conservatorship over my husband's estate?

This answer is actually quite simple. Our usual recommendation is not to seek court authority (and oversight) so long as your current arrangements are working. In other words, you will know it is time to secure a conservatorship when you are unable to accomplish something that needs to be done--like selling your home, or making necessary withdrawals from a retirement account. If you have a power of attorney, we predict that the conservatorship route will never be required.

Is divorce from my disabled husband for financial reasons a good or bad idea? (My husband's income is about $12,000 per year.)

We almost never recommend divorce as a solution to the high cost of long-term care for a disabled spouse. In most of the circumstances we see, the community spouse would end up in about the same financial position or even worse condition after a divorce, and the emotional, moral or religious, and financial cost of the divorce is just too high in most close cases. This is a very delicate issue, and requires much personal soul-searching in addition to a hard economic analysis, so you really should get individualized advice before considering the option. We can offer this one piece of relevant advice: if the only consideration is financial, divorce is unlikely to be a good option unless the community spouse brought most of the wealth into the marriage and/or the couple signed a marital property agreement (prenuptial or postnuptial) while both were mentally competent. Please be very careful with this generalized advice, however, and follow up with capable legal counsel to analyze your own situation.

My mother has been diagnosed with dementia and is in an assisted living facility. Can I use my power of attorney to sell her home to pay her bills?

Yes. Please keep good records, and do not mingle her money with your own. Be prepared to show how the money was spent, and that it was for her benefit, even if no one is ever going to ask.

Is it necessary for a husband and wife to have a trust if all their assets are in joint tenancy?

Assuming that the primary concern is the ability of one spouse to manage the couple's assets after the other spouse's diagnosis of dementia, joint tenancy is a suitable (and less expensive) alternative to establishing a living trust. As noted above, however, joint tenancy will not be helpful if the well spouse dies or becomes unable to handle finances; in that case, it may become necessary to go through the conservatorship (and possibly guardianship) process anyway. It is probably a good idea to get good legal advice now, while you are still able to handle finances for both of you--and while your spouse may still retain sufficient capability to at least sign planning documents to take care of the possibility that you might die or become disabled before the death of your spouse.

When one spouse gives power of attorney (both financial and health care) to an adult child, who has begun to utilize the powers, what responsibility does the other spouse have?

There are at least two components to this question. Does the well spouse, who is not using the power of attorney, have any responsibility to monitor the child's actions as agent? Not necessarily, though it could be foolish not to maintain some oversight, since the well spouse's own financial well-being will be affected by the agent's actions. Does the well spouse have any obligation to pay for care of the ill spouse? Yes, though the obligation is not well-defined. Arizona does require spouses to provide financial assistance for one another, but there are few cases deciding exactly what that means. If the agent handling your spouse's funds is behaving in any but the most circumspect of a manner, you would be well advised to seek legal counsel to review your rights and obligations. (Note: the questioner has added an observation about "danger--unlimited funds given to the adult child." This suggests the possibility of improper behavior, or at least a concern about improper behavior, on the part of the agent/child. If that is the case, the spouse or any other concerned family member should seek legal counsel to see what needs to be done to protect the ill spouse and the marital community.)

How do trusts, including revocable living trusts, affect the ALTCS (long-term Medicaid) process?

This is a wonderful question, and surprisingly complex. First, we need to point out that there are a bewildering variety of trusts being used for a complicated range of purposes. Some (like the so-called "Miller" trust) are used precisely to secure ALTCS eligibility, or to maintain eligibility in the face of high income or receipt of funds. Some are not intended to affect eligibility at all, but may inadvertently delay or prevent ALTCS assistance with long-term care costs. The most common type of trust, the joint revocable living trust signed by a husband and wife long before either became ill or even contemplated long-term care costs, may actually benefit the community spouse in a surprising and unintended way. The analysis is complicated, and may not apply in every instance, but the basic point is this: if a couple of modest means establishes a living trust and transfers their home to the trust before ALTCS eligibility is in question, the community spouse may later be able to retain significantly more of the community's assets by simply transferring the home out of the trust. Be careful, please, and do not attempt to effect this result without first having talked with competent legal counsel, as it is very easy to simply make the situation worse rather than better.

How do I get access to a safe deposit box if I am on the account but can not find a key?

Unfortunately, the only answer is to have the box drilled. This process will probably require a fair amount of energy to coordinate arrangements with the bank, and may be expensive. The bank may not permit you to even drill the box if your name is not on the account and your power of attorney does not specifically mention access to safe deposit boxes (there is nothing in the law mandating that result, but in our experience banks are often difficult to deal with regarding safe deposit boxes). This is a good opportunity to advise seniors who do maintain a safe deposit box: please put the key in a place where it can be located, and give your family information not only about the location and contents of the box, but also about the location of the key.

So what legal paperwork does one need to have to deal with one's spouse or parent who has been diagnosed with dementia? A power of attorney? A will? A guardianship or conservatorship order?

A great question to close with. Virtually everyone should sign a health care and a financial power of attorney while still competent, in order to avoid or at least minimize the need for a court proceeding later. Note, however, that the power of attorney is simultaneously the most important and the most dangerous document you can sign--it is literally a license to steal, and we see instances of theft by power of attorney every week in our practice. That said, a power of attorney naming a trusted family member is almost always indicated.

It would also be good to have a will, but it is frankly less important for most people than the power of attorney. If you die without a will, in most cases the cost of administering your estate does not go up and the taxes and other fees do not increase. You have given up the opportunity to designate who will receive your property, but that just means that the default rules ("intestate succession") apply, and you have let the Arizona legislature decide for you. The funny thing is that the legislature probably will get it right--they have provided that you probably intended to leave everything to your spouse, and if you have no spouse then to your children (and grandchildren, if any of your children died before you). There are even provisions in the intestate succession rules to take care of those who die without spouse or any issue. Two important exceptions to what we have said here: if you have a spouse or children with a disability, or children who are not also children of your surviving spouse, the rules of intestate succession are unlikely to work for you, and you need to see to it that you have planned appropriately.

As for guardianship and conservatorship proceedings, you will probably not need to secure court authorization to take care of a spouse in most circumstances. If the person with dementia is your parent, you are more likely to need to go through the court process. But in both of those cases, our advice is usually the same: do not seek court appointment as guardian or conservator unless there are things you need to do that can not be done with the other legal alternatives available to you. Sadly, if your spouse, parent or other loved one has become too demented to handle personal or financial matters, it is probably too late to talk about getting a power of attorney to help avoid the guardianship/conservatorship process.
  

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