Tag Archive for: power of attorney

Legal Documents for Your College Checklist

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While shopping for extra-long twin sheets and plush mattress pads for your soon-to-be college freshman, consider adding these items to your checklist:

  1. Financial Power of Attorney (POA)
  2. Medical Power of Attorney (MPOA)
  3. Health Insurance Portability & Accountability Act (HIPAA) Authorization

You are probably wondering why your barely-an-adult child needs these documents. Most high school grads have already turned or are about to turn eighteen. When a child turns eighteen, he or she becomes a legal adult. The law considers adult children capable of making their own decisions and permits them full legal privacy. Your rights as legal guardian have ended.

This new legal independence can create hurdles for you and your ability to provide assistance to your adult child. For example, imagine if your child needs medical attention but the doctor refuses to speak to you about your child’s condition because of HIPAA concerns. With a HIPAA authorization, the doctor is allowed to inform you of your child’s condition. Furthermore, what if there are immediate medical decisions that need to be made, but your child is unconscious? If you are the appointed agent under a Medical Power of Attorney, you are able to make those critical and important medical decisions. These documents can be a part of the ultimate care package for your newly-minted young adult.      

Financial Power of Attorney

The first document to add to your college student’s shopping cart is the financial power of attorney (“POA”). In a POA, the principal (your child) appoints an agent (you) to make financial and related decisions or actions on behalf of him or her in the event of need. For example, the POA gives you the authority to continue signing for your child for banking and tax purposes.

Medical Power of Attorney

An MPOA appoints an agent to make medical related decisions on behalf of or for the principal.

HIPAA Authorization

A HIPAA authorization permits doctors and healthcare providers to share health information with a list of individuals authorized by the principal. Otherwise, HIPAA law generally prohibits medical personnel from discussing your adult child’s health information with you.  

Customization Options

Each document can be customized to fit your child’s needs. The powers and decisions given to an agent under the POA and MPOA can be as broad or as limited as the principal specifies. For example, the power to handle tax matters can be granted under the POA while the power to handle digital assets and the content of electronic communications can be withheld. Under the HIPAA authorization, the information authorized to be provided to individuals can be as limited as the principal prefers. Each one of these documents can be drafted to be effective only for a certain period of time, such as for the four years of your child’s college career.

There are countless scenarios in which these documents can be of great help during your child’s journey through adulthood. Without these documents, you may be denied the ability to help your child and be forced to get court approval when time is of the essence. The estate planning attorneys at Farrow-Gillespie Heath Witter LLP can help you check these important documents off your to-do list at an affordable fixed fee. Please contact us for further information.

Amanda Brenner | Farrow-Gillespie & Heath LLP | Estate Planning

Attorney Amanda Brenner’s primary practice areas are estate planning, business formations, and nonprofit organizations. Ms. Brenner graduated from University of Pittsburgh School of Law in 2015.

Revised Durable Power of Attorney Act

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Many sign a Durable Power of Attorney (DPOA) in order to name an agent to handle their finances in case of future illness or incapacity. On November, 1, 2017, the Texas Legislature revised the Texas Durable Power of Attorney Act. The revisions address a frustrating and common problem encountered by Texans attempting to act under a durable power of attorney: third parties (including but especially financial institutions) who reject a valid durable power of attorney with no explanation or request impossible demands. It was not uncommon for a third party to reject a power of attorney and insist that the principal, the maker of a DPOA, execute another “form” provided by the third party. Executing such a form, of course, is not possible when the principal has lost the capacity necessary to execute such a document. The revisions, which apply to all powers of attorney whether executed before or after the revisions, take a “stick and carrot” approach to ensuring third parties recognize durable powers of attorney.

The Carrot

The “carrot” provides that if a durable power of attorney is accepted by a third party “in good faith and without actual knowledge that the durable power of attorney is void, invalid, or terminated, that the agent’s authority is void, invalid or terminated, or that the agent is exceeding or improperly exercising the agent’s authority, the person may rely on the power of attorney and the agent’s authority as if it were genuine, valid, and still in effect.” Put simply, third parties relying on a durable power of attorney in good faith won’t be held liable if that document later turns out to be invalid.

The Stick

The revised Act provides limited circumstances in which a third party may refuse a power of attorney and a time limitation for doing so. It also allows a third party to request a certification from the agent or an attorney’s opinion on any particular power of attorney. The “stick” authorizes the agent of the DPOA to sue any third party who does not timely accept or reject a power of attorney, or who rejects a power of attorney for an improper reason. The agent also is entitled to recover reasonable and necessary attorneys’ fees.

Additional Revisions

The revisions also change the statutory durable power of attorney form in helpful ways, such as utilizing the term “termination” where it once used “revocation,” which clarified that a principal may terminate an agent’s authority without terminating the authority of other agents appointed under a common power of attorney.

The revisions are a result of an endeavor by Real Estate, Probate, and Trust Law (REPTL) Section of the State Bar of Texas. While the revisions are still fairly new, agents under a durable power of attorney can act with confidence that third parties will accept a valid power of attorney.

If you or someone you know has had problems with persons, third parties, or companies accepting a power of attorney, an experienced probate attorney can assist. These situations can often be resolved without the necessity of a lawsuit.

Ryan Sellers’s primary practice areas are probate litigation, guardianship litigation, and probate law. Mr. Sellers joined the firm from his solo practice in Hurst, Texas, where he represented individuals and businesses in a wide variety of civil disputes. He graduated from Baylor Law School in 2014, where he was a member of the Baylor Barrister Society.

Estate Planning | Farrow-Gillespie & Heath | Dallas, TX

Capacity to Sign

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Estate Planning | Farrow-Gillespie & Heath | Dallas, TXDifferent legal actions require different levels of mental capacity to be valid. For example, the level of mental capacity required to sign a will, referred to as “testamentary capacity,” is lower than the level of capacity required to sign a contract, called “contractual capacity.” The various standards are discussed below.

Capacity to Sign a Will – Testamentary Capacity

To have testamentary capacity, the will signer must satisfy five requirements. First, the signer must understand the business in which they are engaged.  Second, the signer must understand the effects of making a will. Third, the signer must understand the general nature and extent of their own property. Fourth, the signer must know to whom their property should pass or is likely to pass. And fifth, the signer must be able to collect all of this information in their mind at once and understand the how it all connects. They also must not suffer from an “insane delusion” that affects the will, nor be under undue influence from an outside party.

A person signing a will may do so during a lucid interval (sometimes also known as a “moment of clarity”), which is a time of mental capacity that is both preceded and followed by periods of mental incapacity. As long as the signing occurs during this lucid interval, the person has capacity to execute the document at issue.

Testamentary capacity must be proven only if the will is challenged by someone during the probate process. The party seeking to uphold the will (the will proponent) is the party who must prove that the testator did, in fact, have capacity at the time of the will signing. To guard against claims to the contrary, the estate planning attorney should be certain that the testator has capacity at signing, and should not allow someone with questionable capacity to execute a will.

Capacity for Other Legal Arrangements

In contrast to testamentary capacity, the standard for legally signing other documents is generally higher.

Contractual Capacity

Contractual capacity is the mental capacity required to validly execute a contract. Contractual capacity requires that the contracting person appreciates the effects of the act of signing the contract, and understands the nature and consequences of signing the contract as well as the business that they are conducting.

Power of Attorney

Although not entirely clear under Texas law, proper execution of a power of attorney probably requires contractual capacity. The reason is that the POA is valid during the signer’s lifetime and can have a profound effect on business and financial transactions.

Donative Capacity

Donative capacity, or the capacity to make a gift, is an elusive concept in Texas, but other states require something that appears to be higher than contractual capacity. Common requirements are that the donor of the gift must understand the nature and purpose of the gift, the kind and amount of property given, who is a reasonable recipient of the gift, and the effect the gift will have on the donor. Some states go so far as to require that the donor understand that the gift is irrevocable and that it will reduce the donor’s own assets.

Health Care Decisions

The capacity required to make health care decisions is more than mere mental capacity. Patients must give “informed consent” to all health care procedures, which requires that the patient be competent and that the consent be given voluntarily. The consent is informed when the health care provider gives the patient the information the patient needs to make the right choice.

The Effect of a Lack of Capacity

If a person does not meet the requisite mental capacity requirements when he or she enters into a legal arrangement, the arrangement and its supporting documents are generally void and unenforceable. Third parties can challenge these documents if they believed the person lacked capacity when the documents were signed. For a will, that means bringing a contest during the probate process.

Read More:
  • Michael H. Wald, The Ethics of Capacity, 77 Tex. B.J. 975 (2014).
  • Rudersdorf v. Bowers, 112 SW2d 784, 789 (Tex. Civ. App.—Galveston, 1938).
  • Tieken v. Midwestern State Univ., 912 SW2d 878, 882 (Tex. App.—Fort Worth, 1995).

Catherine Parsley was an intern at Farrow-Gillespie Heath Witter, LLP in 2017. Catherine served as a judicial extern for Chief Justice Nathan L. Hecht, of the Supreme Court of Texas.  She holds a B.S. in communications studies, cum laude, from the University of Texas at Austin.

Christian Kelso | Farrow-Gillespie & Heath LLP | Dallas, TX

Christian S. Kelso, Esq. is a partner at Farrow-Gillespie Heath Witter LLP. He draws on both personal and professional experience when counseling clients on issues related to estate planning, wealth preservation and transfer, probate, tax, and transactional corporate law. He earned a J.D. and LL.M. in taxation from SMU Dedman School of Law.

Jennifer Lewis | Farrow-Gillespie & Heath LLP | Dallas, TX

What do “Basic” Estate Planning Documents Include?

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Even if an estate is not large enough to be subject to the Federal Estate Tax — and most are not — estate planning is a component of an organized and responsible life.

Good estate planning enables a person to transfer his or her property at death in the fastest, easiest, least expensive manner possible; and it also enables a person to take advantage of the powers granted by the state of Texas to make healthcare choices and to plan appropriately for disability, whether temporary or permanent.

Your loved ones will be grateful to you for leaving your affairs in order. Completing these estate planning documents can provide peace of mind for you and your family.

We prepare the following basic estate planning documents at an affordable fixed fee for individuals and families with estates valued at less than the federal estate tax threshold.

  1. Last Will and Testament, validly prepared and executed under Texas law
  2. Statutory Durable Power of Attorney
  3. Medical Power of Attorney
  4. HIPAA Authorization
  5. Directive to Physicians (often called a Living Will)
  6. Appointment of Guardian for Minor Children
  7. Designation of Guardian Before Need Arises
  8. Burial Instructions

The Will

Every adult who has legal capacity has the authority to designate how his or her assets and liabilities will be distributed at the time of death. To protect that right, the state requires that a Will be properly executed to be considered valid. A valid Texas will can name an Independent Executor to serve without bond and with minimal court supervision. Probate is the legal process of proving the Will in court, settling the estate, and distributing the assets. In Texas the cost of probating a Will is very reasonable. Probate can be very expensive, however, if an individual has assets and dies without a valid Will. Executing a valid Texas Will can go a long way toward preserving your assets for the intended beneficiaries.

Statutory Durable Power of Attorney

The Texas Statutory Durable Power of Attorney is a document that allows you to designate someone to manage your financial affairs or transact business on your behalf in the event it should become necessary or convenient. The powers granted in the document can become effective immediately, or can be designated to become effective only if you become incapacitated. In either case, the powers will remain effective even after your incapacity – hence the use of the word “durable.” This document can be very powerful. The state of Texas has provided a statutory format to be used to help improve acceptance of the document by third parties. Without a Statutory Durable Power of Attorney, a Guardianship would likely be required to take over an incapacitated person’s financial affairs. Guardianships require continuing oversight by the Court, are very expensive, and open a person’s private business to public scrutiny. Having a Texas Statutory Durable Power of Attorney is the estate planning equivalent of a “stitch in time.”

Medical Power of Attorney

The Medical Power of Attorney allows you to designate the person who will make your healthcare decisions in the event you are unable to do so – and only in that event. This document is always important to have. It is particularly valuable where someone other than a spouse will be making those decisions, or when members of a family have differing views of what should happen. If you remember the case of Terry Schiavo in Florida, you should be aware that if she had only executed a Medical Power of Attorney – whether in favor of her husband or her parents – those parties would not have spent the 15 years and untold amounts of money they ultimately spent fighting in court over control of her healthcare decisions.

Directive to Physicians

The Directive to Physicians is sometimes called a Living Will. It allows an individual to decide in advance if he or she wishes to have artificial measures used to sustain life when the person is near death. Many people do not wish to be kept alive by means of artificial respirators or feeding tubes if they are not able to sustain life on their own. Without a Directive to Physicians the doctors involved may be required to use all measures available to sustain life. Proper execution of this document can help maintain a person’s dignity and preserve assets for loved ones. Most importantly, the document allows you to exert maximum control over what happens to you in the event you are unable to speak for yourself.

Designation of Guardian Before Need Arises

The Designation of Guardian Before Need Arises is a relatively new statutory document in the state of Texas. It allows you to designate in advance who your guardian will be should you ever need one – for example, in the event of a debilitating stroke, or an injury that results in incapacity (in which state individuals sometimes linger for many years). The document also allows you to disqualify certain individuals from ever becoming your guardian. This document can bring peace of mind to the maker, and can assist the court in making a proper guardianship designation if the need ever arises.

Appointment of Guardian for Minor Children

If you have minor children, and both you and their other parent die or become incapacitated, the children will need to be cared for by someone until they reach the age of majority. The Appointment of Guardian for Minor Children allows you to choose who that person should be – whether it is a family member or a friend. In the event you do not designate someone yourself before the need arises, your family members may dispute the matter; and in that case, a court of law would decide who will raise your children. You can avoid that possibility and maintain control over your children’s future by executing a Guardian appointment.

Burial Instructions

It is possible to designate a particular person to be in charge of decisions affecting burial and funeral arrangements; and once designated, that person can enforce the right to do so. Within the same document, you may specify your burial instructions.

Conclusion

The documents discussed above form the basic estate planning package. If the estate is large enough to be taxable, certain complex estate planning documents and techniques can minimize and in some cases eliminate the tax liability. For most of us, however, the bottom line is this: Good advance planning significantly eases the emotional and financial burden of disability and death on our loved ones.

Liza Farrow-GIllespie | Farrow-GIllespie & Heath LLP | Dallas, TX

Power of Attorney Liability

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A person (“agent”) holding a power of attorney for another person (the “principal”) must act with the utmost degree of loyalty to the principal. The agent must avoid being involved in any transaction which benefits, or even which potentially benefits, the agent.

That rule of law was enforced once again in 2015 by the Texas courts in Jordan v. Lyles, No. 12-13-0035-CV, 2015 WL 393791 (Tex. App.–Tyler 2015, no pet. h.).

In that case, the agent used her power of attorney to place a significant portion of the principal’s money into pay-on-death accounts naming the agent as the beneficiary. At the principal’s death, the principal’s other heirs sued the agent for breach of fiduciary duty for moving the money and receiving it at the principal’s death. A Tyler jury found in favor of the heirs, and held the agent liable for breach of fiduciary duty and tortious interference with inheritance rights. The appellate court affirmed the jury’s verdict.

The moral to agents is this: If you conduct or participate in a transaction for the principal that benefits you personally, obtain bulletproof evidence that the principal instructed you to do so. If the principal has lost capacity, it is too late; and unless you obtain the advance approval of all beneficiaries under the principal’s will (or all heirs at law if the principal has no will or has a questionable will), you simply may not do anything with the principal’s property during the remainder of the principal’s lifetime that would be to your benefit.