today’s class planning for incapacity revocable trusts (pp. 439-440) durable powers of...
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Todays class Planning for incapacity Revocable trusts (pp. 439-440) Durable powers of attorney Advance directives for medical care Disposition of the body 1 Slide 2 Durable powers of attorney pp. 448-449 Powers of attorney terminate upon principals incapacity; durable powers of attorney survive the principals incapacity (though not the principals death) Trustees versus agents under durable powers Trustees can retain powers after settlors death Courts will appoint successor trustees if trustee dies; only principal can provide for successor agents Trustees enjoy broad powers to conduct transactions with the trust property; agents tend to be much more limited (though principal can grant broad powers) Third parties more comfortable dealing with trustees 2 Slide 3 What were the facts in Kurrelmeyer ?, p. 449 Once again, we have children from a first marriage pitted against the wife from a second marriage Kurrelmeyer appointed one of his children and his wife as agents under durable powers of attorney After Kurrelmeyer lost capacity, his wife created a trust for him, with herself and child as co-trustees, and transferred the Clearwater property into the trust Under the trust, the wife had greater rights to the Clearwater property than she would have received per Kurrelmeyers will, and the children had lesser rights 3 Slide 4 In re Estate of Kurrelmeyer Louis First Wife Nancy Louis, Jr. Ellen In re Estate of Kurrelmeyer Supreme Court of Vermont Remainder in Clearwater Life Estate in Clearwater in Trust Martina 4 Slide 5 Did the wife have authority to create a trust? Under traditional agency law, any powers of an agent have to be expressly stated, with terms of appointment construed strictly This court took a more flexible approach, based on the intent of the principal Note the trade-off between ability to benefit the principal and the potential for abuse Courts can err on the side of protecting against abuse by construing the powers very strictly, or they can err on the side of benefiting the principal by construing powers more flexibly, and rely on agent liability to protect against abuse 5 Slide 6 Did the wife have authority to create a trust? Which provisions of the power of attorney suggested the wife could create a trust? In addition, I authorize my said attorney to: (1) execute and deliver any... trust instruments (p.451) The agent also was authorized to add all of my assets deemed appropriate by my said attorney... to any trust of which I am the Donor (p.451) What suggests the wife could not create this particular trust? The power of attorney authorized the making of gifts to members of my family (other than himself or herself) (p.452) Did Kurrelmeyer really contemplate his wife revising his will? 6 Slide 7 Could Kurrelmeyer delegate the power to create a trust? Trusts serve important purposes in estate planning and asset management, and there are not countervailing considerations that would justify a prohibition on delegation of the trust-creation power, as with the power to execute a will (p. 453) But if agents cant execute wills, how can they use trusts to rewrite wills? The court observed that Kurrelmeyer could and did delegate the power to convey any real estate... which I may own 7 Slide 8 Could Kurrelmeyer delegate the power to create a trust? A better way to explain why agents can rewrite wills through their trust-creating power: The prohibition on agents writing or amending a will is rooted in longstanding statutory interpretation that would need legislative revision. But it is not rooted in a powerful public policy against surrogate decisions. Indeed, there will be many cases in which changes in circumstance make a change in estate planning desirable after the principal loses decision- making capacity. 8 Slide 9 Did the wife breach her fiduciary duties as agent? By conveying the Clearwater property to the trust, she gained greater property rights The power of attorney prohibited her from making gifts to herself Fiduciary principles prohibit agents from using their authority for their own benefit except as authorized On the other hand, the wife argued that the conveyance was justified by prudent tax and estate planning objectives In addition, the approval of the co-trustee provided a safeguard against abuse Case remanded for further proceedings on this question 9 Slide 10 What happened on remand? As note 1 indicates, p. 454, the trial court found that the trust carried out Kurrelmeyers intentions, which he had discussed with an estate planning attorney He hadnt executed his intentions because he wasnt sure whom to name as his wifes co-trustee, and he lost his decision-making capacity before resolving the question (too much deliberation can defeat an estate plan) In the trial courts view, the wife was simply carrying out Kurrelmeyers intent (which was to give her the freedom to move out of the Clearwater property) The Vermont Supreme Court upheld the trial courts holding (992 A.2d 316 (Vt. 2010)) 10 Slide 11 Advance directives for health care Treatment directives (i.e., living wills) Specifies treatment in the event of incompetence, usually for life-sustaining treatment decisions. Proxy appointments Designates an agent to make health care decisions for the patient. Hybrid or combined documents Incorporates both of the first two approaches, that is, directs treatment preferences and designates an agent to make substituted decisions. Important to make sure that people share preferences about organ donation with family 11 Slide 12 End-of-life decisions Patient has the right to accept or refuse medical treatment (federal constitutional right, plus state constitutional right and/or state common law right) Even if the treatment is life-sustaining Includes all treatments, whether ventilator, dialysis, antibiotics, or artificial nutrition and hydration Regardless of patients diagnosis and prognosis Survives a patients loss of mental capacity 12 Slide 13 Substitute decisionmaking Look to prior instructions from patient (e.g., advance directive, oral statements, pattern of practice, religious or other moral views) Follow prior instructions if they give clear and convincing evidence of the patients preferences Either preferences with regard to treatment or with regard to surrogate decision maker Note the absence of formalities that weve seen with preferences about the distribution of ones estate 13 Slide 14 Substitute decisionmaking Evidence of the patients wishes is clear and convincing when it is sufficient to persuade the trier of fact that the patient had a firm and settled commitment to decline treatment. OConnor, 531 N.E.2d 607, 613 (N.Y. 1988). 14 Slide 15 Clear and convincing evidence Some states look only at specific evidencespecific evidence Other states (including IN) look at full range of evidence. Some states find that patients prior statements amount to clear and convincing evidence while other states would find the same evidence to be insufficient. 15 Slide 16 Clear and convincing evidence absent Provide treatment (NY before 2010) Defer to the familys wishes (IN, MA, VA) Decide on basis of patients best interests (AZ, MN) Vary the standard depending on the patients prognosis (CA, MI, NJ, NY, PA, WI) These default rules are the medical treatment analogues for intestacy rules Implemented by court decision or statute 16 Slide 17 Indianas living will statute The attending physician shall... certify... that a person is a qualified patient if... The attending physician has diagnosed the patient as having a terminal condition.... Ind. Stat. Ann. 16-36-4-13 17 Slide 18 Indianas living will statute Terminal condition means a condition... from which... there can be no recovery; and death will occur from the terminal condition within a short period of time without the provision of life prolonging procedures. Ind. Stat. Ann. 16-36-4-5 18 Slide 19 Indianas living will statute The living will declaration of a person diagnosed as pregnant by the attending physician has no effect during the persons pregnancy. Ind. Stat. Ann. 16-36-4-8(d) 19 Slide 20 Indianas living will declaration If at any time my attending physician certifies... that (1) I have an incurable... illness, (2) my death will occur within a short time; and (3) the use of life prolonging procedures would serve only to prolong the dying process, I direct that such procedures be withheld or withdrawn.... Ind. Stat. Ann. 16-36-4-10 20 Slide 21 Indianas living will declaration ____I wish to receive artificially supplied nutrition and hydration, even if the effort to sustain life is futile and excessively burdensome to me. ____I do not wish to receive artificially supplied nutrition and hydration, if the effort to sustain life is futile or excessively burdensome to me. ____I [leave] the decision [about artificially supplied nutrition and hydration to my health care proxy]. Ind. Stat. Ann. 16-36-4-10 21 Slide 22 Indianas living will statute A declaration must be substantially in the form set forth in either [the living will declaration or the life prolonging procedures declaration], but the declaration may include additional, specific directions. The invalidity of any additional, specific directions does not affect the validity of the declaration. Ind. Stat. Ann. 16-36-4-9 22 Slide 23 Indianas living will statute This chapter does not impair or supersede any legal right or legal responsibility that any person may have to effect the withholding or withdrawal of life prolonging procedures in any lawful manner. Ind. Stat. Ann. 16-36-4-17(e). 23 Slide 24 Indianas life prolonging procedures declaration [I]f at any time I have an incurable... illness determined to be a terminal condition I request the use of life prolonging procedures that would extend my life. This includes appropriate nutrition and hydration.... Ind. Stat. Ann. 16-36-4-11 24 Slide 25 Indianas living will statute A living wil