Potential Conflicts with Powers of Attorney

Understanding Durable Powers of Attorney

A durable power of attorney for financial decisions (“DPOAFD”) is an instrument in which you authorize a third party (known as an “Attorney in fact”) to manage your finances. Generally, these types of documents are drafted so that they do not become effective until you are incapacitated. A durable power of attorney for health care decisions (“DPOAHCD”) is a valuable estate planning device which nominates a person (known as a “Healthcare Agent”) to make medical decisions for you when you are no longer able to do so. While many people designate the same person to serve in both positions, this is not required and may not necessarily be the most appropriate arrangement.

Should you use the same person for both DPO’s?

An article by Attorney Josh Ard published in the July 2018 edition of the National Academy of Elder Law Attorneys raises an interesting concern about potential conflicts when you have designated different persons to serve as your Attorney in fact and Healthcare Agent. While the Healthcare Agent is the one who makes the health care decisions, the Attorney in fact is the one who needs to pay for the healthcare. If the two disagree, there could be significant problems. For example, suppose your Healthcare Agent decides that you need 24-hour care at home, but your Attorney in fact thinks a nursing home is the best option and refuses to pay for the at-home care. Any disagreements would have to be settled by a court, which will take time and drain your assets in the process.

If you pick different people for both roles, then you should think about selecting people who can get along and work well together. We also recommend you candidly discuss with both agents your wishes for medical care in hopes they will both be on the same page. Attorney Ard also has an excellent suggestion about language that your attorney can include in the DPOAHCD which provides that “if it seems reasonable that a choice will have financial consequences, I urge my [Healthcare Agent] to confer with my financial agent before making a decision if this is at all practicable.” Language to consider in the DPOAFD would provide “my agent must honor any financial commitments based on decision made by my [Healthcare Agent]. In the event of such a conflict, he also recommends incluision of language which would require the parties to seek mediation. Alternatively, you should consider including language in both documents which nominates a third party who has the authority to settlement such disputes.

Unfortunately, these types of situations can easily arise and your family will be happy that you had the foresight to take reasonable precautions to quickly resolves these types of issues.

For more than 30 years, Attorney Lee A. Drizin has practiced in the areas of estate planning, probate, trusts, guardianship and real estate matters representing clients throughout the state of Nevada.

Drizin Law is providing this information for educational purposes only. It should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. This information is based on general principles of Nevada law at the time it was created and you should be aware laws frequently change. Moreover, the laws affecting you may differ depending on the circumstances. You should consult with a qualified attorney in your own state or jurisdiction concerning your particular situation. Review of this information does not create an attorney-client relationship.

Join us Tuesday, July 18, 2023 from 12:00 p.m. – 1:00 p.m. for our Powers of Attorney CE course. Click the link for more details.