SC Lawyer, Jan. 2004, #5. To court or not to court: guardianship/conservatorship or durable power of attorney.

• Author: By Franchelle C. Millender

South Carolina Lawyer

2004.

SC Lawyer, Jan. 2004, #5.

To court or not to court: guardianship/conservatorship or durable power of attorney

South Carolina LawyerJanuary 2004 To court or not to court: guardianship/conservatorship or durable power of attorneyBy Franchelle C. MillenderBecause of the public interest in protecting personal freedom, it is generally thought that less invasive methods of assisting a person with decision-making are preferable to court action. While clients are competent, they can make choices about how they want their affairs handled in the event that they become unable to make decisions regarding their person or their property. These choices may include executing a durable power of attorney for property, executing a health care power of attorney, establishing joint accounts and creating a trust.

When a person is clearly not competent and has not made advance decisions, the options are limited to a court-ordered guardianship and/or conservatorship. Unfortunately, not all clients are clearly competent or clearly incompetent, and, thus, the choices are less clear.

One of the most difficult decisions a lawyer must make is whether a client or potential client is competent. To further complicate matters, the lawyer must also decide whether the person has the degree of competency necessary to carry out a particular act. Most lawyers are at least moderately comfortable with the standard of capacity to make a will, but it is more difficult to determine capacity to execute a durable power of attorney.

A durable power of attorney is a document wherein the principal names an agent to act on the principal's behalf even if the principal becomes mentally incompetent. The principal can give very limited or very broad authority to the agent to make decisions regarding the principal's assets and can also give the agent authority to make health care decisions on behalf of the principal.

South Carolina Code § 62-5-501 authorizes the creation of a durable power of attorney. "Durable" means that the agency relationship and authority to act continue even if the principal becomes incapacitated. The statute requires language evidencing an intent that the authority of the agent is intended to continue even though the principal is physically disabled or mentally incompetent.

South Carolina Code § 62-5-504, adopted in 1992, created a Statutory Health Care Power of Attorney. The statutory form is a "springing power" that becomes effective only upon certification by two licensed physicians, or one licensed physician and the named agent, that the principal is unable to consent.

The South Carolina Court of Appeals in the case of In the Matter of Doris W. Thames, 334 S.C. 564, 544 S.E.2d 854, established that the level of capacity necessary to execute a durable power of attorney is "contractual" capacity and cites Am.Jur.2d for the proposition that "contractual" capacity is the ability "to understand in a reasonable manner the nature of the transaction in which he or she is engaging and to understand its consequences and effect upon his or her rights and interests."

Having a standard is helpful, but how does the practitioner decide if a particular person meets the standard?

Jane Smith walks into your office with a letter from her father's doctor that states, "Fred Smith is not capable of making decisions for himself. He needs a power of attorney." This letter contains contradictory statements. What do you do?

1. Prepare a power of attorney and take it to Fred to sign;

2. prepare a power of attorney and give it to Jane to get it signed;

3. tell Jane to bring her father to see you;

4. tell Jane she must bring a guardianship and/or conservatorship action; or

5. take two aspirins and call Fred's doctor in the morning.

Capacity is a legal decision, not a medical decision. Judges are the ultimate decision makers in this arena. Medical opinions are evidence, as is testimony from psychologists, geriatric care managers, family and friends of the person whose competence is questioned. A lawyer's job is to assemble the facts to establish competence or a lack thereof. If the lawyer believes that the evidence indicates competence, then a durable power of attorney is an appropriate document. If the lawyer believes that the evidence indicates incompetence, then a guardianship, conservatorship or both may be necessary.

This is an arena in which it is easy to err on either side. A lawyer can be too cautious and fail to have a durable power of attorney executed because of concerns about competence and thereby limit planning options for the client and cause the client to bear the cost of court proceedings. This would be answer (d) when the lawyer fails to look beyond the letter from the doctor. Before taking option (d), it would be advisable to take option (e). Make contact with the doctor. What did the doctor mean? The doctor may be able to tell you that Mr. Smith is in the late stages of Alzheimer's disease and cannot distinguish between family members or make any coherent choices, in which case option (d) is the correct answer. More frequently, the doctor will tell you that he or she has treated Mr. Smith for years, and he is getting frail and forgetful but is, in the doctor's opinion, able to make the choices necessary to execute a durable power of attorney. In this case, options (a) or (c) remain the preferences. Both options require a meeting with (1) the person who will be your client, (2) the person for whom you will draft documents, if you decide it is appropriate and (3) the person who will need to communicate his or her choices to you. By the way, person (1), person (2) and person (3) are all the same person. Jane can't decide what Fred wants, only Fred can make these decisions.

On the other hand, a lawyer can be too quick to decide that a client is competent and create a durable power of attorney that results in the client's true wishes being ignored or circumvented. This could be answer (b), which is a very dangerous option. The lawyer prints out his or her standard document, names Jane as the agent and sends Jane off to get it signed.

The lawyer must always identify who is the client. Rule 1.4 of the Rules of Professional Responsibility requires that "A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation." How can a lawyer ethically prepare a legal document for a client to sign without meeting with the client to ascertain his or her wishes and ability to understand the choices made? A power of attorney is not just a form to turn over authority to another person. It is "filled with powers" and, thus, an extremely "powerful" document. The client must understand what he or she is authorizing an agent to do. Does he want his agent to be able to sell his home, change beneficiaries on life insurance policies, give all of his assets away? What level of trust does the client have in the person who is to serve as agent? In our example, how does the lawyer know that Jane did not just arrive in town after a 20-year absence and is trying to pre-empt her two siblings who have been helping daddy handle his affairs for years?

It is important to talk with the client. If Fred is able to come into your office, meet with him there. This is answer (c). While Jane can be included in some of your discussions with Fred, it is important to spend some time alone with Fred in order to assess his ability to make decisions and to determine whether Jane is exerting any power over Fred that might reach the level of "undue influence." Talk to Fred about his family and friends so you can decide whether Fred is able to make the choices required for a durable power of attorney and whether these choices appear reasonable.

With many elderly or disabled clients, traveling to your office is just not physically possible. For instance, the client may be paralyzed and unable to get out of bed. In other situations, it may be physically possible for the client to come in to your office, but because of the client's mental state, it is preferable to meet in the client's home. Frequently, a person in the early stages of dementia or Alzheimer's disease will become disoriented and confused if they must travel to an unfamiliar place and meet with unfamiliar people. The attorney is more likely to find clients better able to participate in the decision-making in their own familiar surroundings. This is answer (a). For economic reasons, the attorney making a house call may wish to take the prepared documents to the meeting. However, it is imperative that the client understand and agree to the documents as proposed. If changes are dictated by discussions with the client, a second trip may be necessary.

Whether you choose answer (a), (c) or (d), in this scenario answer (e) should also be utilized. Fred's doctor has made a determination that he needs legal assistance, so you should take this opportunity to discuss this with the doctor if the doctor will talk with you. New HIPAA (Health Insurance Portability and Accountability Act) regulations are discouraging medical providers from engaging in such discussions, but it is at least worth an attempt. If the doctor has been involved with this client for a long time, he or she may have valuable knowledge about the client and the client's family and support system that will help you more fully represent your client.

Rule 1.14 of the Rules of Professional Conduct gives some guidance to the lawyer who is representing a client under a disability, but it also leaves many issues unresolved. One of the comments to Rule 1.14 gives an example of the need for either a power of attorney or a conservatorship. "Thus, if a disabled client has substantial property that should be sold for the client's benefit, effective completion of the transaction ordinarily requires appointment of a legal representative. In many circumstances, however, appointment of a legal representative may be expensive or traumatic for the client. Evaluation of these considerations is a matter of professional judgment on the lawyer's part."

In each case, the lawyer must gather the facts and make a decision as to which direction to take. If the client has sufficient understanding and if the family is cohesive, a durable power of attorney is certainly the less expensive and less traumatic option. If the person lacks sufficient understanding to make an informed decision or if there is significant friction within the family that could lead to the person being taken advantage of by family members, it may be preferable to bring a conservatorship action and, if needed, a guardianship action, so that the person will have the protection of court supervision.

Franchelle C. Millender is a partner in the firm of Sherrill & Roof, LLP in Columbia, South Carolina.

Copyright (c) 2004 by the South Carolina Bar. All rights reserved. No part of this publication may be reproduced without written permission.