Financial Planning Insights
6 minute read time
I am going to start this blog on a surprisingly personal and private topic. I have been holding off writing about the need to think about estate planning documents and in particular, powers of attorney. I suppose there are several reasons for that: there is enough fear out there and I certainly don’t want to add to it. And then COVID-19 hit our family.
Our family has seen first-hand the speed and destruction of this virus, experienced the abject sadness of not being with a loved ones that is in the end stage and felt the extreme confusion of making life or death medical decisions without being together in person with a loved one. I’ve been temporarily shocked, emotionally damaged and permanently sobered by this virus. And sadly, it has forced me to want to make sure that others have empowered the right people to make the right decisions for you in this new world.
The important documents anyone should have for a time like this are health care powers of attorney and financial powers of attorney. These have always been important. They allow you to empower someone to make financial or health care decision on your behalf when you cannot communicate your wishes or handle your own affairs. Those situations arise when you cannot physically communicate (for example, you are in a coma) or when you can communicate but lack neurological capacity (for example, those suffering from Alzheimer’s).
I have discussed these documents with hundreds, maybe even thousands of clients. We have discussed how they work, when they are needed and what they do (and don’t do). We have played out numerous scenarios. But I have to admit, if you think about it logically and statistically, these scenarios have fairly narrow application. It is medically infrequent that someone loses the ability to communicate wishes so quickly and unexpectedly that the patient is unable to make his or her own decisions. And then came this virus that progresses with incredible speed from a dry cough to sedation and ventilation--in other words, to a state of being physically unable to communicate.
And here is the challenge. Many of the choices we made in our documents in a pre-coronavirus world may not be the choices we would make now. For example, many of my clients chose to have DNRs (do not resuscitate orders). In the context in which they made those choices, they envisioned a world where oxygen deprivation would have permanent neurological damage, and they rationally chose not to live that way. But that is not really a risk for those in serious conditions with this virus. They are on ventilators. They are receiving oxygen. And there are drugs that have been shown, sporadically, to reverse symptoms. So what do we do with our documents in this new and strange world?
First, it is important to understand the decision making “tools” for health care decisions. One such tool is an advanced directive, sometimes known as a living will. A living will is a communication from you to your doctor. It is what you want the doctor to do in certain circumstances. The reasons people use living wills are two-fold. First, they want control over their own decisions to ensure those decisions are made in the way they want. Second, and in my experience much more important, they want to protect their loved ones from having to make these difficult decisions. The downside of advanced directives is their inflexibility. They contain several “if then” rules; if this happens, then do this. So advanced directives work fine in predictable medical situations, but as referenced above, strongly risk undesired results in unpredictable situations like we are experiencing now.
The other tool is a health care power of attorney. A health care power of attorney is also a communication from you to your doctor. But instead of saying what you want and what the doctor should do, it tells the doctor who you want to make health care decisions. Their weakness is they put the emotional burden on your loved one to make difficult decisions. But their advantage is they allow the decision maker to have the benefit of the best and most recent medical wisdom.
In times like these, where medical information and knowledge is literally changing daily, you should think long and hard about whether you want an advanced directive. It will likely not contemplate what we know about this virus today and it will not contemplate what we know a week from now. The only way to insure your treatment is as informed as it can be in these times of rapid scientific change is to forego the use of an advanced directive and use a health care power of attorney as your sole health care decision making tool.
Traditionally, when clients have chosen health care decision makers, a couple of key attributes have consistently been important. First has been proximity. Being geographically close has typically been one of the most important factors in choosing a decision maker allowing for the ability to monitor your condition and speak face-to-face with doctors. Second has been courage. While loved ones gather in person at the hospital, all bringing affection, passion and opinions, the decision maker must empathize, listen to everyone’s opinion and then be strong enough to fulfill your wishes.
Yet in this new world, it is fair to wonder whether either of those attributes are of primary importance. Proximity does not matter; no one can see the patient or speak face to face with medical professionals. Second, courage matters, but likely matters less when family members are dispersed. What has become of much greater importance is health care knowledge and experience. Given the overwhelming nature of this disease, the stress on the health care system, and the uncertainties about disease progression, the treating health care professionals are less able to provide information to the decision maker. With limited information, the more knowledgeable the decision maker is, the better informed the decision.
While health care decisions are the most important considerations in these times, they are not the only decisions that need to be made in times of incapacity. Financial decisions must be made as well. It is important to ensure that you have empowered someone to make financial decisions for you as well. Again, this decision takes on even more importance in times like these where incapacity happens quickly and the market is so volatile. Not only is it critical that decisions are made that protect (and perhaps save) your life, but that decisions are made to save your lifestyle.
To start where this began, this virus has changed the world. Documents that made sense a month ago should be reviewed to insure they still make sense in this new environment. Lives and lifestyles may depend upon it.
Johnson Financial Group is a privately-held financial services company and marketing name for its subsidiaries Johnson Bank, Johnson Wealth Inc., and Johnson Insurance Services, LLC.
Johnson Financial Group and its advisors do not provide tax advice. You should review your particular circumstances with your independent tax advisor.