Making Critical Decisions for a Child with Special Needs: What Happens When Parents Are

Making Critical Decisions for a Child with Special Needs: What Happens When Parents Are out of the Picture?

Who will make important decisions for—or with—your child with special needs when you are no longer able to do so? Flexible legal and institutional mechanisms offer practical solutions to this difficult question.However, choosing the best option depends upon several factors.

First of all, is the child competent to make decisions about basic financial and health-care matters, with or without parental assistance, at the time the legal strategy choice is to be made? If so, the legal path is generally to have the child grant a power of attorney (POA) today to a trusted individual to make decisions in the future, should the child become incompetent. (Ifthe child is not competent today, the basic alternative is a court-approved guardianship arrangement.)

A basic POA gives legal authority to a person, called the "agent" or the "attorney-in-fact," to make decisions on behalf of another person,called the "principal" (in this case, the person with special needs). But unless the power of attorney is "durable," it automatically ceases upon the incapacity of the principal, which typically would defeat its purpose.

A durable POA remains in effect—and indeed begins to serve its primary intended purpose—upon the incapacity of the principal. A durable POA can be created specifically for health care matters. This is commonly referred to as a "health care proxy" or "health care power of attorney."

Advantages of Durable POAs

Durable POAs(not just those involvinghealth-care issues)have several important advantages overguardianship arrangements. They:

• can be broad or narrow ascircumstances demand;

• can be implemented quickly andinexpensively, but may also be revokedat any time;

• do not result in a judicialdeclaration of incompetency,

• do not require the transfer orre-titling of property; and

• Should a guardian ultimately be required,the agent can nominate a guardian of aperson (orproperty) through the powergranted by a POA.Gifting,or taking those steps necessary toensure that the person with a disability orother special needqualifies for needs-basedgovernment benefits (such as SupplementalSecurity Income andMedicaid), can beeffectuated with much more certainty withdurable POAs than withguardianships.

"Springing" durable POA

A “springing” durable POA becomes effective not immediately upon signing, but when some future event happens,such as the principal's incapacity. There can be a downsideto “springing” provisions. If, for example,the agent wants to access a bankaccount, you may have to prove to the bank's satisfaction that the principal lacks capacity to makedecisions.

Other considerations

How detailed should you make your POA? It may beself- defeating to limit the scope of the POA because inevitablysome twist on things comes up thatyou didn’t anticipate.You might wind up tying the hands of the person whosejudgmentyou’re trusting to exercise.

On the other hand, overly general POA documentscan lead to unintended consequences. Many financial institutions and third parties are not willing toaccept general statements of "you can do anything I can do." Theymay in fact be looking for the exact things a person can or cannot do. It should also be kept in mind that the IRS, in dealingwith financial decisions, may invalidate transactions based onoverly general POA documents.

In any event, many attorneys recommend creating distinct POAagreements for financial andhealth-care decisions. And within thescope of health-care decision-making, different durable POAs maybe appropriate for general health-care decisions, versus so-called“end-of-life”decisions, as expressed in “living will” documents.

POAs should be drafted with sensitivityto variations in state law(which generally governs these matters),as well as different courts’ legal philosophies. Case law—that is, legal precedents as established by the outcome of former cases—is what often determines the court’sopinion on these issues.

Who should be the agent?

Typically,the best agent is a family member. In some situations, a principalmay want to designate two agents, andrequire thatthey both concur on key decisions.That provides a check and balance. The downside, however, is that decision-making may be more difficult.

Successor POA Agents

POA documents should provide for asuccessor agent as a back-up should theprimary agent be unavailable to serve atthe moment of need.Again, a family member may be the best choice.Alternatively, a health-care institution such as a nursing home may be given decision-making authority—some even demand it. In other situations,attorneys will take on the role. An institutionalalternative, the community trust(which typically handles guardianshiprelationships), can also sometimes be designatedfor POA powers.

Whoever the agent may be, POA agreementsmust be reviewed regularly—at leastevery twoyears. Lawschange. The person’s life or circumstances could change. The person chosen as agentmight not be the same person they’d wanttoday. An experienced lawyer can help you make the best decisions with respect to both the original draft and future revisions.

The information provided is not written or intended as specific tax or legal advice and may not be relied on for the purposes of avoiding any Federal tax penalties. MassMutual, its employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

(1)The Chartered Special Needs Consultant (ChSNC®) - a professional designation awarded to those individuals who've completed 120 hours of academic classes in addition to holding either Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC) or Certified Financial Planner (CFP) designations and previously completing the Special Care Planner certification program. The ChSNC designation was developed by The American College in Bryn Mawr, Pennsylvania. The certification program and the professional designation evolved from MassMutual's SpecialCare(SM) Program.

(2)“Local sales agencies are not subsidiaries of MassMutual or its affiliated companies.”

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