Diminished Capacity Planning for Alternative Decision Making. Introduction. Disclaimer 9/9/2016. Charlie Bottenberg Masterson & Bottenberg, LLP

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1 This image cannot currently be displayed. 9/9/2016 Diminished Capacity Planning for Alternative Decision Making Charlie Bottenberg Masterson & Bottenberg, LLP Introduction Background of the Presenter Charlie Bottenberg has a B.A. in Biochemistry, Cell and Molecular Biology from Drake University, his Master of Business Administration from Iowa State University, and his Juris Doctor from Drake University Law School, where he served on the Drake Journal of Agricultural Law and graduated with High Honors. He is a partner at Masterson & Bottenberg, LLP in Waukee, Iowa, where he practices primarily in the areas of Estate Planning, Elder Law & Special Needs Planning. He is the President of the Dallas County Bar Association, serves as the Chair of the Board of Directors for the Waukee Area Chamber of Commerce, is a member of the Iowa Bar Association in the Probate and Real Estate Sections, and serves on several local non profit Boards. Disclaimer Scope All information presented will be specific and exclusive to Iowa law only. Each state has unique and individual laws pertaining to alternate decision making, and terms as well as procedures may vary greatly. No Legal Representation This presentation and related materials is intended only as general information, not specific legal advice. None of the materials presented may be relied upon in making an legal decisions, and no legal representation is undertaken or implied by attending this class. Any and all specific questions should be directed towards your legal advisor. 1

2 Ground Rules Feel free to interrupt me with questions. In the real life scenarios at the end of the presentation, I plan on asking those in the audience for their opinion. Capacity Principal Agent Ward Fiduciary Important Definitions Decision Making Tools Medical Power of Attorney Financial Power of Attorney Guardianship Conservatorship 2

3 Capacity Does the principal have sufficient mental capacity to appreciate the effect of what he is doing. In re Estate of Faris, 159 N.W.2d 417, 420 (Iowa 1968) It is essential to the validity of a contract that the parties thereto possess not only the legal status affording capacity to contract In re Estate of Faris, 159 N.W.2d 417, 420 (Iowa 1968) Power of Attorney Overview 2 types with 2 categories Medical Financial Durable General Medical Power of Attorney When can decisions be made on behalf of the Principal? What decisions can be made on behalf of the Principal? 3

4 Financial Power of Attorney When can decisions be made on behalf of the Principal? What decisions can be made on behalf of the Principal? Financial Power of Attorney Cont. Durable v. General? Other considerations: Co Agents Granting other powers besides the default 4

5 Guardianships Voluntary Less common Used when a potential Ward can understand what they are agreeing to, while also recognizing they have issues making good decisions Involuntary More common How do I Get One? What is the legal standard to obtain a guardianship? Clear and convincing evidence that the potential Ward is: Incompetent Needs the supervisions and protection of a Guardian The appointment of the Guardian is in the best interests of the proposed Ward. 5

6 Incompetency 3 factors: Decisional Capacity Degree of Impairment Functional Capacity Decisional Capacity Defined as a person s ability to understand and make decisions about their needs. What to look for: Does the individual understand what their needs are? Do they understand how to meet those needs? Do they understand the choices available to them and what the effect each choice will have? Impairment This is generally a medical diagnoses of a disability or condition that impacts their decision making ability One whose decision making capacity is so impaired that the person is unable to care for the person s personal safety or to attend to or provide for the necessities for the person such as food, shelter, closing, or medical care without which physical injury or illness may occur. 6

7 Functional Capacity How well an individual can practically meet their needs. For example, an individual understanding that they need to regularly use the restroom is decisional capacity, however that same person who physically cannot get to the restroom lacks functional capacity. 7

8 Conservatorships Same general criteria to establish as a Guardianship Analysis is less concerned with physical aspects and more with ability to manage financial resources. Absent special circumstances, Conservatorships are generally paired with Guardianships Real Life Scenarios Mid 20 s male is in a motorcycle accident No initial ability to communicate No ability to sign a Power of Attorney or consent to a Guardianship/Conservatorship 8

9 Scenario Two Late 70 s female suffers a stroke She seemingly can understand what is being communicated to her, but cannot easily communicate back Daughter wants to help mom out paying bills and make medical decisions Scenario Three Mid 60 s male is diagnosed with Lewy body disease He wants his son or first daughter to help him out and eventually make decisions, but doesn t want his second daughter to have control over him Scenario Four Late 60 s female is having trouble remembering which bills she has paid and which she still needs to pay Several instances of missed bills, along with some being double paid Daughter wants to take over for mom, but mom doesn t trust daughter 9

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