This Could Get Interesting

The Michigan Supreme Court is considering a case involving the issue of a medical provider and Michigan law regarding surrogate decision-making. Specifically, Margaret Roush was a resident of the Laurel’s of Carson City, a skilled nursing facility. Click here for Court of Appeals decision.

Ms. Roush had nominated a patient advocate. On October 24, 2012, that nominated patient advocate agreed that Ms. Roush should remain in the facility’s care. However, a dispute arose as to whether that nominated patient advocate’s authority had been properly invoked (that is, whether two doctors had certified Ms. Roush unable to make her own decisions). The resulting retention of Ms. Roush continued until November 21. In the intervening period, two doctors did in fact find Ms. Roush unable to participate in her decision making, but additional medical evidence was also produced to support the proposition that Ms. Roush was capable of making her own decisions; and, importantly, on November 12, Ms. Roush formally revoked the existing patient advocate designation.

Ms. Roush was ultimately allowed to leave the facility, and died a short time later in her home.

The facility was sued for false imprisonment and intentional infliction of emotional distress, among other things, which claims arose out of the period during which Ms. Roush was forced to remain in the facility after the dispute arose, and after she revoked the patient advocate designation. The case was dismissed at trial court on summary disposition in favor of the facility/defendant. The Court of Appeals, in its unpublished decision, reversed the trial court, finding that sufficient questions remained to preclude summary disposition to the defendant. The Michigan Supreme Court is now considering whether or not it will review the decision of the Court of Appeals.

Wherever it goes from here, if nothing else, this case reminds healthcare providers of the sticky situations they can find themselves in when the laws regarding surrogate decision-making are not carefully adhered to. A few years back, many nursing homes were cited for failing to use the proper procedure to rely on a patient advocate’s direction. That is, they were commonly deferring to nominated patient advocates for medical decision-making, before and without having two doctors formally certify the patient as unable to make their own decisions. And all of this falls within a long history of the medical community refusing to accept the technicalities of the legal process whereby one person can make decisions about the care of another (surrogate decision-making).


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The End of Life Tar Pit

I had the most amazing client interview the other day.  A retired attorney in a lockdown unit at an assisted living facility, placed there by his family and against his will.  Perfectly lucid, but deemed to be “unable to make informed decisions” by his doctors – not because he couldn’t understand and articulate his desires, but because the desires he expressed were unacceptable to the listeners: suicide. 

He could explain why he wanted to take his life, and it made sense:  his age, physical limitations, and bleak prospects for quality of life in the future.  I was particularly moved by one of his reasons: having been predeceased by his wife and other family members, he spoke of the possibility – as he said, the “outside chance”  – that he may be reunited with them at death. 

As an estate planner, it is hard not to get trapped in a fascination with the issue of end of life planning.   It is a new concept in the law, and clearly evolving.  Currently only a few states allow assisted suicide. Others states stumble through, as Michigan does, with surrogate decision making laws and guardianships.

Perhaps it is out of our own individual concerns about mortality, and having worked with the aged and infirm long enough to be particularly sensitive to the unpleasantries that often accompany the final phase of life, that estate planners can get so lost in the mire of this area of the law.

At times I think of the role of lawyers in society in terms of a metaphor.  There is a house that humanity resides in.  The dwellers allow only the scientists to go outside and look around, but demand that they come back in and explain that they see the hand of God in nature.  They allow only the lawyers to go into the basement, to inspect and maintain the foundation and utilities.  They demand that the lawyers are able to explain what they see in terms of justice and truth.  The people in the house don’t want to believe that the placement of rocks on which the house was built are the product of randomness – and so the lawyers do their part in keeping the house standing without offending those who dwell there. 

In looking at the way the law handles end of life, I feel this calling most acutely.  Society is faced with an unprecedented issue – we are living longer, but for many, the final years are without quality.  We have a hard time thinking about and talking about quality versus quantity in the context of human life.  So the lawyers struggle with how to explain the rules for ending life, when those rules must supposedly stand on the rocks of justice and truth.

Yes – I am trapped.  But please, don’t pull me out just yet. 

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More Thoughts On Our New Durable Power of Attorney Law

In an earlier post I reported on changes to MCL 700.5501 brought about by Public Act 141 of 2012.  In this post I would like to point out some other intriguing aspects of this law.  A link to the law may be found at in that earlier post of June 12, 2012.

Planners need to be mindful of how these new developments impact planning options by a principal who later becomes incompetent, and the extent to which the documents created may limit the planning tools available to the agent, and the exposure of the agent to liability.

First, and most importantly, section 3(d) provides:

“The attorney-in-fact shall not make a gift of all or any part of the principal’s assets, unless provided for in the durable power of attorney or by judicial order.”

This section addresses one of most difficult issues of FPOA drafting, whether, and to what extent, to authorize an agent to make gifts.  Heretofore the law on this issue was vague. MCL 700.2114 can be extrapolated to mean that an agent may not gift to themselves without express authority, but this new law goes much further, and becomes much more of an obstacle to things like Medicaid planning by an agent.

Commonly, form FPOAs used by too many practitioners will include no expression on gifting, or will include a provision that limits gifting the federal annual exclusion amount.  These documents are likely generated without much discussion or consideration of the important role gifting plays in estate planning, VA benefits planning and Medicaid eligibility planning.  For planners interested in an FPOA that authorizes broad gifting powers, a form of such a document I use is available on the ICLE website forms bank, and as an exhibit in my ICLE book on Medicaid Planning

Where gifting is allowed, it is often best to limit that authority to gifts made in a manner consistent with the principal’s existing estate plan.

That’s not to say that gifting is always a good thing.  For many people, and for many reasons, gifting is not appropriate, and such documents should either remain silent on the issue or expressly preclude gifting by an agent.

Notably, the new law does not address the second leg of this issue, whether an agent can modify a revocable trust created by an incompetent settlor.  One would presume however, that Michigan law would not sanction such actions unless expressly authorized by the document.  Again, see my ICLE form for suggested language.

Another important issue not addressed expressly in the new law is the question: Are transfers from accounts jointly owned between the principal and agent, gifts by the agent?  Presumably if the joint ownership is created by a competent principal, the agent/co-owner’s removal of funds from such an account would not be a violation of the statute because it would not be an act of the agent in their fiduciary capacity.  That is not to say that such action, if taken, and where the agent did not contribute to the account, and/or where the joint ownership was established for convenience purposes, would not be actionable.

Section 2(e of the new law does say however that:

“Unless provided in the durable power of attorney or by judicial order, the attorney-in-fact, while acting as attorney-in-fact, shall not create an account or other asset in joint tenancy between the principal and the attorney-in-fact.”

Also important is section 2(g) of the new law, it provides:

“In the durable power of attorney, the principal may exonerate the attorney-in-fact of any liability to the principal for breach of fiduciary duty except for actions committed by the attorney-in-fact in bad faith or with reckless indifference.”

This section authorizes exculpation of the agent, but with a “bad faith” floor.  The Medicaid planning power of attorney included in my ICLE materials referenced above, provides such exculpation provisions, which planners may want to consider.

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Revised MCL 700.5501 Mandates Acceptance and Other Formalities

The passage of Public Act 141 of 2012 is significant to estate planners in that it requires that an agent appointed under a standard power of attorney for finances (FPOA) to sign an acceptance before acting, and for such documents to be witnessed by two people and notarized.

For planners who have not historically included an acceptance with their financial power of attorneys, they need to start.  For those who have, they need to alter their acceptances to conform to the statutorily required form.  An example of this form can be found at:

Michigan law has long required acceptances for medical power of attorneys/patient advocate designations and this law does not change that.

The law should not impact the validity of existing FPOA’s that have nonconforming acceptances or no acceptances.  Specifically, MCL 700.5501(7) provides that the new requirements are not applicable to documents created before October 1, 2012. Of course, problems may arise in the future with institutions that refuse to accept documents without acceptances.  Accordingly, best practice may be to provide clients using existing FPOA’s with new acceptances, or otherwise make these acceptances available.

There are exceptions for power of attorneys used in business dealings and other unique situations, also described in MCL 700.5501(7).

The new law will be found in EPIC at 700.5501.  It is immediately effective.

To review the legislation, go to:

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