Modifying Estate Planning Documents for Someone Living with Parkinson’s Disease

Modifying Estate Planning Documents for Someone Living with Parkinson’s Disease

By: Martin M. Shenkman, CPA, MBA, JD

Introduction to Planning and Drafting Documents for PD

If you or a loved one has Parkinson’s disease (PD), every estate planning document, as well as your planning itself (not discussed extensively in this article), should be modified and tailored to reflect your current circumstances and likely disease course.

Naming Fiduciaries When Planning for a Client with PD

Guiding a PD client in selecting fiduciaries is generally similar to the expected planning for any client, with the following special considerations. PD can be a long term illness lasting many decades. Therefore, the age of the agent is important, naming sufficient successors is important, and consideration to using a revocable trust in addition to a durable power of attorney to provide long term professional management of assets to avoid undue imposition on a particular agent, or a lack of sufficient successor agents. Many PD clients reach a stage in the progression of their illness when executive dysfunction becomes problematic. It will become difficult to balance bank statements, make significant decisions, and so forth. Therefore, the provisions to be included in a power and/or revocable trust should be tailored while the PD client has the ability, to provide structure and guidance to an agent and successor trustee should this occur.

Since PD is a steadily deteriorating chronic illness, similar to Alzheimer’s, or Primary Progressive Multiple Sclerosis, an agent under a durable power, or a successor trustee under a living trust, will generally have knowledge of the pending need to serve as the client’s condition worsens, and in advance of taking control of the client’s affairs.


Addressing Handwriting Issues

There are a number of common PD symptoms which can make the PD client’s handwriting difficult to read or illegible. Significantly, handwriting can vary depending on the course of the client’s PD and even depending on the time of day relative to the effect of the various PD medications. Tremors can make writing difficult to read. Bradykinesia can make writing so slow as to impede a productive signing meeting. In addition, micrographia is common. This results in the letters written getting smaller and smaller, and closer and closer together. A PD client’s handwriting may be fine and then as the effectiveness of his or her medications wear off, and prior to being able to take the next dose, micrographia may set in. Signatures may change over the course of a long meeting.

Several steps can be take to address these issues:

  • Schedule extra time for signing meetings.
  • Use special powers of attorney for executing documents at a closing. For example, if stock in a family business will be sold, to facilitate the closing provide in the stock purchase (or other) agreement that the client may be represented by an agent under a power of attorney at the closing and attach the proposed special power as an exhibit to the draft documents, so that it can be approved in advance. Consider using a special power solely for the closing that grants the agent power to do all things necessary for the closing only, and thereafter, lapses.
  • Be cognizant of the skepticism the IRS often shows to transactions consummated under a power of attorney.
  • Create a special affidavit acknowledging the variations in the PD client’s handwriting. This could be used to support the legitimate signing of documents even if writing is quite different. It may also be useful for the PD client to have when signing documents at a bank or other location. The affidavit could indicate the PD client’s name, address and other identifying information, and then explain the PD symptoms that impact handwriting, and how. The affidavit could be signed by the PD client, witnessed and notarized at different times to create a single history of the variation in signatures.
  • If handwriting to execute the many documents required by a more complex plan is difficult and a power of attorney is utilized, consider having the PD client execute a special power for purposes of having a named agent, and perhaps not a beneficiary of the plan, execute the documents to implement that one plan. In that special power expressly state that the power is being executed to facilitate the execution of documents for that transaction solely because of the tremors or bradykinesia of the PD. If the IRS were to challenge the transaction at a later date on the basis that the client was not competent, the corroboration of competency and the specific power used for a specific physical purpose, will differentiate the transaction from many of the estate planning transactions challenged by the Service which the issue of an agent executing documents is raised.

Power of Attorney

Durable powers of attorney for PD clients should also take into account the characteristics of PD. The decision whether or not to use a springing power of attorney warrants special consideration. The problems of triggering a springing power are common to all clients. If a client is insistent on a springing power, even a client with a chronic illness, the power may only have to be triggered once when the level of incapacity reaches a point where an agent has to permanently take over. Thus, a springing power is feasible to use.

As explained above, it may be advantageous for the PD client to occasionally use a special immediate power to facilitate execution of documents for particular transactions even though the PD client is competent and the broad general durable power has not “sprung”.

Compensation provisions should also be tailored to the circumstances of a PD client. For any client with a chronic illness, an agent under a durable power may serve for a long period, perhaps decades. Therefore, it may be appropriate to compensate the agent. Some draftspersons use references to state law compensation for a trustee as a gauge for calculating the agent’s compensation.

Given the long term nature of the assistance a PD client will need, a funded revocable trust should probably be used in addition to relying on the durable power. In such cases the power should be coordinated with the trust, especially if different people are named (e.g. a bank or trust company under the revocable trust and a family member under the power).

Living Wills and Health Care Proxies

Living wills and health care proxies for a PD client will generally be similar for most clients, but do warrant a few considerations.

The PD client may be competent to handle his or her affairs so that an agent’s powers under a health care proxy may not be triggered. However, the presence of bradykenesia, akinesia, or other symptoms, may make it difficult for the PD client to handle some routine medical matters. Therefore, preparing a stand alone HIPAA medical release authorizing an agent to receive medical information, to help the PD client, who continues in control should be considered. There may be no need for the PD client to abrogate decision making, but it might be desirable to permit a spouse, partner, or other family member to monitor medical matters.

The PD client might wish to include an express provision concerning donating brain tissue samples for PD research efforts. The language should be specific enough to assure that the donations will be used for PD research. Even some clients with religious preferences against organ donations may wish to provide for this. In such cases, care should be taken to explicitly acknowledge that although organ and tissue donations are against the client’s religious beliefs, they are intentionally permitting the donations of brain tissue if it can productively be used to advance PD research.

Given the progressive nature of PD, a guardianship designation should be included in the health care proxy (or a separate guardian designation prepared). Some state laws expressly permit this. But at minimum, such a designation provides clear evidence of who the client would want to serve in such capacity if a later court proceeding were necessary to confirm a guardian. If a revocable living trust, durable power, and health proxy are all completed, it may lessen the need for the PD client to ever have to address the issue of a guardianship.

Last Will

The need for the PD client’s family members to include special needs trusts (“SNTs”) to protect the PD client will, as for all clients, vary depending on the circumstances. Many with PD will face devastating financial burdens making SNTs essential in, for example, a spouse’s will for a surviving spouse with PD. However, many with PD, although perhaps less so for those with YOPD, will be diagnosed towards the tail end of their careers, or even in retirement. Therefore, they will have had relatively full and often successful careers. Many with PD may continue working for some time after diagnosis. The typical diagnosis of Parkinson’s which is at ages in the 50s and 60s (other than YOPD which tends to affect those in their 40s), continue their careers long after diagnosis, although they might require some accommodations. This contrasts with other chronic illnesses. For example, Alzheimer’s is typically diagnosed at even older ages and Multiple Sclerosis is typically diagnosed between the ages of 20-50. At these ages many clients with PD have savings, long term disability, and long term care insurance. For these PD clients, a SNT in a parent’s or spouse’s will may not be warranted. However, for the YOPD client, whose career is truncated before substantial savings can be realized, special needs planning may in fact be necessary.

As would be expected, many PD clients with the financial wherewithal will be interested in providing charitable support to the PD center, charities, or other programs that provided them assistance and support. This type of charitable giving should be planned for in a manner that best fits the PD client’s disease course and family responsibilities.

Revocable Living Trust

Revocable trusts are an obvious technique to assist any client with a chronic illness to manage assets. However, as with the durable power of attorney discussed above, there are a few nuances for the PD client. The typical revocable trust is drafted with the grantor as sole trustee. For a client with advanced Parkinson’s it may not be possible for the PD client to serve even as a co-trustee. In advanced stages, the PD client cannot process information. However, the PD client may be best served by a hybrid approach. Naming the PD client as a sole trustee may prove problematic at some future point, but identifying the point on the continuum of symptoms and competency issues at which replacement of the PD client as trustee should occur is not simple. Not naming the PD client as trustee cedes control from a client who often has the capacity to make decisions. Relying on a transition to a successor trustee not only creates the expected issues with triggering the transition (as with a springing power of attorney), but also the complete removal of the PD client as trustee may be unwarranted. A better approach for the PD client might be to have the PD client and another person or institution as co-trustees from inception, with either being granted authority to act independently to take the actions that might be required. The use of an institutional co-trustee of a fully funded revocable living trust may provide the PD client the most involvement and control over his or her finances for as long as possible, without the risks other arrangements may create.

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