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Where are Your Papers?
This report is intended to alert you to recently updated Federal rules regarding medical privacy that can directly affect some estate plans. And wait a second, don’t delete this just yet if you don’t have any trusts because these new rules may also affect power of attorney documents, which ... arguably ... everyone should have.
In 2004, new privacy standards were ratified under the Health Insurance Portability and Accountability Act (HIPPA). According to these new rules, doctors aren’t allowed to talk freely about a patient’s medical condition. They can be fined or even jailed for doing so without consent.
Under the new rules, there may be the potential for significant problems for:
· People who have granted someone power of attorney to address their medical and/or financial needs if they are unable to do so themselves; and
· People who have named someone as trustee or successor trustee to a trust.
In many cases, power of attorney documents are written in a way (by choice or by state law) that the power to act on your behalf only “springs” into action upon your incapacitation. Here’s the hitch: if the person you’ve chosen to act on your behalf doesn't have access to your medical records (because of the new HIPPA rules), they can’t prove you’re incapacity, and therefore the power to act on your behalf never “springs” into action.
This creates a similar problem for people with trusts. In the past, it was often written into the trust document that if a doctor deemed the trustee unable to manage the trust, then the trustee would step down. Beneficiaries could count on being able to call the doctor and confirming the information. Under the new HIPPA rules, the doctor can’t provide that information.
Don’t despair, these items can be addressed*. A meeting with your estate planning attorney will help define what needs to be done to address the new rules.
Too often, people follow their good intentions and create these important documents, but don’t follow through with the steps necessary to ensure they serve their purpose. If you haven’t talked with your attorney about this, please make a call sooner rather than later. (0605)
* This report is not intended to be received as legal or tax advice. It is offered only to alert you to an issue that may potentially affect your current estate planning techniques.
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