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Making a strong business case for medical power of attorney

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Remember Terri Schiavo? She was the Florida woman who ended up in a vegetative state after suffering a cardiac arrest, and she lingered for years in a hospital while her husband and parents fought over medical decisions.

Due to the lack of a power of attorney document for health care, her family was unable to resolve their dispute over whether she should be taken off a feeding tube. She was a young woman when tragedy struck, so it probably never occurred to her that naming an agent to make those decisions on her behalf would prevent a protracted legal battle.

As important as medical power of attorney documents are for individuals, they are even more important to business owners. The people who run Madison businesses should draft a tailored POA for health care when they discuss business succession planning, and it should identify one person — with at least one backup — who they trust to carry out their wishes.

“If you are in a position of authority in a business, it’s important to have an updated power of attorney for health care, partly so that if you have a health event that affects your ability to make decisions or perform your duties, there are individuals who can confer with doctors to determine whether you are disabled and unable to perform,” says attorney Greg Monday, a shareholder with Reinhart Boerner Van Deuren.

Here are three business cases for getting things in order beforehand. (Editors note: This article pertains to power of attorney for health care not a financial POA or a special POA for family business interests, two other important documents to consider).

Case #1: Pricy predicament

The lack of a POA is expensive because the family or the business might have to go through guardianship, a costly court proceeding — $3,500 or more — in which an agent is selected for you. “I tell my clients that POAs are more crucial than the disposal of assets because 85% of the population will reach the point where they cannot act for themselves when they are still living,” says attorney Gini Hendrickson of Murphy Desmond.

Selecting the right person to serve as your power of attorney for health care is crucial, according to Maggie Premo, an attorney with Neider and Boucher. In the POA document, Premo says you may designate an agent and backup agent to make medical decisions on your behalf if you are incapacitated and unable to make your own health care decisions. The document should direct the agent to ascertain the client’s wishes for health care decisions, even if communication is limited to blinking the eyes “yes” or “no.”

“If the client is unable to communicate his or her wishes, the agent would use his or her own judgment, hopefully based on prior conversations with the client, to make the health care decision in the client’s stead,” Premo explains.

In terms of the agent’s attributes, Premo cites trust. “Discussions about the end of your life can be scary and awkward, so you should pick someone that you can speak openly and honestly with about the topic,” Premo advises. “This is just as much for you as it is for the agent. If the time comes for your agent to make a decision on your behalf, you will have provided them with confidence and peace of mind if they know they are making the decision you would have wanted them to make.”

Case #2: Certain uncertainty

By failing to address the POA in advance, Monday says the resulting uncertainty is a problem. There are studies that show that when a company loses its CEO, any delay in naming a successor or even an interim successor can cause damage to the company’s performance and value.

“There have been some studies that show there is a direct correlation between the value lost in the business and the amount of time that passes before a new CEO is appointed,” Monday says. “To have a business with a CEO who suffers a health event or accident and for that reason is unable to perform, and a board or the other owners can’t get the information that they need to make that determination and appoint a successor, that can really be harmful to the business.”

Since power of attorney documents are tailored to the individual, another major decision is what triggers a power-of-attorney decision. Some don’t want the power of attorney to apply unless two physicians have determined incapacity. Monday prefers to have the power of attorney apply immediately when the document is signed, but some clients don’t feel comfortable with someone having this power unless they become disabled.

“I have two answers to that,” Monday says. “One is that as long as you have capacity you can revoke the power. If you start to develop concerns that your agent is abusing the power or trying to abuse the power against your wishes, you can revoke that while you have capacity. The second, more powerful argument is that if you’re concerned about somebody abusing the power of attorney while you have full capacity, why would you ever trust him to exercise your power of attorney when you become incapacitated?”

(Continued)

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