Table of Contents

Foreword

Personal Finances:

• Bank Accounts

• Safe Deposit Boxes

• Community and Separate Property

• Social Security

• Medicaid

• Tax Issues

• Homestead and Property Tax Exemptions

• Consumer Protection

• Age Discrimination in Employment

Health Planning:

• Powers of Attorney and Living Wills

• Trusts

• Guardianships

• Mental Illness and Mental Health Commitments

• Services and Residential Alternatives

Planning for Death:

• Funeral Arrangements

• Wills

• Probating Wills and Administration of Estates

Resources for Services & Forms:

• Assistance for Caregivers

• Useful Websites for Seniors

• "Advance Directive", Form

• "Medical Power of Attorney", Form

FOREWORD

As we enter the 21st Century, it is easy to look back and see the many significant social, technological, and medical advances of the past century. One result of these advances has been the great increase in the number of citizens over the age of sixty-five. In earlier generations, sixty-five was retirement age; in future generations, persons sixty-five and older will continue to be healthy and active. In this new century, those over sixty-five will constitute a growing percentage of the population, and their needs will increase and become more varied. 

Inspired by the Elder Law Handbook prepared by the Houston Bar Association's Elder Law Committee, the Tarrant County Bar Association has prepared this handbook to provide citizens of Tarrant County and the surrounding communities with information about issues commonly faced by an aging population. 

The handbook is divided into topics identified in the Table of Contents. Each topic is addressed in a question and answer format. 

This handbook is based on Texas law and is meant to inform, not to advise. This is a general summary of the laws as they existed as of the second edition, but there may be exceptions or changes to the law by the time you read this. Moreover, situations differ, and what is appropriate for one person or family may not be appropriate for another. You should seek the advice of an attorney about your particular situation. Because laws are subject to change by the legislature and to judicial interpretation, this handbook is not intended as a substitute for sound legal advice. 

This handbook was written by the Senior Citizens Committee of the Tarrant County Bar Association. The Association gratefully acknowledges the contributions of the following committee members: John Brookman, Paula Conley, Amy Fuqua, Catherine Goodman, Chandler Grisham, Lisa Jamieson, Roger Jones, Steve Katten, Susan LaMere, Thomas Mastin, Lynn Olinger, Wayne Olsen, Cynthia Williams-Pearson, David Skala, Ann Stevenson, Mike Wade, and Rita Rodriguez Utt. The Association also thanks Tom Clarke of the Social Security Administration, who contributed to the handbook, and Cindy Rankin of the Tarrant County Bar Association staff, who kept everyone organized and shepherded the handbook through publication. A special thanks also to Vickie Rainwater for the difficult task of editing. 

The Association also thanks those sponsors whose contributions made the second printing of this handbook possible. The Tarrant County Area Agency on Aging and the North Central Texas Area Agency on Aging for funding the original printing of the handbook. 

We hope this handbook will provide you with helpful information about the law and about resources for services and support organizations in the community. 

Tarrant County Bar Association
1315 Calhoun Street
Fort Worth, Texas 76102-6504
Phone: (817) 338-4092 * Fax: (817) 335-9238
Winner of the 2001 LexisNexis NABE Community & Educational Outreach Award  

1. If a husband and wife put their wills in a safe deposit box and one spouse dies, can the survivor get the will out of the safe deposit box?

Yes. If a safe deposit box is held in the names of two or more persons jointly, any of the named persons is entitled to access to the box and may remove the contents at any time. The death of one holder of a jointly held safe deposit box does not affect the right of any other holder to have access to and remove the contents from the safe deposit box. Generally, the best place for your will is in your safe deposit box.

2. If I have a safe deposit box in my name only, who can get into the safe deposit box after my death?

The bank should, without a court order, allow the following persons to examine the contents of a safe deposit box in the presence of a bank officer:

A. the surviving spouse;

B. a parent of the deceased;

C. any adult child(ren) or grandchild(ren) of the deceased; and

D. a person named as executor who presents a copy of a document that appears to be the will of the boxholder.

3. If the safe deposit box is in my name only and I die, what items can the persons entitled to examine the box remove?

The bank may deliver the will to the Probate Clerk or to the person named as executor. The deed to a burial plot in which the decedent is to be buried may be given to the person examining the box. A life insurance policy may be delivered to a beneficiary named in the policy. No other items may be removed from the box until court authority is obtained.

4. If I have a safe deposit box in my name only, who can get into the safe deposit box if l become mentally incapacitated?

Using a Power of Attorney, the agent named in your Power of Attorney may be able to gain access to the safe deposit box. Banks are sometimes reluctant to accept a Power of Attorney because of concerns about fraud or theft. A court-appointed guardian of the estate of a mentally incapacitated box owner always has access to the box.

1. What is community property?

Community property is owned equally by spouses. The Texas Constitution defines only separate property. Separate property includes: (1) property owned by a spouse before marriage; (2) property acquired during marriage by gift or inheritance; (3) recoveries from personal injuries while married, except recoveries for loss of earnings; and (4) gifts from one spouse to the other of community property. Community property is all property not defined as separate. One of the most important rules of community property is that upon divorce or the death of one spouse, all property is presumed to be community, unless it is proved to be separate. Specifically, income earned during marriage, whether earned from community or separate property, is presumed to be community property. The burden of proof falls upon the person trying to show that the property is separate. After January 1, 2000, spouses can agree to convert separate property into community property.

2. Are there different types of community property?

Yes. While married, each spouse has the sole right to manage and control the community property that he or she would have owned as a single person, which is referred to as “sole management community property.” This includes, but is not limited to: (1) personal earnings, (2) revenue from separate property, (3) recoveries from personal injuries, and (4) any increases in and all revenue from sole management community property. All other community property is joint community property and is subject to the management and control of both spouses.

3. Is it true that if an asset is in my name alone it is my separate property?

No. Placing title to an asset in only one spouse’s name is not sufficient to make the asset separate property. Again, the property is presumed to be community unless it is proved to be separate.

4. Is my sole management community property liable for my spouse’s debts?

No. A spouse’s sole management community property is not liable for any debts of his or her spouse incurred before they married, or for any contractual liabilities incurred by the spouse during the marriage. The joint community property is generally subject to all liabilities incurred by either spouse before or during marriage.

5. Is my separate property liable for my spouse’s debt?

No. A spouse’s separate property is not subject to the other spouse’s liabilities. Therefore, it is important to keep separate property in a separate bank account and not co-mingled with any community property. If separate property is co-mingled with community property, it is all presumed to be community, unless proved otherwise.

6. How do I make a gift to my spouse?

One spouse may always give to the other spouse property that is his or her separate property, or his or her interest in sole management or joint community property. This property will then become the separate property of the spouse receiving the gift. Both spouses may also agree to divide community property into separate property, with each spouse owning one-half. Further, spouses may agree to designate property, such as bank accounts, as property with right of survivorship, so that the property will pass to the surviving spouse without the necessity of probate.

7. Can one spouse manage the community property if the other spouse is incapacitated?

Yes. A spouse may use a power of attorney for finances to manage an incapacitated spouse’s community property. Texas law provides that when a spouse is judicially declared incapacitated, the other spouse acquires full power to manage and control the entire community estate, without the necessity of a guardianship. However, the competent spouse still owes a fiduciary duty to the incapacitated spouse. This law does not apply to the incapacitated spouse’s separate property. 

1. What is Social Security?

Social Security is a social insurance program. It insures workers and their families against loss of income as a result of retirement, disability, and premature death. A worker obtains this protection by working in a job that is covered by Social Security. The following information is general in nature. You may call Social Security at 1-800-772-1213 for specific information on your eligibility for benefits.

2. What kinds of benefits are available from Social Security?

Although most people think of Social Security as a retirement program, it is actually much more. Social Security also pays disabled workers and the minor children and surviving spouses of deceased workers. The disability and survivors parts of Social Security are a very important part of the program, because 1 in 3 workers will become disabled, and 1 in 6 will die before retirement age.

3. How do I apply for Social Security?

You can apply either by telephone or in person. It is best to set an appointment first by calling Social Security toll free at 1-800-772-1213. You can apply up to 3 months before you are first eligible for benefits.

4. How long do I have to work to be eligible for Social Security benefits.

To receive retirement benefits, a person needs 40 credits, which is 10 years of work. For disability and survivor benefits, the number of credits required varies based on the worker's age. For disability benefits, a person must also have worked recently.

5. How much will I receive from Social Security?

The amount of Social Security benefits is based on the worker's earnings over his whole working lifetime. To receive an estimate of your Social Security benefit amount, you can call Social Security at 1-800-772-1213 and request the Social Security Benefit Statement. The statement will give you an estimate of retirement and disability benefits, as well as an estimate of the benefits your children under 18 could receive if you die.

6. How old do I have to be to receive Social Security retirement benefits?

You must be 62 years old to begin receiving Social Security retirement benefits.

7. My spouse has never worked outside the home. Can he or she receive benefits based on my work?

Yes, at age 62, a husband or wife can receive benefits based on a spouse's work unless he or she is entitled to more based on his or her own work. Also, the worker must be receiving his or her own benefits for the non-working spouse to receive benefits.

8. Will my spouse and children be able to receive benefits if I die?

If a parent who has worked enough under Social Security dies, Social Security will pay benefits to each child until age 18. A child can continue receiving benefits until age 19 if the child is a full-time high school student or, if disabled, until age 22. In addition, widows and widowers can receive Social Security benefits based on a deceased spouse's work at age 60, or at age 50 if the widow or widower becomes disabled within 7 years of the worker's death. Also, widows and widowers can receive benefits at any age if they are caring for a child under 16 who is receiving benefits from the deceased worker.

9. What benefits are available if I become disabled?

Social Security pays monthly benefits to disabled workers and their minor children. To receive Social Security disability benefits, one must be 100% disabled, which means you must be so disabled you cannot do any job.

10. What is SSI?

SSI is an abbreviation for Supplemental Security Income. SSI is not Social Security and is not paid with Social Security taxes. However, the local Social Security offices administer SSI. SSI is a program for persons who are 65 or over or 100% disabled and whose income and resources are limited. In Texas, any person who qualifies for SSI is also eligible for Medicaid. The Texas Department of Human Services administers Medicaid.

11. What if I disagree with a decision the Social Security Administration makes on my application for benefits?

You have the right to appeal a Social Security decision. Social Security has an appeals process. The first step in that process is a reconsideration. You have 60 days from the date of the first decision to request a reconsideration. If you disagree with the reconsideration, you can request a hearing before an administrative law judge. You have 60 days from the date of the reconsideration decision to request the hearing. If you  disagree with the decision of the administrative law judge, you may request Appeal Council review. The last step in the appeal process is a civil suit in federal court.

1. What is Medicaid?

Medicaid is assistance for persons with limited assets and income. The Medicaid program is administered by the Texas Department of Human Resources and the Texas Department of Health. You may be eligible for Medicaid if you are at least 65 years old, blind, or disabled. To qualify, you must meet both income and resource limits discussed below. Medicaid covers most hospital expenses, doctor bills, and home health services. Medicaid will also pay for most skilled nursing care. Under certain circumstances, items such as prescription drugs, hearing aids, and eye-glasses may also be covered.

2. What are the income and resource limits?

To qualify for Medicaid, an individual may not have resources valued over $2,000 or an income above a specified amount. The income limit changes each year, based upon the cost of living. In determining the resource test, certain items are excluded. Among the excluded items are your residence (if you intend to return to your home), an automobile with a value up to $4,500, up to $2,000 of personal property, a pre-paid burial policy, and certain life insurance policies up to a face value of $1,500. If you meet both the income  and resource tests, you qualify for Medicaid assistance at a nursing home.

3. What if I have too much income to meet the qualifications, but not enough income to pay for a nursing home?

Congress has made it possible to qualify for Medicaid if your income is too great, but you otherwise meet the resource test. In 2001, the maximum allowable monthly income is $1,590.00. You must establish a Qualified Income Trust (also referred to as a “Miller Trust”), under which trust income is not treated as such for purposes of meeting the income test. The trust income must be disbursed in a specific manner within one month after receipt: income can be used first for your personal needs, and then for your spouse’s maintenance, if he or she is not in a nursing home; the balance must be paid to the nursing home. The trust must provide that assets in the trust at your death are paid to reimburse the state for Medicaid assistance.

4. Are the rules the same even if I have a spouse at home?

No. Special rules permit a larger amount of income and assets to be used by the spouse remaining at home. Although the rules are somewhat complex, basically a spouse who remains at home may retain the lesser of (1) 50% of the assets owned by the husband or wife, or (2) a fixed dollar amount, which is adjusted annually for inflation. In 2001, the fixed dollar amount is $87,000.

5. Can I give away my property to qualify for Medicaid?

Transfers of property within 3 years of an application for Medicaid benefits are treated as an asset still owned by the applicant. If the transfer is to a trust, the period is 5 years. Therefore, transferring property immediately before applying for Medicaid is of no benefit.

6. Is it worthwhile to transfer the property to my children, have them take care of me for three years, and then apply for Medicaid?

This strategy may make you eligible for Medicaid, but it has a number of potential pitfalls. If you give away your property, you have no control over its use. If your children decide not to use the funds for your benefit, you would have no means to pay for nursing home care, if you should need it. Even if your children intend to take care of you, situations beyond their control may occur. For example, they could be subject to a judgment, which could result in the loss of all of their money, including the amount you transferred to them for nursing home expenses. In addition, there may be gift tax consequence of a substantial gift. The most important pitfall, however, is the total loss of control that you experience when you give away all of your property. Therefore, the decision to give away property in order to qualify for Medicaid benefits in the future should not be undertaken without careful consideration.

1. What is a residential homestead?

A residential homestead is the real property and improvements which, when occupied and maintained as a home by a family or a single adult who is not a member of a family, is protected from foreclosure for the payment of debts EXCEPT for debts secured by liens for (1) purchase money for the homestead; (2) taxes on the property or an IRS tax lien; (3) work and material used in constructing improvements on the property if  contracted for in writing before the work is done or the material is furnished; and (4) home equity loans.

2. What is an urban homestead?

Effective January 1, 2000, an urban homestead may consist of a lot or lots, not exceeding ten acres, in a city, town, or village, together with all improvements.

3. What is a rural homestead?

Effective January 1, 2000, a rural homestead may consist of not more than 200 acres of land and all improvements for a family and not more than 100 acres of land and all improvements for a single adult, that is not located in a city, town, or village.

4. What is a business homestead?

An urban homestead may be a business homestead if it is used as a place of business to provide for a family or a single adult. Effective January 1, 2000, a business homestead may consist of a lot or contiguous lots not exceeding ten acres. An urban homestead and a business homestead must be located within the same urban area. Prior to January 1, 2000, an urban homestead could be used either as a residence or a business. Now a business homestead must also include an urban homestead.

5. How can I obtain an over-65 or homestead exemption for real property taxes on my residential homestead?

Cities, counties, and other political subdivisions may exempt not less than $3,000 of the valuation on residential homesteads for persons over the age of 65, or for the surviving spouses of persons who were 65 or older at the time of death. Political subdivisions may also exempt a percentage of the valuation on residential homesteads, not to exceed 20% and not less than $5,000 ($15,000 for school district property taxes) for a married or unmarried adult. You can obtain an application for an over-65 exemption and for a homestead exemption from your local tax appraisal district.

6. Can I defer payment of real property taxes on my residential homestead?

Texas residents over age 65 can defer the payment of real property taxes on a residential homestead until the property loses its homestead character. During the deferred period, taxes are still due, interest on the taxes accrue, and a tax lien may be imposed on the property, but the tax lien cannot be enforced and a penalty may not be imposed. Senior citizens may transfer current property tax freezes to other homesteads if they move. You can obtain an application for an over-65 tax deferral from your local tax appraisal district.

7. Can I perform community service in lieu of payment of real property taxes on my homestead?

Under certain specified circumstances, cities, counties, and other political subdivisions may permit residents 65 or older to perform community service instead of paying property taxes on the homestead. This is a new law, so check with your local tax appraisal district to determine your eligibility.

8. How can property lose its homestead character?

Property loses its homestead character (1) when the homestead claimant dies and family members no longer occupy the property or (2) when the homestead is abandoned. Abandonment occurs when the homestead claimant has a present, definite, and permanent intent to cease using the property as a homestead. That intent is shown for example, when the homestead is sold or when the claimant designates another homestead.

9. How can I avoid the payment of capital gains taxes when I sell my residence?

There is an allowable exclusion of gain on the sale of a personal residence for persons of any age, which may not be used more frequently than once every two years, if you have owned and occupied a residence for at least two of the five years preceding the sale. Additionally, if you become physically or mentally incapable of self-care (including living in a nursing home), but lived in the residence for 1 year out of the last 5, you still qualify. $250,000 for an individual and $500,000 for a joint return may be excluded in most situations.

10. How does the new home equity law work and what do I need to know?

Under the new home equity law, you may borrow money for any purpose by pledging your homestead. The law protects homeowners with the following requirements: (1) the total of all loan balances against your home may not be more than 80% of the fair market value on your home; (2) the lien may be foreclosed only under a court order; (3) fees to make the loan may not exceed three percent of the loan amount; (4) the loan may close only at the office of the lender, a title company, or an attorney; and (5) the loan may not close until 12 days after you submit a written application for credit. If you do not repay the loan, the lender may foreclose and sell your home. Use caution: you should carefully consider the consequences of borrowing against your home. Do not be pressured to pledge your home for risky business ventures or other endeavors.

1. What is a sweepstakes, a lottery, or a premium?

A legitimate sweepstakes is an advertising or promotional device that awards prizes to participating consumers by chance with no purchase or “entry fee” required. You should never have to pay a fee to enter and win a sweepstakes. The law requires that you have an equal chance of winning whether or not you order anything.  

If you receive a promotion congratulating you on winning a prize, but requiring a shipping and handling fee, the promotion is not a sweepstakes and may be fraudulent. You should never have to pay any fee in order to receive a prize in a sweepstakes. 

A legitimate lottery is a promotional device by which prizes are awarded to members of the public by chance, but which requires some form of payment in order to participate. Lotteries are illegal except when conducted by states and certain exempt charitable organizations.  

A legitimate premium is a gift that companies make available to all recipients who respond according to the company’s instructions. For example, a travel bag you receive with a new magazine subscription or a bottle of perfume you receive with the purchase of a certain dollar amount of products are considered premiums. When everyone who responds to the offer receives the same gift item, and there is no element of chance, the offer is not a sweepstakes. Some examples of premium offers that may be confused with sweepstakes include postcard or other mailings that congratulate you as a recipient of a valuable prize or award such as cash, a car, or a glamorous vacation. Be aware that such promotions may have 900 numbers to call to learn what “prize” or “award” you have won. Remember that calling a 900 number costs money. If you are interested in participating, use the free mail-in option. Calling will not improve your chances of winning.  

BEWARE of fraudulent sweepstakes, lottery, or promotion. Unfortunately, Americans lose about $40 billion each year due to fraudulent sales. These frauds are frequently perpetrated on the elderly. The telemarketers usually portray themselves as polite, friendly young people who are interested in the well-being of the elderly person. A person may be placed on what is known as a “mooch list.” A “mooch list” is a list of names and telephone numbers of likely victims of telemarketing fraud. According to Congress, 56% of the names on the “mooch lists” are aged 50 or older. These lists are sold or transferred from one fraudulent group to another. If you receive a call from one group, don’t be surprised if your phone soon begins ringing off the wall. Fraudulent companies may also attempt to contact you by mail. They use creative and misleading schemes to make you believe that you have  won a great prize or are one of a very few who have a chance to win. All you have to do is send money to claim or qualify for the prize.

2. How do I know what is legitimate and what is fraudulent?

If you answer yes to any of the following questions, you may be the target of a fraudulent telemarketing scam.

A. Do I have to purchase something, pay money (shipping and handling, tax, or other sum) or call a 900 number to enter the sweepstakes, or can I simply enter by mailing in an entry form with no purchase necessary and still be qualified to win?

B. Am I required to give my credit card or bank account information when registering to win?

C. Do I have adequate time to think this over, or am I being pressured for a decision right now?

D. If the telemarketer calls me on the phone, will he or she send me additional information through the mail, with representations and promises in writing?

E. Is the telemarketer insisting on my credit card or checking account number right now?

F. Does the telemarketer want to send a private courier for my check today?

3. How do I protect myself?

Use your head. Take your time. Before you commit to anything, take 24 hours to think about it. Talk it over with someone you trust. Read the fine print! Remember that these people are not your friends. They are trying to get money from you, legally or illegally. Do not buy something merely because you will get a “free gift.” It is not “free” if you have to pay shipping, handling, tax, or any other fee to receive it. Get all information in writing before you agree to buy. Check out the caller’s record (see sources listed below). Do not give your credit card number or checking account number to anyone who calls on the phone or sends you a mailing. Check out charities before you give. Ask the caller how much of your donation actually goes to the charity. Be extremely cautious about investing

with an unknown caller who insists you must decide immediately. If the investment is a security, check with state officials to see if it is properly registered. If large amounts of money are involved, check with your legal or financial advisor. Do not send money by messenger or overnight mail. If you use money rather than a credit card, you may lose your right to dispute fraudulent charges. Make sure you know the per-minute charge for any 900-number you call. Hang up instead of being pressured to buy. If it sounds too good to be true, it probably is.

4. How do I get off junk mail and telemarketing lists?

Sometimes it is impossible to get off “mooch lists,” but you can try. Below are a few things you can try:

A. Change your phone number and get an unlisted number.

B. Get a caller ID box (The phone company will provide one for a small monthly fee.) and have all anonymous calls blocked. Keep a list of all these calls and report them to the police or the Attorney General’s office (see address, below).  

C. You can protect a lot of your personal and confidential information by writing letters to the three main credit bureaus and to the companies who maintain, purchase, sell, and operate these lists requesting that they not sell or disclose your personal information. For a comprehensive list of the credit bureaus and other companies’ names and addresses, and for form letters, contact your local United States Post Office, Postal Inspection Service.

5. What if I buy a product or service and it does not work?

If you have purchased a product or service that has not lived up to expectation or has broken through no fault of your own, you can do the following things:  

A. Check your warranty. Most goods and services come with a written warranty. Usually the warranty information gives instructions on how to replace or repair the item. Even without a written warranty, Texas law enforces certain implied (that is, they are neither written nor spoken) warranties. Most products have an implied warranty of merchantability, which requires that the product be fit for the ordinary purpose for which it is used. For services, the implied warranty requires that the services be provided in a good and workmanlike manner.  

B. Contact the business. Contact the salesperson, the manager or the company’s customer service representative. If you are still not satisfied, contact the owner or the company’s headquarters.  

C. File a detailed, written complaint with the Office of the Attorney General of Texas:

Office of the Attorney General
Consumer Protection Division/010
P. O. Box 12548
Austin, Texas 78711-2548 

D. Contact the Better Business Bureau (see Services and Resources).  

E. Contact the City of Fort Worth or Tarrant County Consumer Affairs offices.  

F. Attend agreed mediation, private or through Dispute Resolution Services (see Services and Resources). 

G. Contact the Federal Trade Commission regional office (see Services and Resources).  

H. Contact your local, state, and federal representatives, and other elected officials.  

I.. File a suit in the Justice of the Peace court (limit $5,000.00 in damages).  

J. Contact a lawyer about filing an action for you. The Tarrant County Bar Association has a lawyer referral service (see Services and Resources).

6. What is the Texas Deceptive Trade Practices Act?

The Texas Deceptive Trade Practices Act, sometimes known as DTPA, is designed to protect purchasers or consumers of goods or services from the harm caused by misrepresentations made by sellers of goods or services. Most of the purchases we make in our daily lives are included under this Act. You must meet certain deadlines in order to recover. In some situations, consumers can recover treble damages. You will probably need to hire a lawyer to handle a DTPA complaint.

7. What can I do if a creditor is harassing me?

The Texas Debt Collection Act and the Federal Debt Collection Practices Act limit the times and the manner in which a creditor, or the creditor’s representative, such as a collection agency, can contact you regarding payment of a debt. If the collection agency violates these acts, you may be entitled to statutory damages. Try to stop telephone harassment by sending a letter by certified mail asking the creditor to contact you by mail only in the future.

Employers cannot discriminate against older employees because of age. Federal and state laws protect employees aged 40 and over against age discrimination. Unfair treatment can include laying off older workers and keeping younger ones. Employees who have been unfairly treated because of age should promptly contact the Equal Employment Opportunity Commission (EEOC). The telephone number is (214) 655-3355. The address is 207 S. Houston Street, Dallas, Texas 75202 (located in the Federal Building). The EEOC procedures have deadlines that you must meet to be entitled to any compensation, so you must act promptly.

You must be mentally competent to give informed consent to medical treatment or to enter into contracts or business transactions. One who is mentally competent understands and appreciates the nature and consequences of a treatment decision or a business decision, including the significant benefits and harms of, and any reasonable alternatives to, any proposed medical treatment decisions or business decisions. A competent adult may plan for possible later incompetence by designating an agent to conduct his or her financial and personal affairs. If a person does not designate an agent and later becomes incapacitated, then health care providers, financial institutions, and other service providers will face a dilemma: is the person competent to provide informed consent for those services or treatment? If not, a guardian may be required. Designation of an agent avoids that dilemma. The designation must meet statutory requirements. The following are documents normally used by competent individuals to designate agents:

1. Power of Attorney.

A. What is it?

A power of attorney is a written document in which one person (the “principal”) appoints another person (the “attorney-in-fact”) as an agent and grants the agent authority to perform certain acts. The power of attorney may be general and include broad authority to act on behalf of the principal, or it may be limited to certain specified acts or circumstances. The power of attorney is normally used to designate an agent to handle financial matters on behalf of the principal.

B. What are the legal requirements of a general power of attorney?

1. It must be in writing;

2. It must be signed by a principal who is an adult; and

3. It must be acknowledged before a notary public.

C. What is a Durable Power of Attorney?

A Durable Power of Attorney is an important estate planning tool used to avoid a guardianship of a person’s estate. Normally, a power of attorney becomes invalid upon the incompetency of the principal. But the Texas Probate Code authorizes a Durable Power of Attorney that does not terminate if the principal becomes incompetent. Acts performed under a Durable Power of Attorney are binding on the principal whether or not the principal is incompetent. A Durable Power of Attorney includes words such as: “This power of attorney shall not terminate upon the disability or incapacity of the principal.”

D. What is a Statutory Power of Attorney?

A Statutory Power of Attorney is a general power of attorney, using language determined by the legislature and set forth in a certain statute. Banks and other institutions tend to accept a power of attorney that uses the statutory language more readily than one that uses other language. Therefore, you should consider revising powers of attorney that do not use the statutory language. If a guardian is appointed over a mentally incompetent person’s estate, the power of attorney is no longer effective.

2. Medical Power of Attorney.

A. What is it?

Since 1989, Texas law has provided for a Medical Power of Attorney. A Medical Power of Attorney allows the designated agent to make decisions about health care for the principal. The agent can make decisions that the principal would make if he or she were competent. There is now a mandatory statutory form for the Medical Power of Attorney. A form for a Medical Power of Attorney is provided in the back pocket of this booklet.

B. What are the statutory requirements?

1. The Medical Power of Attorney must be in writing and in substantially the same language as that set forth in the statute;  

2. The Medical Power of Attorney must be signed in the presence of at least two witnesses over the age of 18;  

3. The first witness may not be:

a. Related to the principal by blood or marriage;

b. The attending physician or an employee of the attending physician;

c. An employee of a health care facility in which the principal is a patient if the employee is providing direct patient care to the principal;

d. A patient in a health care facility in which principal is a patient;

e. Any person who is entitled to any portion of the estate of the principal or has a claim against the estate of the principal;

f. An officer, director, partner, or business office employee of a health care facility in which the principal is being cared for or of any parent organization of the health care facility; or

g. The agent.  

4. The witnesses must affirm that the principal appeared to be of sound mind to make health care decisions. 

5. The principal must affirm to the witnesses in their presence that he or she is aware of the nature of the Medical Power of Attorney and that he or she is signing it voluntarily and not under duress.  

6. A Disclosure Statement, the form of which is found in the statute, must be read and signed by the principal before execution of the Medical Power of Attorney.  

7. The Medical Power of Attorney must be delivered to the agent before it becomes effective.