DISABILITY PLANNING GUIDE

By Glenn M. Karisch, Barnes & Karisch, P. C., Austin, Texas

CONTENTS

SUMMARY OF 1997 LEGISLATIVE CHANGES AFFECTING DISABILITY PLANNING

These three bills from the 75^th Texas legislature affected disability planning:

1. SB 620 -- This was the durable power of attorney bill authored by the Real Estate, Probate and Trust Law Section of the State Bar of Texas. It made several changes to 1993's Durable Power of Attorney Act. The change which is most likely to affect estate planners is, in effect, a new statutory durable power of attorney form. The new form, for use on and after September 1, 1997:

• Adopts a strike-out method of designating specific powers, rather than the initial-the-box method of the old form, which should be less confusing and less susceptible to fraud.

• Makes the statutory form a general power of appointment if no specific powers are struck.

• Includes an optional provision for making annual exclusion gifts (which must be separately initialed).
• Eliminates the requirement for including the principal's social security number.
• Specifies a procedure for determining disability if a springing power is used.

Use of the statutory form remains optional. SB 620 also provides for the automatic revocation of the designation of a spouse as agent upon divorce, clarifies that oil and gas transactions are covered by "Real Property Transactions" and defines "retirement plans" to include IRAs, qualified plans, etc. SB 620 has been signed by Governor Bush and becomes law on September 1, 1997.

2. HB 880 -- HB 880 changed the witness requirements on directives to physicians. Under these changes:

• The person designated to make a treatment decision under the directive to physicians may not be a witness to the directive.
• A patient in the health care facility where the declarant is a patient is no longer prohibited from being a witness.
• Under the old law, an employee of the health care facility who "is directly involved in the financial affairs of the facility" was prohibited from being a witness. Under the new law, that vague standard is made more objective. Now, a person who "is an officer, director, partner, or business office employee of the health care facility or of any parent organization of the health care facility" is prohibited from being a witness.

These changes to the witnessing requirements necessitated a change to the statutory form of directive to physicians. The form remains optional, however -- nonstandard forms may be used.

HB 880 also made a change to the procedure for making a treatment decision for a person with no guardian. Under HB 880, the attending physician must now document and sign the treatment decision in the patient's medical record, and if the patient has no legal guardian or other relative available, a treatment decision must be witnessed by another physician who is not involved in the treatment of the patient.

The changes made by HB 880 take effect January 1, 1998.

3. SB 972 -- SB 972 adds new Chapter 137 to the Civil Practices and Remedies Code, permitting a person who is not incapacitated to declare how he or she wishes to be treated for mental illness if he or she later is adjudicated incapacitated by the probate court or in a "medication hearing" under Section 574.106 of the Health and Safety Code. A mental health declaration expires after three years, but it continues if the person is incapacitated at the end of the three-year period. This form permits the declarant to consent (or not consent) to the use of electroconvulsive treatment, specific psychoactive medications, and emergency mental health treatment.

SB 972 includes a mandatory statutory form. It seems unlikely that a declaration for mental health treatment will become a "standard" disability planning document, as the health care power, directive to physician, declaration of guardian and durable power of attorney have become. Rather, it seems likely that this new declaration will be used in cases where incapacity due to a specific condition is likely and the declarant can make informed decisions about how he or she wishes to be treated.

SB 972 becomes effective September 1, 1997.

Table -- Statutory Disability Planning Forms (After 1997 Changes)

Copyright 1997, 1998 by Glenn M. Karisch     Last Revised May 24, 1998