Amy & Dan Smith's Planning for Life: Planning for the Unexpected

Life-changing medical events of the past week have reminded me to not only review my plans but perhaps serve as a messenger for a "call to action" to any of you who think financial and estate planning is for the well-heeled or something you cannot afford or don't need.

The situation happened quickly.  I had visited my parents last month and, while chronic issues were evident, crisis did not seem imminent.  Then one of my elderly parents began falling at home repeatedly.  My other parent, also physically impaired, did not register the gravity of this matter and did nothing.  My sister, arriving a few days later, immediately called 911, taking my parent to the hospital emergency room.

I won't go into the details of what transpired the next four days but suffice to say it was quite intense.  Our large family was split as to what action to take while our other parent accused some of us as "over-reacting."  The doctor made it clear to us that my parent would not be released from the hospital until a plan was in place at home for 24/7 nursing care.  Two of the first questions were "how much will it cost" and "how will we pay for it?"  Even for someone with adequate financial resources, it can be quite sobering to calculate what the cost of 24/7 home care might add up to over the course of a year and the impact it can potentially have on retirement savings and the amount left for heirs.

For example, while Medicare may pay up to the first 20 days of qualified, skilled nursing care after a hospital stay, thereafter it could be as much as $20 per hour.  Multiply this by 168 hours per week ($3,360) times 52 weeks and the total could come to as much as $174,720 per year.  Unfortunately, my parents had refused long-term care insurance years before, thinking they would never need it.  What to do?

First, my parent told the doctor that family members would provide this care at home.  I loved what the doctor said about family members taking care of critically ill parents:  It's the family's job to love the patient, not provide nursing care, unless they are professionally trained.  After spending 14 hours a day for 4 consecutive days in the hospital, I had a better understanding and appreciation of the professional nursing skills and sheer physicality required to feed, toilet, transport and bathe my parent (who was essentially dead weight) without causing further injury.

We kids thought the ultimate medical decision rested in the hands of my brother, who had been named power of attorney.  This was incorrect.  We had to find out who held my parent's medical directives and decision-making powers restricted to health-related matters.  (See complete "Health Care Decision Making" article previously posted.)  After lots of confusion, tears and prayer, my parent was allowed to return home the last day of my stay and is now experiencing a "new normal" in light of these events.  I hope my story will help some of you review your plans for when the unexpected occurs and consider the following action items if not in place:

• Ask a legal professional in your state of residence to execute a written medical directive, selecting an agent (usually a family member) to execute your wishes.

• If your agent is not capable to make appropriate medical decisions when needed, provide appropriate language in your documents to remove agent, specify under circumstances agent can be removed, and then provide the name of a successor.

• Discuss your wishes with loved ones preferably before a crisis occurs.

• Consider setting aside separate funds for health-care needs or invest in long-term care insurance.

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com). He has practiced law in Loudoun County since 1980.

Amy & Dan Smith's Planning for Life: Looking Beyond U.S. Borders

Even though U.S. equities still represent the single largest portion of the world stock markets, more than half of the world's total stock market capitalization lies outside the United States, and economic growth rates outside the United States have in some cases exceeded that of the United States.  Investors are beginning to consider diversifying their holdings beyond U.S. borders as a result.  In the past, I have often recommended allocating no more than 10-20 percent of an investor's overall portfolio to international funds.  However, with the growth of global markets and the European Central Bank's recent initiation of quantitative easing, many experts now suggest an even higher percentage can be appropriate given the right circumstances.

The following article "Thoughts on Europe" is from Chris Bailey, Raymond James European Strategist.  The complete article can be found on my website www.amysmithwealthmanagement.com under "Market View" then "Investment Strategy Quarterly."

Thoughts on Europe

From the perspective of American investors, this year's rise of the U.S. dollar pushed most international markets into losses although the history books show that, in local currencies, many European and international equity markets made gains during 2014.  However, any losses are modest compared to those apparent in mid-October when most international equity markets hit their lows for the year.  By contrast, fixed income markets in Europe and Asia have been very strong with generally material yield compression to levels not seen in modern financial history.

To understand the reasons for the above, it's necessary to review the policy actions of the European Central Bank (ECB) and Bank of Japan (BOJ) and the People's Bank of China (PBOC).  Throughout 2014, the ECB loosened policy that included interest rate cuts and the announcement of asset buying support mechanisms.  Meanwhile, the BOJ announced a material expansion of the quantitative easing program and the PBOC also cut interest rates for the first time in two years.

Unifying reasons for these actions was a fear that these economies would slip into a slower growth zone, such as outright recession in Europe and Japan and below recent-trend-growth rates in China.  In the last few months of 2014, the anticipated expansion of these pro-growth policies into 2015 has provided a strong boost since the mid-October lows.  In late December, market fears about the euro zone resurfaced amid political crisis in Greece, stoking concerns about a renegotiation of it's bailout.

Europe's outlook for 2015 rests on the credibility of policy-makers.  Further stimulus measures to help boost growth seem very likely in the euro zone; however these are unlikely to be sufficient on their own to sustainably boost the local economies and retain investor confidence.  This role rests with the speed of structural reforms around taxation, labor markets and other company productivity initiatives.  If legislation movement in Europe can be successfully accomplished, the investment outlook for the euro zone in particular is bright.

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com). He has practiced law in Loudoun County since 1980.

Amy & Dan Smith's Planning for Life: Five Equity Market Themes for 2015

By Amy Smith

Each year I read many market forecasts for the coming year from investment experts around the globe. Accordingly, I’d like to provide you with a recent article from Jeffrey Saut, Raymond James Chief Investment Strategist titled “Five Equity Market Themes For 2015”. (Readers may find the complete 2015 Outlook from Raymond James Investment Strategy Quarterly on my website www.amysmithwealthmanagement.com under “Market Views.”)

Lower Fuel Prices

This extended period of lower fuel costs should benefit companies that are dependent upon fuel as an input, such as the airlines, trucking and cruise lines, railroads, shipper, etc. Additionally, consumers are paying less at the pump and the hope is that those savings will now flow into other areas of the economy, like the consumer discretionary sector.

Smarter Policy Makers

One of my major themes has been that we will elect smarter government policymakers and subsequently smarter policies. With the mid-term elections over, we now shall see whether these newly elected officials can help enact policies to further boost the economy and create jobs.

Interest Rate Increases

The Federal Reserve is expected to begin raising short-term interest rates in the second half of 2015. Will the market begin to anticipate this move and buck the trend of lower rates that we have seen in 2014? We believe so, with higher rates more likely in second half of 2015, because the economy is strengthening.

Immigration Reform

President Obama issued an Executive Order in November that may allow approximately five million immigrants to legally work (and pay taxes) here in the United States. This action should benefit certain companies and industries, while providing additional tax revenue for the country.

Long-Term Secular Bull Market

Equity markets tend to enter a long period of expansion after emerging from an extended period of negative returns (the lost decades of 1964-1982, or 2000-2012). Typically, these expansion periods last for about 15 years with annualized returns of roughly 16 percent per year. Using March 2009 as a starting point implies that we may have another 10 years left in the current secular bull market. Of course, there will be corrections, but they should be viewed within the context of the long-term secular bull market. To quote my departed friend Sir John Templeton, “Bull-markets are born on pessimism, grow on skepticism, mature on optimism and dies on euphoria.” We are still in the skepticism phase …

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com). He has practiced law in Loudoun County since 1980.

Amy & Dan Smith's Planning for Life: Planning Your Will

A will is a highly protected form of writing. The requirements for a valid will must not be casually regarded. With rare exception in Virginia, only the original of a will – not a copy – may be admitted to probate. To be admitted to probate a will must (1) be in writing, (2) signed by the testator (the person making the will) and (3) signed by two competent witnesses who were both present with the testator either to watch him sign it or to hear him acknowledge his signature. There is a popularly known exception for a will, which is entirely in the handwriting of the testator, called a “holographic” will. However, it is dangerous to rely on this exception because it is very narrowly applied by the courts.

The requisite formalities may not be strictly applied to wills made by persons in military service. Wills made by a person deemed of “unsound mind” or by a minor are not valid.

The most convenient and efficient manner of proving a will is for the will to include a notarized statement (an “affidavit”) reciting that the formalities were followed. If a will is presented with such an affidavit attached, it is said to be “self-proving.” Without the affidavit, the witnesses must appear personally before the clerk or may, in some cases, provide a written statement to prove the due execution of the will.

The will should name the executor (also called the “personal representative”) and, if there are children under the age of 18, a guardian for the person and property of each minor child. An executor is required to give bond at the time he/she is “qualified” (that is, when he/she is appointed). The bond is a personal pledge by the executor in the amount set by the clerk that he/she will perform the required duties of the office. In many cases a “surety” will be required. A surety is a contract from an insurance company to protect the beneficiaries and creditors of the estate. A surety policy requires annual premiums until the estate is settled. Increasingly, insurance companies are raising the requirements for issuing surety contracts making them more difficult to obtain. The will may waive the requirement for a surety. However, while the executor need not be a resident of Virginia, the surety requirement cannot be waived for a non-resident executor. This problem can be avoided by having the non-resident executor appoint a resident co-executor to serve.

The testator expresses his directions regarding the disposition of his estate in the will. The law allows the will to refer to a separate informal writing outside of the will to direct the disposition of items of tangible personal property, such as furniture and jewelry. It is important to note that the will has no effect on property placed in certain forms of ownership such as, for example, property in a living trust, in joint tenancy with survivorship, in accounts with pay-on-death designations, and life insurance and retirement funds with beneficiary designations. These forms of ownership supersede any provisions in a will.

Marriage, divorce and the birth of a child can affect the provisions of an existing will. Thus, in such situations, and upon a change in financial circumstances, the will should be reviewed. A change to a will, called a “codicil,” requires the same formalities as the will.

At the risk of sounding self-serving (admission: your author is an attorney), the do-it-yourself will and trust kits are not recommended. Dollars saved initially are often lost in fees and courts costs necessary to unravel self-made documents.

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com). He has practiced law in Loudoun County since 1980.

Smith & Pugh, PLC: What's So Complex About Administering a Trust?

The process of identifying and collecting assets; paying debts, expenses and taxes; and making proper distributions of remaining assets after one’s death is referred to as estate or trust administration.

The identification of assets begins with the inquiry as to how assets are titled. Assets that are jointly held with survivorship will pass automatically to the survivor; assets that have a beneficiary designation will go to the person(s) so designated. Assets held in a trust are to be administered pursuant to the instructions provided in the trust document. Assets in a person’s sole name must be administered pursuant to the terms of his/her will or, if none, by the laws of intestacy (that is, death without a will).

The collection of assets depends on who may access the deceased person’s assets. With respect to assets held in a trust, the trust document typically designates someone (individual or financial institution) as Trustee. A person who established the trust (the Settlor or Trustor) often designates himself/herself as trustee. Upon his/her death, a successor trustee is typically named in the document. In other words, the trust document itself gives the successor the legal authority to administer the assets.

If assets are administered under a will, an Executor (sometimes called “Personal Representative”) is named to administer assets. If there was no will, an heir (or sometimes a creditor) may step forward to be the Administrator. In either case, however, the Executor or Administrator must apply to the local court having probate authority to qualify as such. This begins the process referred to as probate. This process can vary greatly from state to state.

The administration of the estate of a deceased person can be viewed as:

1. determining the extent and nature of the deceased person’s assets,

2. transfering title of assets to obtain legal control,

3. paying debts, expenses and taxes, and

4. distributing the remainder pursuant to the terms of the trust, will, or laws of intestacy.

This person may be an Executor under a will, or an Administrator in intestacy, or a Trustee under a Trust. Sometimes the documents require that the assets be held in trust for an extended period such as for the life of a beneficiary or until the beneficiaries reach a certain age. By the end of the process, there should be no assets left in the name of the deceased person.

Estate and trust administration takes time. How much time depends on several factors: Can the original documents be located easily? Is real estate among the assets? Are the assets easily liquidated? Are there estate or income taxes to pay? Who is the executor or trustee? Who are the beneficiaries and can they be located? Are there any provisions in the trust or will that are unclear? Are there significant assets which were held jointly or passed by beneficiary designation? Were the rights of the surviving spouse addressed in the documents?

As with estate planning, the complexity of the administration of an estate or trust is affected by the beneficiary list and decedent’s financial holdings. Anyone who has served as Executor, Administrator, or Trustee can attest that these are positions of great responsibility. For most clients, service in such a position is a once in a lifetime role. Most people finding themselves with such responsibility can benefit from legal and accounting guidance throughout the process.

The foregoing article contains general legal information only and is not intended to convey legal advice.

Daniel D.  Smith and W. Franklin Pugh are partners in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176 (703-777-6084, www.smithpugh.com).

Amy V. Smith, CFP®, CIMA®: Starting at the Finish Line

In preparing for a recent speaking engagement on “Financial Planning for Life,” I was reminded that there is more to talk about than money in the world of financial planning. Money is just the vehicle to get us to our financial destinations.

What we do when we arrive is another issue.

Why should we try to plan for life? Because life is full of surprises. We cannot control our future, but we can control our financial behavior—planning, saving, budgeting, investing, and covering risk of loss. This is when the discipline and benefit of financial planning is realized.

After 15 years as a certified financial planning practitioner, I have learned that the essence of effective financial planning is holistic, not compartmentalized. To talk only about money is to see a work of art with one eye closed.

Sticking with the vehicle analogy, you may have a brand new car, but where is it taking you? If you’re planning a trip, where are you going? How will you get there? When will you arrive? You’ll likely need a road map to reach your final destination.

The same analogy applies to financial planning. For example, when setting goals for retirement, most of us will want to maintain, at the very least, today’s standard of living, before inflation, when we retire and not take a pay cut when we no longer earn an income. How and when we plan to get there is the equivalent of a financial road map, a financial plan.

Starting this month, I’d like to expand the scope of this column to include the whole picture, not just the parts, and begin asking the “big questions.” This means not only presenting ideas on individual topics such as investments, taxes, and insurance, but also exploring how these financial vehicles can work together to benefit you, the reader, in your personal retirement planning, risk management and legacy planning.

To address these bigger life issues, I’ve invited my husband, Dan Smith, practicing estate planning attorney for more than 40 years, to join me in writing this column with a new title to fit this broader perspective: Amy and Dan Smith’s Planning For Life. Dan and I have been married almost eight years. We both experienced the death of our spouses. While neither of us had planned for this to happen, it did. Were we prepared? Not really. Were these lessons learned that influenced our work as professionals? Absolutely.

As this column goes forward, we will share with you information and suggestions, which hopefully, you will find helpful in your planning for life.

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com). He has practiced law in Loudoun County since 1980.

Smith & Pugh, PLC: The Essential Components of Estate Planning

The careful planning of an estate can serve to avoid unnecessary taxation and expense and, very importantly, assure that the desired distribution of assets will be carried out accurately and efficiently.

Where minor children are involved, careful thought should be given to the appointment of guardians for the person of the child and to the appropriate method of distributing assets to the child or held for his/her benefit. Custodial accounts may be utilized until the child reaches age 21, or trusts may be established to provide for the administration of assets for the child’s benefit until a later age.

Many clients consider the use of a revocable living trust for the purpose of avoiding probate and adding flexibility to the administration of their estates during their lifetime. A common misunderstanding is that a living trust avoids death taxes; in fact, that is not the case. However, the living trust may contain a plan which will serve to avoid death tax, particularly when husband and wife are creating estate plans jointly. However, such provisions can be included in a properly drafted will as well. The trust will avoid probate with regard to the assets which are properly included therein, whereas assets passing under a will are subjected to the process of probate.

A will or trust may also address payment of estate taxes. Moreover, a married couple, planning together, can arrange their affairs so that, between them, they may pass twice the value of assets tax-free to the next generation than one individual might do acting alone.

The proper designation of beneficiaries for life insurance, annuities, and retirement plans is a very important component of estate planning. Typically, the applications for these contracts or accounts include beneficiary designation forms. Careful planning is required in the completion of the beneficiary forms to avoid misdirection of benefits or the inadvertent failure to take advantage of tax and probate avoidance opportunities. Your primary will or trust will not control the distribution of such assets unless the completed form specifically so designates, or one fails to designate beneficiaries. It is very important to ensure that the beneficiary designation forms complement your will or trust, rather than working at cross purposes.

Estate planning also should involve the preparation of durable general powers of attorney and medical directives. The primary purpose of these documents is to designate substitute decision-makers in the event you become unable to manage your affairs during your lifetime or make informed medical decisions. The medical directive may include a “living will” to address questions about end-of-life medical and support measures.

Wills, trusts, powers of attorney, and medical directives are important legal documents that require thoughtful planning. While many of estate planning documents have standard legal wording,“one size fits all” documents usually fail to meet an individual's needs fully and accurately.

The foregoing article contains general legal information only and is not intended to convey legal advice.

Daniel D.  Smith and W. Franklin Pugh are partners in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176 (703-777-6084, www.smithpugh.com).

Amy & Dan Smith's Planning for Life: Explaining the Process of Probate

The term “Probate” derives from the Latin Probatio meaning “proof.” The term came to be applied specifically to proof of wills. In common practice, when a person dies, the proponent of a will takes it to court (usually a probate clerk) and “proves the will”; that is, the proponent submits the will as the true and authentic last will and testament of the deceased person (the “decedent”). In addition, a death certificate or an obituary notice must be produced and a “list of heirs,” which consists of the names and addresses of the people who would take an estate if the decedent died without a will.

The term “probate” now is commonly used to refer to the process of administration of a decedent’s estate whether he/she died with or without a will. If there was no will, the decedent is said to have died “intestate,” in which case the estate will pass to the “heirs at law.” Each state by statute lists the order of family members who will take the estate of a person dying without a will.

Once an estate is opened, a person is “qualified”; that is, he, she or they is/are appointed to settle the estate. If there is a will, he is “executing” the will. The person is given a Certificate of Qualification by the clerk that proves his authority to act on behalf of the estate. Traditionally, the person who administers an estate with a will is called an “executor,” and the person appointed to administer an estate where there is no will is called an “administrator.” The term “personal representative” (the “PR”) is becoming more common as a generic name for both an executor and an administrator.

The PR is sworn in and must give a “bond” for the performance of his duties. A bond is simply a person’s word reduced to writing. In some cases a “surety” may be required. That is, an independent insurance carrier must guarantee the performance of the PR’s duties. This will entail an annual premium payment until the estate is fully settled.

A probate tax is imposed on estates in excess of $15,000. The state rate is 10¢ per $100 of value and the county can add a third to that. So, for example, an estate of $15,500 would be taxed at $15.50 (state) plus $5.17 (local) for a total of $20.67. A common misconception is that avoiding probate avoids estate tax. No so.

The personal representative is required to provide a notice to certain people who may be affected by the probate of the estate and must prepare and file with the commissioner of accounts an inventory of assets in the estate and annual accountings for the estate until it is fully settled.

Probate consists of collecting all the assets of the estate, paying all the debts, and disbursing the balance of assets, and may be concluded in a matter of months. If there are delays in the process, typically they are caused by events outside of probate, such as disputes among heirs.

Probate is easily avoided as, for example, by the titling of assets “joint with survivorship,” by beneficiary designations, by adding “pay on death” or “transfer on death” designations to accounts, and by living trusts.

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com). He has practiced law in Loudoun County since 1980.

Amy & Dan Smith's Planning for Life: The General Power of Attorney

A power of attorney is a writing authorizing one person (the agent) to act for another person (the principal). The term “durable” is often used with power of attorney. This simply means that the power continues even if the principal becomes incapacitated. By law in Virginia now, all powers are durable unless they expressly state otherwise.

A power of attorney is effective upon signing unless it states that it is effective upon a certain date or only upon the occurrence of a future event or set of circumstances. A power which is to become effective in the future is called a “springing power.” A power which is effective immediately avoids the difficulties necessitated by having to prove the satisfaction of whatever conditions are established before the power becomes effective such as, for example, obtaining a doctor’s certification of incompetency. Thus, a power which is effective immediately is more efficient, but of course, leaves the principal at greater risk of being victimized by the agent. Trust is the basis for any appointment of an agent under a general power.

A power of attorney may be general in scope or specific. For example, a person may authorize another to execute documents on his behalf in a real estate settlement. A special power of attorney would be drawn for that purpose and would be limited in scope only to those actions necessary to close the transaction. Usually an outside date is set upon which the power will expire if the transaction has not been completed by that time.

The existence of a valid general power of attorney can avoid the time-consuming and costly process of appointing a guardian or a curator for an incapacitated person. The process requires a physician’s report on the nature and extent of the incapacity, a judicial hearing, and regular reporting to the court or to the commissioner of accounts regarding the finances (the “estate”) of the incapacitated person.

A power of attorney may be revoked by the principal at any time (assuming he/she is competent) but terminates automatically upon the death of the principal.

An agent under a general power of attorney has broad authority to deal with a wide range of matters on behalf of the principal, everything from, for example, buying and selling real estate to providing for the support and maintenance to the principal out of his/her resources.

As explained in a prior column, the medical directive is a different document. It is similar in that both the medical directive and the power of attorney involve the appointment of an agent. The agent under the medical directive and the general power may be the same person or persons. The authority of the agent under the medical directive is restricted to health-related matters.

Tip: Even if you have a valid general power of attorney, it is wise, if you are able, to sign the power of attorney forms with each of your financial institutions (banks and brokerage firms) so that they have on record the appointment of your agent on their own form.

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com). He has practiced law in Loudoun County since 1980.

Amy & Dan Smith's Planning For Life: Do Not Resuscitate Order ("DNR")

The DNR is a written order issued by a physician to withhold cardiopulmonary resuscitation for the patient in the event of cardiac or respiratory arrest. The DNR is now referred to officially as a “Durable Do Not Resuscitate Order.” The term “Durable” simply means that the order remains applicable even if the patient is for any reason incapable of making an informed decision.

A DNR is not an Advance Directive. Except in the case of certain optional, rarely used provisions of an Advance Directive which require a physician’s signature, the Advance Directive is not signed by a physician. Rather, it is signed by the patient and two witnesses. In certain cases the Advance Directive can be oral. In contrast, a DNR cannot be oral and must be signed by the doctor. (A provision of the Virginia Code appears to allow an oral DNR by the patient, but a recent opinion from the Virginia Attorney General’s office declares that the Virginia Code does not create a verbal DNR.) While the DNR must be written, it can be revoked by the patient verbally.

A doctor may issue a DNR only for a patient with whom the doctor has a bona fide physician/patient relationship and only, of course, with the consent of the patient. Note, however, that consent to a DNR may be given by the agent of the patient pursuant to an Advance Directive. Recall that for an agent to be empowered to act under an Advance Directive, the patient must be determined by two medical caregivers to be “incapable of making an informed decision.” Only after such a determination has been made may the agent request, or consent to, a DNR from the patient’s doctor.

The authority to consent to a DNR can create a dilemma for the agent under an Advance Directive. Consider, for example, the situation where a patient remains conversant and apparently cognizant but whom the doctors have certified to be incapable of making an informed decision. The medical caregivers come to you suggesting the advisability of a DNR while citing the pain and discomfort of the patient, an incurable and deteriorating condition, and, if cardiac or respiratory arrest occurs, the prospect of an indefinite vegetative state if resuscitation is successful. Add to these facts that the patient purposely did not seek a DNR while competent and, even now in his diminished capacity, resists the idea of a DNR when it is suggested. The foregoing facts are from an actual case and are not unusual, especially for elderly patients.

An agent who consents to a DNR under an Advance Directive may revoke that DNR. However, an agent under an Advance Directive cannot revoke a written DNR that was issued upon the request of the patient himself/herself.

The DNR should be readily accessible to emergency medical services personnel. Some folks post a copy on their refrigerator. Family should be advised of your DNR, and doctors, in addition to your primary care doctor, should note the existence of your DNR in your medical files.

While an Advance Directive is highly recommended and is usually prepared by the attorney in conjunction with other estate planning documents, the DNR is an entirely separate matter. It is issued, if at all, by the patient’s physician. It is a personal decision to be weighed carefully after consultation with your physician.

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com). He has practiced law in Loudoun County since 1980.