What You Need to Know About A Power of Attorney
Has a parent or senior loved one asked you to handle a Power of Attorney (POA) for them? Have they assigned you as the executor of their estate? If so, you’re probably honored to be chosen for the trusted role. But do you really know what you’re taking on?
Can you recognize when a loved one needs a POA? How do you convince them it’s in their best interest? Are you ready to take the plunge and take on that responsibility?
It’s possible that you may find yourself forced into a situation that requires a POA for a loved one. Have you ever had medical personnel tell you that they can’t give you any info about your loved one? You can’t apply for any aid such as Veteran’s Aid or assisted-living or in-home care that may be needed for your relative. This may leave your hands tied at a very crucial time.
You and your loved ones do need a POA. Why? Read on!
Power of Attorney, Explained
All the confusion surrounding a Power of Attorney stems from tales of elder people being swindled by people holding a POA. Many seniors are afraid to even create a POA. Even so, they are one of the best things you can do for yourself.
POAs cover a wide range of issues you may need to manage, such as selling real estate, buying a car, and managing everyday bills and financial transactions. It allows your agent (the person you choose as the executor), among many things, to make calls to collect and gather information. Your agent can speak for you, assist you in person, and sign for you when needed. You can also designate an alternate agent in the event the first person is unable to perform.
As with many things, it can get a bit more complicated. I strongly recommend that you have an attorney draw up your POAs. Yes, you may want more than one. Consider a Medical/Healthcare POA and a Financial POA. These can be combined if you have an agent willing to serve in both areas.
If attorney fees are a concern, you can find examples online that will serve as a guide for your or your loved one’s situation. You can print and complete the form, but I strongly recommend you have an attorney review it. Once it is finalized, your attorney will have you sign it and they will provide witness signatures for you. Some attorneys are also Notaries or have one on staff to complete the document.
Perhaps you have a doctor or nurse or another medical expert in the family that you feel would make better decisions. Here is a list of some of the decisions they may have to make:
- Medical care including what hospital, clinic, pharmacy, or primary care doctor will be indicated for you
- Treatments such as surgery, rehab, physical therapy, psychiatric, dietary, wound care, prescription medications
- Where you will live such as residential long-term care, assisted living, memory care, and nursing homes
- What you eat and who bathes you
This type of POA may have a broad spectrum of responsibility and would be required to assist the Medical POA if a separate agent is assigned to each POA. Below is a list of financial responsibilities that may be included:
- Have access to financial accounts to assure you have your medical, housing, utility, transportation, insurance, and other bills paid
- Arrange to have all your taxes filed and paid, including income and real estate taxes
- Investment accounts should be monitored and sound decisions made on your behalf. This may require your POA to work with other financial advisors
- Collect your debts and manage any property you may own
- Oversee your applications for Medicaid, supplemental insurance, veterans’ benefits, et cetera
- Manage support of your family members such as spousal care, dependent children or parents
You do NOT lose your right to make your own decisions. You have the same decision-making powers you had before you signed it.
I had to send a copy of my father’s POA to the electric company for their records. It was only then that I could get the balance due, information on power usage, transfer the bill into my niece’s name when she moved in to housesit for the winter, and ultimately close the account when the house sold.
Springing Power POA
This particular POA only kicks in after a qualified doctor determines that you are not able to make decisions for yourself, whether it’s regarding your finances, assets, or care.
It is recommended that you include the criteria for deciding who is involved in declaring that you are mentally incompetent.
Choose your POA agent carefully. The amount of responsibility and power he/she holds will affect your future.
Personally, I would not recommend this POA. The determination of incompetency can be very controversial. Your family members may well disagree and cause emotional and financial distress.
Fiduciary Responsibility of Your Agent
Your choice of POA agent is crucial. Under state laws, your agent cannot take your money for themselves, that means no fancy vacations for themselves. This is known as fiduciary responsibility. It may be necessary to have two agents serve at the same time.
Now, this has a pro and a con, depending on the family. Pro: It keeps one person from skimming from your accounts to their advantage. Con: These two may not agree on what is in your best interests. This can inhibit crucial decision-making whether it’s financial or not.
I strongly advise you to use an attorney to create this clause. Under state laws, your agent cannot give away your assets to other family members to make you eligible for Medicare. You must have a properly written paragraph that would legally allow disbursement to the family to facilitate access to Medicare coverage for a nursing home or assisted living. Medicare is very good at finding assets being hidden.
Do NOT use free forms from the internet. You need the expertise of legal counsel for the protection of your assets.
It won’t be terribly expensive to create, but if you don’t have this clause it could get spendy. I recommend creating trusts to protect your assets. In some states, a trust must be in effect for a minimum number of years to protect the assets. Example: Minnesota requires assets to be in trust for five years to be protected. Plans are being made to change this to seven years.
Be sure to check your state’s qualification guidelines.
Do NOT send the original copy of a Power of Attorney to anyone. Not even if they promise to send it back.
The way around this is to take the original to a bank and ask for an officer who is a Notary. The Notary will copy the original after verifying your identification and then notarize the copy. That notarized copy can be sent in place of the original.