Q. My lifelong friend, Peter, has an aunt who was never married and never had children of her own. Peter was the closest family member she had, but she was not a very trusting person, and didn’t trust Peter or anyone, especially when it came to money. When she was beginning to experience memory loss, Peter, who has had his estate planning and incapacity planning documents in place since he was 45, suggested to her that she get hers done, but she refused. She put him off until it was too late.
After his aunt developed Alzheimer’s, Peter found it difficult to pay her bills because he could not access her money. He was also faced with medical decisions that needed to be made, but he didn’t have the authority to make them.
Peter wants me to do a power of attorney to make things a lot less difficult for my loved ones. I’m convinced for the most part, but wary because of things I’ve heard and read about Powers of Attorneys not being accepted at some banks, among other things. I have also seen do-it-yourself kits you can buy online where you can put together your documents for a lot cheaper than you can with an experienced attorney.
What are some of the common concerns you hear about Powers of Attorney from your clients, and what do you tell them to ease their minds? Would a legal website be good enough for my initial documents, since I am only 43, and can have them looked at by an attorney later? Thanks for your help!
A. Estate Planning is about carrying out our wishes after we die. But, as you can see from your friend’s ordeal, in addition to a good Estate Plan, everyone over the age of 18 also needs a good Incapacity Plan that takes care of you during your lifetime if you become incapacitated.
A durable Power of Attorney (POA) is one of the most important estate planning documents you can have, because it allows you to appoint someone to act for you (your “Agent” or “Attorney-in-fact”) if you become incapacitated. Without a valid Power of Attorney, your loved ones would not have the authority to make decisions for you or manage your finances. It might even be necessary to ask a court to appoint someone as guardian or conservator, which is an expensive and time-consuming process. Moreover, the person appointed might not be the person you would have chosen for yourself.
You are correct that there is a lot of misinformation floating around about POAs and other vital documents. To help you better understand POAs, let’s take a look at the most common misconceptions, and why they are wrong:
• Misconception 1: You can use a do-it yourself online program for an effective POA. While there are many “do-it-yourself” POA forms available, you should strongly consider having an elder law attorney draft this document for you, because there are many significant issues to consider, including missteps that make your document invalid. One size does not fit all when it comes to these documents. The whole point of a POA and other vital incapacity planning documents is that they are valid and usable for all needed purposes when the time comes that you need them.
• Misconception 2: Once you make your POA you don’t need to worry about it anymore. Laws change, people change, and the POA you made years ago might not be of any value to you today. In addition, even if you do everything correctly, some banks and other financial institutions are reluctant to accept a POA over a year old, or more than 3 years old. These institutions are afraid of a lawsuit if the Power of Attorney is no longer valid. The Farr Law Firm offers a Lifetime Protection Program, which encourages clients to come to our office on an annual basis to assess their entire estate plan and to sign new Powers of Attorney, ensuring that their documents remain current.
• Misconception 3: The POA should only be usable if you are incompetent. Most people who sign a power of attorney make it effective immediately — generally a very good idea in order to avoid the necessity of a doctor declaring you incompetent. Financial institutions dislike POAs that are only usable if you have been declared incompetent because it requires the institution to determine whether your incompetency has been proven satisfactorily. So long as you are giving power of attorney to someone you have complete trust in, you should not be worried about them misusing the document while you are still competent. On the contrary, it is more likely that if your agent is going to abuse your power of attorney, he or she will wait to do it after you become incompetent
• Misconception 4: I shouldn’t make a POA because anyone I appoint as an agent might take advantage of me. While this is technically true because you cannot control other people’s actions, an agent who misuses his or her powers under a POA faces some potentially significant legal consequences. Agents have a legal duty to act in your best interest. If your agent takes advantage of you or otherwise acts inappropriately, not only can that agent be subject to civil lawsuits and penalties, but criminal sanctions can also apply.
• Misconception 5: A short and simple “General” Power if Attorney can be used for everything. For your agent to be able to do something on your behalf, the POA must contain specific language allowing you to do that specific thing. Short and simple general powers of attorney that were done in the 80s and 90s no longer work for most things. Back when I first started practicing law in 1987, our power of attorneys were two pages long. Nowadays, my power of attorney is about 15 pages long because it has to specifically spell out every possible power that might at some point be needed by your Agent.
• Misconception 6: You can keep using the POA after someone dies. Death revokes a POA. You can’t write checks using a POA after the person who gave the power dies. When it comes to funeral bills, if the funeral hasn’t been pre-paid, the individual who pays a funeral bill from their own funds can be reimbursed from the estate after the court empowers someone to serve as Executor.
• Misconception 7: I don’t need a POA because I’m young/healthy/married. No one knows what the future holds, and a POA is an essential tool for everyone over the age of 18, because you never know when an disaster may strike. Every capable adult, whether young, old, healthy, or sick, needs POAs in place. If you don’t have these documents and something should happen to you, there is no guarantee that those who end up making decisions on your behalf will do what you want them to do. Further, if you are married, you cannot rely on the marital relationship between you and your spouse to guarantee that your spouse will be able to manage your affairs if you become incapacitated one day. If you want your spouse to have this ability you need to have a good POA in place to guarantee that your spouse will be able to step in to take over your legal and financial affairs without the hardship of having to go to court and get you declared incompetent and becoming your guardian and conservator, thus beginning the process of lifetime probate, which nightmare could endure for the rest of your life.
Every Adult Needs a Power of Attorney
Hopefully, the details refuting the misconceptions described above cleared up any concerns that you have. As you can see, every adult should have both financial and medical Powers of Attorney in place. POAs offer the peace of mind that someone you appoint can step in if and when needed to handle your legal and financial affairs, and healthcare decisions. If you have not done Incapacity Planning or Estate Planning yourself, or if you have a loved one who is nearing the need for long-term care or already receiving long-term care, the time to plan is now. Please contact us at any time to make an appointment for an initial consultation:
¼Fairfax Power of Attorney Lawyer: 703-691-1888
Fredericksburg Power of Attorney Lawyer: 540-479-1435
Rockville Power of Attorney Lawyer: 301-519-8041
DC Power of Attorney Lawyer: 202-587-2797
About Evan H Farr, CELA, CAP
