A Power of Attorney is a legal document that protects you and protects your senior loved one. It basically says if your loved one becomes incompetent to make decisions you are appointed to act on your loved one’s behalf (or AS your loved one.) It does not make you vulnerable to their liabilities as a result. Do not, under any circumstances, add your name to Mom or Dad’s checking account. Do not be a party to situations over which you have no control.
The Financial Power of Attorney is a document given to appoint someone (aka agent or attorney-in-fact) to act legally on behalf of another (aka principal,) should the principal become incompetent, incapacitated, or otherwise unable to act financially on their own behalf. From a legal perspective, decisions and actions made by the agent are considered to be made by the principal. So, choosing whom to give power of attorney should be carefully and deliberately made. The agent should be considered completely trustworthy by the principal. Ideally, this decision should be made while the principal is still very cognitive. Mom or Dad need to have their choice clearly defined on who those individuals should be in the family.
The Financial Power of Attorney should be someone who is involved and fully understands the day-to-day situations of a senior loved one. It should also be someone in close regular proximity to them, mainly for practical reasons. It needs to be someone who is at the pulse of the day to day lives of the senior, or “principal.”
In the case of an emergency, the Power of Attorney will need to be available to respond to any sort of hospital emergency with your loved one and will be required to sign legal documents on their behalf.
Being the Power of Attorney in many families is not fun. Yes, you have the power to act on the behalf of the parent. But there could be times when you have to make unpopular decisions on their behalf with which your siblings won’t necessarily agree with. You may need to sell of assets of a loved one to fund long term care, and there may be angst between family members over their own entitlement to a potential inheritance from them.
If you are the Financial Power of Attorney, once a doctor deems your senior loved one incompetent, you are acting “in fact” for that individual. The document will give you authority to sign checks out of their checking account. It will give you the ability to make any and all financial decisions as if you are the person for whom you are acting. Having Power of Attorney makes you the “Attorney-in-Fact” as a legal definition.
If you are the Power of Attorney, even if your parent is of sound mind, in the case of emergency there are still some things you should handle up front and have access to. This includes the following:
- Make sure you understand fully what your responsibility is. (If you have a healthcare directive, take time to understand what is requested of you.)
- Talk to your loved one about the “what ifs.” “Mom, what if you cannot take care of yourself in your home? Where would you like to go? Which family member do you want to be near?”
- Do you have authority to access your loved ones’ safety deposit box? Are you familiar with where the key is?
- Where are the copies of their legal documents, such as their will, the deed to their house, mortgage papers, insurance policies, etc?
- Do you have the passwords for all of their bank accounts, their social media, email, etc.?
- What about special property? Has Mom shared with you who she wants her china to go to? What about her jewelry? Did Dad talk about his classic car that is sitting in the garage? Write these things down up front. It will save so much heartache later.
What happens if there is no Power of Attorney?
If there is no Power of Attorney in place, it can become extremely time-consuming, expensive, and overwhelming. Families will have to hire an attorney, go to court, and a designated “guardian” will be appointed to be an agent on the behalf of the loved one. Sometimes it is not a family member, but instead a guardian who is appointed by the court.
Maybe you feel you don’t need one because you are just added to a bank account or given a key to a safety deposit box. Please realize without the legal document giving you authority to act on their behalf, you could be personally held liable for any and all outstanding creditors, debts and liabilities your loved one has. You could also be held responsible if another family member disputes transactions, citing your lack of authority to make financial decisions or transactions. It could be fiscally devastating to you, including losing any assets you might have.
Take the time and make sure that your senior loved one has a document like this in place. Make sure that family members are all clear on the wishes of your loved one on who will act if your loved one needs assistance.
