No matter what age you are, if you have a legal voice and have privileged access to bank accounts, financial documents, OR if you want someone to speak for you in a hospital if you cannot speak for yourself, you need to have a Medical and Financial Power of Attorney. It should be an integral part of any estate plan and/or final documents like a Will or Living Trust and should be drafted up by an attorney only.
The Financial Power of Attorney is a document that is created to appoint someone of your wishes to act legally on your behalf ONLY if you are designated incompetent to do so on your own. It is the type of document that must be in place to an appointed individual in a family when caring for a senior loved one. If Mom and/or Dad have their choice clearly defined on who those individuals should be in the family.
In my personal opinion, and not an attorney, as a former family caregiver who took care of my mother, (and of course there are exceptions) the Power of Attorney should be someone who is involved and understands fully the day-to-day financial situations of a senior loved one and should be someone in close regular proximity to them. Why?
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 also will be required to sign legal and financial documents on their behalf. You will need to also act according to your loved ones’ wishes– not yours. (A Medical Directive and Power of Attorney will also need to be presented to Hospital Staff as well.)
If you have been appointed Financial Power of Attorney by your parent, it means that once your parent is deemed incompetent to act in their own best wishes financially by a doctor, you are acting “in fact” of 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 were them. Having Power of Attorney makes you the “Attorney in Fact” as a legal definition. (Banks use the term, “Attorney in Fact”)
If your parent has appointed you the Financial Power of Attorney, it is also important for you to know where all of their bank accounts are, what the passwords are to their online banking forms, and how to gain access (keys) to their safety deposit box. You will need to know the names of all financial institutions that they are affiliated with, and any financial advisors they work with should be given a copy of the document once the Financial Power of Attorney is activated by their doctor or physician.
Take the time to make sure that you have all the information that you need as if an emergency happened tomorrow. Once the Power of Attorney is activated, you will need to present the signed document by your loved ones’ doctor directly to financial institutions and professionals that they deal with.
What happens if there is no Power of Attorney?
If there is no Power of Attorney in place in a family, it can become extremely time-consuming, expensive, and overwhelming for the parent and all members of the family. Families will have limited access to information, no access to financial sources, and they will not have the legal ability to make critical decisions to advocate for their loved one. To do so, they will need 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. What that could do, is make you a party to your parents’ liabilities. That means you may be liable for any and all creditors and liabilities that your loved one has. It could be devastating for you in losing any assets you personally might have. Here is an example:
John lives near his father, a retired veteran, but who has been failing as of late. John’s dad Bert rents a home near John and his family, but Bert refuses to put the paperwork in place like a Power of Attorney for John to help him. Bert is stubborn. He refuses to stop driving, even though he has been in two fender benders. His car is paid off, but has a low liability policy on it, as he has little if any assets anymore.
One day Bert drove into town and had a devastating accident. He didn’t see someone in a crosswalk, and as a result this individual was badly hurt. In fact, the pedestrian was in critical condition facing a very long expensive road to recovery.
One day the individual sued both Bert and John. Why was John sued? Because John was on his father’s bank account it made him a party to Bert’s assets. John to defend himself on a suit that ultimately cost him many thousands of dollars and loss of his own assets. All because a Power of Attorney was not in place.
Moral of the Story- under no circumstances should you add your name to a loved ones’ accounts without a Power of Attorney in place. Don’t be a party to situations you have no control over. A Power of Attorney protects you AND your family member from liability from situations like this. It basically says that you are appointed to act upon your loved one’s best interest. It does not make you vulnerable to their liabilities as a result.
