Power of Attorney – Essential for Elder Law Survival – Part 1

With so many television shows devoted to survival and doomsday preparation, I thought it appropriate to discuss what families should do to prepare for a long term care event.   Given that three out of four people will either receive nursing home level care at home or in a facility, what is the most important legal document you should have in order to be prepared?

POWER OF ATTORNEY – It continues to amaze us how many people come to us with a family member in a hospital or nursing home without a Power of Attorney.  Just as many come to us who are trying to use a Power of Attorney that is outdated or not valid under current law or that fails to authorize the Agent to do what is necessary to protect them and their families.   Most people do not realize that Powers of Attorney are not created equal.  Some are very high quality documents containing well thought-out and well-drafted provisions that permit an Agent to perform all of the tasks that may be required to care for their loved-ones. Unfortunately, we see mostly off-the-shelf documents drawn by software engineers or by bored preparers who have little practical experience with using their own documents. Powers of Attorney used to be simple to execute but some people took advantage and the laws were changed. A Power of Attorney now requires two witnesses and needs to be NOTARIZED to be valid!  The Power has to be accepted by the Agent and, although not required, we notarize the Agent’s signature as well just to be safe since some banks object to anything in order to stall the moving of assets.

And how about names? It seems like a simple thing to get the name right if it’s your name.  I don’t know how often we see Powers of Attorney with a name that DOES NOT match the name on the Deed or bank account or insurance policy.  And if the name doesn’t match the property you are trying to control, the Power of Attorney fails.   It is quite common for people to draft Powers of Attorney without ever considering what their use will be and matching names accordingly.

Many banks do not really know the law and tell our clients that this or that is wrong with the document. You need to know that a bank cannot refuse to honor a Power of Attorney presented in good faith unless they have a reason to know it is being used improperly.  They may validly ask for a certification that the principal is still alive and hasn’t been declared incapacitated and that the power is still in full force and effect and that the copy before them is accurate – but that is all they can ask.    If you supply a certification, the bank must honor the power or may be liable for the consequences.   If those consequences are losing money on nursing care that could have been saved, then they usually act quickly to honor the Power. And they cannot force you to supply an original.   They can look at the original but they cannot keep it.  Most Powers of Attorney clearly state that a copy is as good as an original.  Do not be bullied by a bank.  The only time we give an original Power of Attorney is when we are recording a Deed.  That Power of Attorney is filed with the Court and then certified.

And what about the basics such as when the Power is effective and who is serving as Agent?   How should this be handled in a “good” Power of Attorney?    There should be a provision that it is immediately valid and not a Power that “springs” into effect when the principal is incapacitated.  Such a provision is simply a ticket to an expensive and time-consuming guardianship because that is what the bank or insurance company will ask for if this provision is in the document.

Secondly, the Power of Attorney should name ONE agent, not the whole family and not even two people.  There should be no “successors” named unless you are looking to prove that the primary agent is incapacitated as well or “prove” they are unavailable by dealing with their doctor.  If you want co-agents, do two powers of attorney permitting EITHER to act alone.  You can even keep one of the documents in your safe deposit box or with your attorney and have it accepted when you need it.  Make sure the Power does not invalidate the other powers and you have the flexibility that each Agent may assist the other.

This is the first step in doing a good Power of Attorney.   In the next part of our series, we will tackle the provisions that EVERY Power of Attorney should have and HOW these provisions should be placed in your document.   If you have questions about Powers of Attorney, please call us as we would be happy to look over your existing document or draft a new one for you.

mm About Leonard L. Shober

Leonard L. Shober has focused a quarter century on representing clients in their estates and tax matters. He began his legal career in an estate planning practice. However, his interest in taxes and estate planning led him to pursue a Master of Laws (LLM) from Temple which he completed in 1994. Len continued his estate and tax practice which ultimately led to a focus on the needs of the elderly and disabled. At Shober & Rock, Len focuses on elder law, tax and estate planning and estate and trust administration.

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