Seniors Should You Have Power of Attorney in Place?
In my work, I frequently encounter people who have power of attorney for someone we are providing services for or I am asked whether one of our clients needs or should have power of attorney in place for themselves.
Since this is such a common issue and I am not an attorney, I thought I would ask an attorney for a basic explanation of power of attorney. I consulted the local directory of the National Association of Elder Law Attorneys www.naela.org. and met with Attorney Frank Yunes, an attorney specializing in trusts and estates (244 Bedford Street, Lexington, MA. 781-674-0234, fyunes@yunes.org). The following represents our question and answer discussion.
What exactly is a power of attorney? Power of attorney is the right granted from one person (A) to another(B) to exercise control over one's(A's) assets just as he or she could have done for themselves. It is evidenced by a legal document which must be presented when the power is to be used. Most often, the power is invoked to sign a person's name for them because they are unable to sign for themselves (due to either physical or mental incapacity or physically not available).
From an estate planning perspective, a particular kind of power of attorney known as a "durable power of attorney" would be prudent. It is so-called "durable" because it is specially drafted to survive that person's subsequent incapacity.
How do I grant power of attorney? I strongly recommend consulting with an attorney. To find an attorney, search the local directory of the National Association of Elder Law Attorneys. (See website above).
What does it cost? Certainly no more than a few hundred dollars depending on the complexity of the situation.
What does it do or allow me to do? Among other things, power of attorney allows another person to sign your name for you. With this power, the "attorney" could use your own checks to pay your bills, could sell or transfer your assets out of your name and could sign your income tax returns. Power of attorney does not grant to the "attorney" the power to make medical or health care decisions for you. That involves something known as a health care proxy.
Why do you recommend that senior citizens have one? It is positively vital for seniors to have power of attorney in place in case they lose the ability to make financial decisions for themselves. Seniors will want to have power of attorney in place at the very least to allow for the smooth administration of their assets in the unfortunate event of their incapacity. In some cases, durable power of attorney could end up saving families hundreds of thousands of dollars.
Take an example from a family I worked with in 2005. Sadly, Mom was elderly and in the late stages of her terminal cancer. Dad had passed away in the mid-1980s. Mom owned her Newton home outright in her own name. Fortunately, Mom had the foresight to grant daughter durable power of attorney.
Mom became incapacitated, her condition taking a turn for the worst. Daughter exercised her durable power of attorney, signing a deed transferring the house into a trust Mom had set up with her attorney some years ago. Mom unfortunately passed away soon after. But because the house was transferred to the trust during Mom's lifetime, the Trustee (daughter) was permitted to put the house on the market right away in the fall of 2005. They passed papers in November 2005 at a favorable price. If Mom had passed away owning the house in her own name, the house would have gone through probate and could not have even been put on the market for several months. This delay, in light of the real estate market at the time, could have cost the family tens of thousands of dollars. This is just one example of how durable power of attorney can prove positively critical.
What's to stop someone from using their power of attorney to raid someone's bank account or otherwise take inappropriate or dishonest advantage of their power? They have a name for people who do this...they're called criminals. To simply raid someone's bank account using power of attorney is known as embezzlement, a felony in Massachusetts which means it is a crime punishable by at least 1 year of incarceration. Power of attorney is a fiduciary office, which means it is a responsibility held to the highest standard of duty applied by law. However, the potential for abuse certainly exists. Therefore, one should never grant power of attorney lightly and should choose the person to whom they wish to grant power of attorney wisely.
Jack Cross is president of Home Instead Senior Care a provider of companionship and home care for the elderly. He can be reached at 781-402-0060.