How To Remain In Control When You Appoint a Power of Attorney
I am convinced that one reason clients can hesitate when deciding whether to appoint an agent under Power of Attorney is the fear of losing control. According to Mergl and Wenger, Attorneys at Law in Western PA, that fear can be aggravated on realizing that most Powers of Attorney today take effect after signing both by the person giving the power and the one receiving it. In the past “springing powers” that only take effect on certification by a doctor were more common. Today banks and financial institutions are more likely to want an immediate power.
True, the Acknowledgement required to be executed by the person receiving the power confirms that he or she will act responsibly and in the best interest of the person who appoints. Also he or she will act in accordance with that person’s “reasonable expectations.” They have to look out for you. But there are also other ways to improve your chances that the relationship will work well and express your wishes even if you were to become incapacitated.
Here are some ideas how to keep you in the “driver’s seat” when designating an Agent under Power of Attorney.
- Choose your Agent well. The number 1 way to avoid financial exploitation by an Agent under Power of Attorney is to choose your Agent well. In our office we use the “checkbook across the table” rule. This means you would feel comfortable taking your checkbook and handing it across the table to the person you are appointing and he or she would act responsibly, act in your best interest, follow through in paying bills appropriately, consult with experts where expert advice is needed, keep a record of transactions, and be scrupulously honest when it comes to handling your funds and your assets.You should not choose your Agent based only on whether that person is your oldest child or whether there would be hurt feelings. If your Agent is experiencing money problems herself or himself this might not be the time to appoint since the stress could be too great.
- Have backups. There should almost always be at least one backup Agent under Power of Attorney appointed. If your primary agent becomes disabled or unavailable, someone needs to step up and act.
- Ask questions to tailor the document to your specifications. Every Power of Attorney is not the same. You could give unlimited power, limited power, or no power to gift and you should know why in each case. You could give control over handling of your business or corporation, or not. You should know the expression “limited gifting” means $15,000 per person per year. That might be too much or not enough. If you believe Medicaid or asset protection planning could be in your future, this might be included, subject to your needs being provided for. You could give power to cash in insurance policies for your needs but not allow the Agent to change beneficiaries.You could have more than one Agent although that practice might be frowned upon by banks. Consider whether a Successor Agent would be better and also reasonably whether your Agents could work together.
- Financial Power of Attorney and Health Care Power of Attorney can be separated. One child might be great for health care and another a whiz on figures. The documents can be separated or the same person could act as both but under separate documents.
- Tell other children where appropriate. When parents develop a relationship with one child and others are left out and there is a functional family, it may be better to let others know at least of the appointment and your thoughts. Then if crisis strikes, family members may be more likely to act together.
- Fire when necessary. You can fire your Agent. Most Powers state the document is effective until a written document is received by the Agent advising her or him that it has been revoked. It is not necessary to go to an attorney to draft a Revocation of Power of Attorney although it might be best to consult with an attorney if matters have deteriorated.
Finally, although this goes further than Power of Attorney advice, you should be careful about who has access to your debit cards, credit cards, user names and passwords, and online access to your bank and investment accounts. The same rules regarding trustworthiness apply. Get help if needed.
About the Author Janet Colliton
Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.