What Happens Without a Power of Attorney?

Sometimes readers suggest ideas for columns.  One suggestion that has arisen more than once is “you really should tell people what happens if they do not have a valid power of attorney.” Well, I thought it would be a great post to read for people with the same question, so here it is.

Powers of attorney are those documents that give authority to someone else to act on behalf of the maker.  There are financial powers of attorney and health care powers of attorney as stated by Hale Law, P.A. site.

What happens when there is no valid power of attorney and actions must be taken on behalf of a disabled person such as finding a new residence, providing medical care, and paying bills is that often someone must apply to be appointed guardian.  The person who is appointed by a Court might not be the person who the disabled person would have appointed before his disability.

A petition for appointment of guardian is a legal proceeding.  It will usually require the applicant, who may be a relative or friend, to appear in court.  The alleged disabled person is also served with papers and invited to appear.  This happens even if the person is unconscious or seriously mentally ill or in a coma.   Guardianship proceedings often are time consuming, emotionally draining and costly.  Once appointed, the guardian often must post a bond to assure that he or she administers his or her responsibilities properly.  There will likely also be reports required from the Court that made the appointment.

The difference between this proceeding and acting under a power of attorney is that the person appointed under power of attorney (known as the “agent” under power of attorney) was selected by the disabled person before he or she became disabled and, the agent, as long as he is acting properly, is not required to report back to a Court.

A person appointing another as his agent should consider who he would hand his checkbook today and feel confident that that person will act in his or her best interest.   The agent should be both intelligent in financial matters and trustworthy.  He or she does not need to be a financial expert, however, since a well drafted power will allow him to hire good financial people to assist him. The agent should also be a good judge of character.

Health care powers of attorney require a different skill.  The maker should choose who he would trust with his life.

I tell clients to consider whose judgment they would trust if, after an accident, decisions need to be made whether they should receive certain medical treatments or procedures or whether, in the end, extraordinary measures should be taken. I have had a client who was injured in a car accident on the way to work and was helped in every way by his agent.

There are times when the person who the maker would trust with his checkbook is not the same person he would trust with his life.  This is one reason, among others, that having a separate financial and health care power of attorney may make sense.

The term “durable power of attorney” is one that many readers would recognize.   A “durable” power of attorney is simply one that continues during a period of disability.  Since most consumers expect powers of attorney to be used during disability, some may be surprised to learn that, at one time, documents were required to specify that they are “durable” in order to be honored during the maker’s disability.

Since some financial institutions still act on the premise that a power of attorney is durable only if it states that it continues beyond any period of incapacity, it is probably a good idea to include that statement in the text of the document.   I have found that some investment advisors and banks have refused to honor durable powers of attorney even when the notice on the face of the document states that the document continues throughout incapacity and even when the document is titled “Durable Power of Attorney.”  They still required the statement in the text.

Powers of attorney make sense for most people who have others in their life whom they trust.  The most difficult cases are those persons who know no one trustworthy or dependable in their lives.   Such persons may need to spend some time identifying another who can act for them in times of need.

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.

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