Elder Law 101:
Why Having a Power of Attorney is Essential

By Howard S Krooks, Esq., CELA, CAP

Life is full or responsibilities and a variety of things we would prefer not to contemplate. Yet, with dementia and Alzheimer’s on the rise, planning for one’s incapacity is essential. Have you ever thought about who will make decisions for you if you become incapacitated and unable to handle day-to-day financial matters or make healthcare decisions? Although it’s not pleasant to think about, if you don’t do anything to prepare for this possibility, a judge might have to appoint someone to do these things for you. Nobody wants a court’s intervention in such personal matters, but someone must have legal authority to act on your behalf to avoid court involvement.

I often tell my readers there are seven essential legal documents that you need to protect yourself from serious legal complications, and to ensure decisions regarding your person and property are implemented if you are temporarily or permanently unable to make them. These documents are: Durable Power of Attorney, Designation of Health Care Surrogate (medical power of attorney), a Living Will, a HIPAA Release, Designation of Pre-Need Guardian, a Last Will & Testament and a Revocable Living Trust.

Be sure to give someone you trust the legal authority to act for you by creating documents called durable powers of attorney (POAs); one for financial matters and one for health care. The person you choose is called your agent or attorney-in-fact. Once signed and notarized, a POA is legally valid, and your mind can be at ease.

Many people tend to name one or more of their adult children as their agents. If you think your child is trustworthy, lives nearby and is up to the task, by all means, go ahead and name that child as your agent. However, you might want to name a back-up agent – either another child or a professional fiduciary, if your initial agent fails or refuses to serve. This is why Power of Attorney is essential.

If you are an adult child of elderly parents, be sure to find out if they have POAs in place and who their agents are. Without a signed POA, you would have to go to court to get guardianship of your parents in order to make decisions for them financially and for their long-term care if they become incapacitated.

The Powers of a POA

Depending on how the POA document is written, the powers of an appointed agent can be broad or narrow (i.e., a generic POA document that does not contain any limitations typically gives an agent broad power over both medical and financial decisions). Florida law requires specificity when authorizing an agent to take any action under the POA, so just providing general authority will not work for Florida POAs. State law should be consulted regarding this issue to determine if your state has a similar requirement. The following are a few examples of the kinds of decisions each type of POA agent can make.

A health care agent can decide:

  • What medical care the principal receives, including hospital care, surgery, psychiatric treatment, home health care, etc. (depending on the financial means of the principal and the approval of their financial POA agent);
  • Which doctors and care providers the principal uses;
  • Where the principal lives, including decisions regarding residential long-term care, such as assisted living or memory care facility and nursing homes (again, depending on the financial means of the principal and the approval of the financial POA agent);
  • What the principal eats, who bathes the principal, and other decisions about care inside a hospital or long-term care facility.

A financial agent can:

  • Access the principal’s financial accounts to pay for health care, housing needs and other bills;
  • Sign checks, and open and close bank accounts;
  • File taxes on behalf of the principal;
  • Make investment decisions on behalf of the principal;
  • Collect the principal’s debts;
  • Manage the principal’s property; and
  • Apply for public benefits for the principal, such as Medicaid, Veterans’ benefits, etc.

One of the fundamental rules governing an agent’s power is that he or she is expected to act in a fiduciary manner, or in their principal’s best interest. This duty cannot be broken. In addition, an agent can’t:

  • Change a principal’s will.
  • Make decisions on behalf of the principal after his/her death (unless the principal also has named the agent as the personal representative of his/her will, or the principal dies without a will and the agent then petitions to become administrator of the decedent’s estate.)
  • Change or transfer the POA to someone else. An agent has the right to decline his/her appointment at any time. However, unless the principal named a co-agent or alternate agent in the same POA document, or is still of sufficient capacity to appoint someone else to act on his/her behalf, an agent can’t choose who takes over his/her duties.

Special Powers

Having a Power of Attorney is essential because different states also include “special powers” that must be initialed by the principal in order to convey authority to the agent, including the power to create and fund trusts, the power to change beneficiary designations on certain assets and accounts, and the power to engage in a gifting program on behalf of the principal. Paying compensation to the agents, gift-giving authority and the power to change beneficiaries among numerous other powers, must be clearly and specifically detailed in the POA.

Generally, a POA is valid and “durable” as soon as it is signed, thus allowing for the agent’s authority to continue even after the principal becomes incapacitated.

Third parties, such as doctors, banks and long-term care facilities cannot be held accountable for upholding the decisions of an agent with a valid POA document. Indeed, these third parties must adhere to the agent’s decisions regarding the care or finances of the principal, and will not allow decisions to be made by other interested parties or family members without a valid POA.

 Plan Ahead

Once a healthcare emergency strikes, it will probably be too late to prepare these documents, so take care of this right away for yourself or talk to your parent about getting their affairs in order and spelling out their wishes regarding health care and their finances while they still are healthy enough to do so. This is why Power of Attorney is essential.

Because POAs can vary in complexity and the nature and extent of the powers conveyed to agents, it’s important to have a reputable elder law or special needs planning attorney who knows the intricacies of the law to draw up these documents, rather than purchasing or downloading a generic POA from the internet. An attorney can discuss your needs and concerns and draft POA documents reflecting the powers you want your agent to have. An elder law attorney also can provide advice on additional planning tools, depending on your family’s circumstances.

If you have any questions about the POA documents you need, or you would like to execute these all-important documents, you can visit www.elderlawassociates.com or contact my firm at 1-800-ELDERLAW or (561) 750-3850 to make an appointment to speak to an attorney.

The information contained in this article has been prepared by Elder Law Associates PA, presents general information, is for informational purposes only, and is not, nor is it intended to be, legal advice. Before acting on any of the information presented, consult an attorney for advice regarding your individual situation.