How to Avoid Trouble When Using a Power of Attorney

14 Comments

One of the most powerful tools for managing your affairs should you become mentally incapacitated is the general durable power of attorney (“DPOA”). This legal document allows you to appoint another person to make legal decisions on your behalf in the event that you are unable to do so yourself. It is “general” because it covers a wide range of situations, such as selling real estate, purchasing items you may need, accessing your bank accounts and other investments, etc. It is “durable” because it is effective even if you become incapacitated; indeed, that’s probably the only time you’ll really need it!

There are two types of POAs: one type takes immediate effect without having to prove you are incapacitated. The other—called a “springing power”—only becomes effective upon the determination by a physician that you are unable to make your own decisions regarding your property.

One of the misconceptions about DPOAs is that you lose your independent right to make decisions for yourself (i) when you sign it, or (ii) when the power “kicks in.” In fact, you continue to have all the rights you had before you signed the DPOA—to sign documents, withdraw money from your bank accounts, and make other legal decisions—unless and until a court order says you lack the capacity to do so.

Since the person you are naming as your “agent” under your DPOA will have very broad powers over your property and legal decisions, it is vital to choose your agent carefully. Frequently spouses appoint each other, with a named successor agent being one or more of their children.

Another misconception is that the agent can take your money and give it to themselves. However, under state laws, the agent has “fiduciary responsibility,” which means that they must only act in your best interests, and they are barred from benefiting themselves with your money.

Naming two or more agents to serve at the same time can prevent inter-family jealousy and ensure that a rogue agent cannot enrich themselves secretly while you are incapacitated. However, it has the disadvantage of requiring all the agents to agree about every decision to be made, significantly slowing down their ability to access funds and make other legal decisions.

More frequently, parents name a child with a series of successor agents named right in the document. That way, if the first named child/agent does not want to—or is unable to—serve, there is already a named successor agent. In most cases, it is not a good idea to allow the named agent to name their own successor, since they may select someone that you may not have approved had you had the chance to choose.

One often-overlooked provision is the ability to do “Medicaid planning” should the need arise. Under state laws, an agent cannot give away your property without your consent. But under a properly drafted Medicaid planning paragraph in your DPOA, the agent would be specifically given the authority to make transfers to other family members, if doing so would preserve your assets for the family unit while accelerating your access to Medicaid coverage in a nursing home or assisted living facility.

Finally, be sure to have an attorney prepare this important legal document for you and avoid using a cheap or free “form” from the internet! Not only are you paying for the language in the document, but also for the expertise in eliciting from you which clauses you wish to be included and who should serve as your agent(s).

K. Gabriel Heiser is an attorney with over 25 years of experience in elder law and estate planning. He is the author of "How to Protect Your Family's Assets from Devastating Nursing Home Costs: Medicaid Secrets," an annually updated practical guide for the layperson.

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14 Comments

Thanks for this article. I see you are an elder attorney and must know what you're talking about. I've read countless articles about POA for 3 years and it seems there's conflicting information. Some say ANY POA does not take effect until the person is deemed legally incompetent in a court of law, which rarely happens. I think you say otherwise? I believe you are saying the agent makes independent decisions that they believe are in the other person's best interest? Others imply they act only on the person's behalf... for example, pay bills or move money per instruction, even though in reality most cannot actually provide instruction. These subjects come up here often, and causd debates that are never clarified. It's often about whether the POA can force the person to move into a nursing home, determine where they can go and who they can see. I was misguided into thinking I could not bring my parents home to dinner, or take them out of their nursing home for any reason because my brother (POA) AND the nursing home said so. They said I would be arrested if I took them out of the building for any reason. I paid an attorney several thousand dollars only to discover later on from Adult Protective Services that my parents were free to go or live wherever they wanted until deemed legally incompetent. (They were actually extremely confused, but not "officially" or legally deemed incompetent.) Also, my brother and the elder attorney changed my parents' POA and Health Care Proxy to exclude me, after they were diagnosed with Alzheimer's and had no idea what they were signing. Again, they were not "legally" incompetent, but all medical records reflected that they had dementia or Alzheimer's. Their original POA and HCP were only four years old and signed before they were confused. Was it legal for the attorney to have them sign new ones? All this conflict was all due to a disagreement between me and my brother... he wanted them in a nursing home and I wanted to care for them at home with professional help. So he and the nursing home ganged up. I have so many burning questions and hope you can clarify. Thank You!!!
Riley90... Your letter brought me to tears. I went through a very similar situation. It is hard to believe how attorneys and nursing homes gang up on family members to bully and harass them for their own benefit. They certainly dont care about what is best for the elderly person being fooled or neglected. We supposedly have "rights" but need to empty our bank accounts to have them enforced. There is far too much ambiguity and confusion about POA, even amongst lawyers and healthcare providers. My attorney either did not know the law or took advantage of all the ambiguity to take my money. I spent thousands with him trying to get my parents out of a nursing home where they were neglected, only to find out from Adult Protective Services that they had the right to walk out on their own at any time. The nursing home to me their Health Care Proxy was outdated and useless because it was not the original copy. (I knew that was a lie.) then the elder-lawyer had my senile parents sign a new one without me on it. I was told I would be arrested if I took my parents out to dinner. They are all crooked and in cahoots. I don't know why they cannot make the whole POA the thing more clear to avoid all this unnecessary angst and expense. (I'm not sure who "they" are.) I wonder if Legal Aide, the Department of Health, Elder Source, or Adult Protective could help you.
By the recommendation of his estate lawyer, my father, who was already showing signs of dementia, named a younger friend, known for only 4 years, as his DPOA, for mental and for health. We, his 2 daughters, were unaware that the friend had unethical intentions until it was too late. We are both named as the Alternates, however, the agent blocked us as soon as our father went into crisis. He was taken from his home in his retirement community and locked up on an advanced alzhiemers wing, against his will. His DPOA then took total control of our father, and suddenly quit returning our phone calls and emails, then was consulting with and using our father's lawyer against us. He aggressively blocked us from getting any information about our father and firbid his doctors, nurses, and social worker to talk to us. When we visited our father, he said several times he wanted his daughters to make all of his decisions, health and fiancial, and he kept trying to fire his lawyer. When we tried to change tge DPOA with him, one of the hospital admins who kbew my dads lawyer found out and he told my dads lawyer. Right before the doctor came to help us witness the signing, the hospital administrator told the doctor they'd slap a lawsuit on her of she helped us. So she backed off and we were never able to get it changed. The lawyer bullied us and told us even if we changed it there's no way it would be honored by the hospital. After that my dad kept trying to fire his lawyer, and even told his DPOA he wanted him fired, but he'd gotten the dementia diagnosis so no one honored what he was saying about his daughters being DPOA, or to replace his lawyer. We even have him asking us to find him a replacement lawyer on a voicemail, and 3 times on video saying he wanted his daughters to make all of his decisions. We got a bad attorney who botched our case and none of this got addressed and we continued to get bullied and harrassed by my dads lawyer (he and the DPOA accused us of stealing almost 10K from our fathers accounts after he had taken control of my dads finances, we didn't, and we asked for his documentation but he never produced it). We hired a new attorney but he ended up doing damage control from our previous attorney. In any case, it looks as though you are saying my dad could have changed the DPOA, and fired his lawyer, even after the dementia diagnosis? There was no court order stating he couldn't make any of his own decisions. The Agent continues to block us, our attorney now is managing to get us information but its costing us 10s of thousands, and will soon bankrupt us, and now, aftet not being allowed to visit him for several months until we hired this new attorney, we discovered our dad is showing signs of serious neglect, bedsores, oral hygeine being ignored, goes on and on. Attorney now working to address issues. We think the agent is a perpetrator, or predator, and had planned all along to get my father's trust then ingratiate himself onto my dads documents. He is also the executor. I was the co-trustee, but 2 months after all the agreements were made as to that arrangement, they coerced my dad into removing me, and instead now the lawyer is tge Trust Protector. He kept trying to tell my dad during the estate planning meeting we had, that my dad should appoint him as the trust protector and my dad didn't want to, we even talked about it after the meeting. I just found out 2 months ago after our new attorney finally got a copy of the trust, that I'm not on there anymore, but the lawyer is. My sister and both live out if state. It's been a total living nightmare. We desparately want to take care of our father and this agent will not let us even advocate for his quality of life (he has none) and when my dad's church friends try to advocate for my dad, they are told to stop "interfering" or stop "meddling" and have been bullied by my dads lawyer, he even threatened to ban her from visiting my father. His church friends are tge only ones advocating for my dad, as we have no voice, but they keep trying to shut them up, too. My dad is deteriorating under their watch. If wr had been able to get the POA changed, we would never have allowed this horrible neglect to take place. The facility is antiquated, and not sufficient for his needs but the agent won't let us advocate to get him moved to a better facility. But we are not ever going to give up, and are determined to succeed.