The other day I got a call from a daughter whose mother had fallen and broken her leg. She explained that her mother had been declining both physically and mentally for several months. Friends had advised the daughter to get a power of attorney. The daughter asked me, “What is a power of attorney and do I need one?” This question illustrates the fact that a senior who has a health problem has a financial and a legal problem too. If a senior becomes incapacitated, who will make decisions and act for the senior in his or her financial and business matters?
A power of attorney is a document that evidences the authority of one person to act for another, known as an agency relationship. Using a power of attorney, you (the principal) grant legal rights and powers to another (the agent or attorney-in-fact.) Your agent stands in your shoes and can make financial decisions for you. For individuals coping with dementia, this type of financial assistance is essential. However, before executing a power of attorney you should know these important facts:
- A power of attorney authorizes your agent to make decisions concerning your property. Your agent can do whatever you may do—withdraw funds from bank accounts, trade stock, pay bills, cash checks, deed property—unless limited in the power of attorney.
- The power of attorney does not authorize your agent to make health care decisions for you.
- Unless a power of attorney is springing—taking effect only if you become incapacitated—it takes effect as soon as it is signed.
- You should select someone you trust to serve as your agent. Your agent’s authority will continue until your death unless you revoke the power of attorney or your agent resigns.
- Your agent is entitled to reasonable compensation unless you state otherwise in the Special Instructions.
- You may revoke the power of attorney at any time by sending your agent a letter that the power of attorney is revoked
- The law governing powers of attorney is explained in the Uniform Power of Attorney Act, chapter 12, title 15, Idaho Code.
In addition to making a power of attorney for financial matters, you should also make a living will and durable power of attorney for health care. With these two documents, many times the need for a guardianship/conservatorship can be avoided in case of incapacity. In next month’s tip we will discuss living wills and durable power of attorney for health care.
Tom Packer is an Elder Care Attorney serving all of Southeast Idaho and is a licensed Nursing Home Administrator.