A Power of Attorney (PoA) is a legal document that gives someone authority to act on your behalf. Think about all the decisions you make on a daily, weekly, monthly basis. Now think about what would happen if you couldn’t make those decisions for yourself anymore. A Power of Attorney designates an Agent (typically a family member or another trusted party), and specifies powers for the Agent to navigate difficult times when you can’t make your own decisions.
There are essentially two types of PoAs. One is for financial and general life or business decisions, and the other one is specifically for health care decisions.
This time of year it is common to hear about people creating PoAs for their kids who are headed off to college. These are generally Health Care Powers of Attorney (HCPoA) that people are talking about. If the unthinkable happens and your child is in a terrible car accident, because they are no longer a minor, you would need to have a HCPoA to help manage their health care decisions. Additionally, if you don’t have the companion HIPAA Authorization document for your child, the medical professionals can’t even provide you their health status or update.
The financial PoA is commonly called the General Durable Power of Attorney. Financial PoAs give an Agent the power to make financial decisions and take financial action on your behalf. For instance, if you have a stroke and are unable to pay your bills for several weeks or months, a financial PoA Agent would be able to continue making mortgage payments or pay your other bills during your illness. If there is no PoA Agent appointed for you, your financial life can get very complicated quickly.
What If a Bank or Nursing Home Won’t Honor Your Power of Attorney?
“Asset holders” (typically banks) are quite picky about PoAs these days. If the PoA is too old or the language isn’t just right, they can reject the PoA. All this despite the fact that a PoA has durability terms saying it never truly expires. These entities are putting policies in place that put a time limit on PoAs. Additionally, these entities are getting much more specific on the powers required in the PoA.
So, what can you do about this?
There are generally two options:
1. You can redo the PoA every 3-5 years, or
2. You can re-certify the PoA with an updated Affidavit or Certification of PoA
The exact process of recertification depends on the entity that is challenging the PoA, though. In addition, they can have their own required forms. You need to make sure you know EXACTLY what they mean by “re-certify,” but generally you will need to involve an attorney so everyone’s rights are protected. There is no law that valid PoAs need to be “recertified,” but again, primarily due to fraud and financial abuse, some organizations, including nursing homes are getting very particular. Unfortunately, this often creates an undue burden for the people in possession of the PoA.
This situation can create a real problem if the principal can’t sign a new PoA or a certification of the PoA. The principal is the person who created the PoA and assigned an Agent to act on their behalf. If you can’t prove that the PoA is current with a certification, or you can’t easily sign another one due to mental capacity, then you may have to move to pursue legal action against the business entity or create a guardianship — and both options are expensive and incredibly stressful.
A Real Life Example
An attorney I know was recently telling me about a man who needed access to his wife’s retirement assets to pay for her long-term care. Remember, retirement assets (IRAs) are in an individual’s name only. The couple didn’t have PoAs, so he couldn’t legally access her account as the PoA Agent. The wife didn’t have capacity to sign a PoA any longer because of advancing dementia, so they ended up spending nearly $4,000 to complete a guardianship. Once the guardianship was in place (which can take a while), the husband was able to access her funds to pay for the long-term care bill, but it ended up costing a lot more money (and stress) than a valid PoA would have!
A Few Things to Keep In Mind About Powers of Attorney
Generally, Health Care Powers of Attorney (HCPoA) are more lenient to direct family members when health care decisions need to be made. Unfortunately, those decisions usually cannot wait. Even without a HCPoA, a spouse, or other close family member, can have some input with the doctors, but that is becoming less of the normal routine. Although banks and other business entities are becoming more and more restrictive with PoAs, we know hospitals and doctors may not be far behind with increased restrictions on Health Care Power of Attorney documents.
Powers of Attorney are an important tool for anyone over the age of 18. But they become especially important as one ages and faces significant health issues or issues of cognitive decline that can impact your ability to manage your finances. Unfortunately, none of us know exactly when those times might occur in our lives.
Sadly, a tool that is designed to make hard times a little easier, can get complicated when banks and nursing homes decide to be picky about honoring them. It is also critically important to understand exactly how assets are owned, and how that ownership corresponds to your PoA document, and how a PoA Agent’s powers can, or cannot, be used with trust assets. At that point, it is important to consult with an experienced and trusted estate planning or elder law attorney to know exactly what the law says, what you and your loved one’s rights are, and what exactly the bank or nursing home wants with regards to the PoA.
If you have questions, give us a call to review your situation at a no-cost consultation. You can reach us at 913-345-2323, and we will be happy to help.
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