Top Rated Assisted Living Communities by City
This article focuses on how, when, and why elderly individuals should create a Durable Power Of Attorney for Asset Management (often called a Durable Power of Attorney for Finances or simply a Power of Attorney, which is abbreviated as POA). Its intended audience is the elderly, spouses, and other family members, such as the adult children. This article is of particular relevance for those living in assisted living communities, nursing homes, or those receiving care assistance to age at home.
What’s in a name?
A Durable Power of Attorney for Asset Management is also referred to as a Financial Power of Attorney and a Springing Durable Power of Attorney.
Description and Purpose of POA
What a Durable Power of Attorney can and cannot do? A Durable Power of Attorney for Asset Management is a legal document that allows an individual, usually elderly, to appoint another person to act for them in financial matters. It cannot be used to make health care decisions. However, a Medical Power of Attorney exists for that purpose.
Powers of Attorney can be written to allow persons to make a single, specific financial transaction, such as managing the sale of a home, or a broad suite of transactions, such as selling stocks, writing checks, depositing Social Security checks, and opening and closing accounts. However, the individual granted power of attorney is only able to manage assets that are solely in the person’s name. The control of jointly held assets and those assets held in trusts are not impacted by a power of attorney.
POA can be written to become effective immediately, which is what happens when one signs a Durable Power of Attorney, or to be triggered upon a certain event, for example, a lack of competency. This is called a Springing Durable Power of Attorney or a Conditional Power of Attorney. If triggered by a lack of competency, a doctor’s opinion is needed to attest to one’s lack of ability before the POA becomes effective. Once effective, the Power of Attorney remains effective until death. However, a person found to be (or have regained) basic competency is able to revoke a Power of Attorney.
For veterans, a regular Durable Power of Attorney form does not allow someone else the power to manage their federal benefit checks. Through the VA, one can designate someone to manage their VA benefits. This person is referred to as a VA fiduciary. To learn more, click here.
For those who receive Social Security, a regular POA form does not allow someone else to manage their SSI checks. However, there is a program, Social Security’s Representative Payment Program, that gives one the power to manage another person’s Social Security benefits. For more information, click here.
Relevant Parties When Creating a POA
Who is involved in the creation of a Power of Attorney? When creating a POA, there can be many different parties involved, some of which are required and some are optional. Nearly all parties can be referred to by several different and confusing legal titles. Here we make sense of all possible parties, their involvement and, hopefully, dispel some of the confusion surrounding the legal terminology.
Of the following parties, only 3 are required to create a POA: the Principal, the Agent & a Notary Public.
1. Principal – the individual who is giving up power through the Power of Attorney is called the principal. They are also called the grantor or donor. In the context of aging, the principal is the elderly individual in poor health.
2. Agent – the person receiving power is called the agent. The agent is also called an attorney-in-fact or grantee. This is the individual who will be making the financial decisions on behalf of the elderly individual. Any adult can be appointed as the agent. In the context of aging, most often an adult child assumes this role but also common are siblings, grandchildren and other relatives.
3. Successor Agent – a successor agent is the second in charge. They assume the role of the agent if the agent is unable or unwilling to assume responsibility.
4. Medical Professional – a doctor or other medical professional is not a required party, but they can play a role. When creating a POA, some persons will obtain a statement that declares they are competent at the moment of creation. With a Springing POA, a doctor is needed to declare the individual giving up power is no longer competent and therefore the POA goes into effect.
5. Notary Public – is an individual licensed by a state government to serve as an official witness. In most states, a POA must be notarized by a notary public.
6. Lawyer – legal consul is not required to create a POA. Some persons choose to use an attorney in the creation process, but this is a choice not a requirement.
7. Family Members – there is no requirement that adult children, siblings, spouses or any other family members be present, serve as witnesses or be notified when a POA of attorney is created.
8. Conservator – a conservator is an individual appointed by the courts when a power of attorney does not exist and the person is incompetent. They may also be referred to as a court-appointed guardian. They are not involved in the creation of the POA.
Who Should Create a POA and When
Who should have a Power of Attorney for Asset Management? Most elder law professionals would advise that every aging individual have a Power of Attorney. However some would argue that financial POA are only needed if the individuals has financial assets. For example, persons on institutional Medicaid would have no need. Our organization takes the position that because there are unforeseeable complexities associated with aging, it does make sense for everyone to have a Power of Attorney.
When to create a Power of Attorney? Is it ever too late? It is never too early to create a POA and it is only too late if an individual already lacks basic competency. Basic competency is defined as being aware of what you are signing and being aware of what would otherwise happen to your assets should you have no power of attorney.
Having received a diagnosis of a chronic or terminal illness such as Alzheimer’s does not prevent one from creating a POA. However it does increase the urgency to do so as basic competency will eventually be lost.
Storage of a POA
What to do with a POA after it has been created? Once the POA has been notarized, who to notify of its existence is a highly personal question and one specific to every family. In some cases, the individual giving up or eventually giving up power will want all their family members to be aware. In other cases, they will want the information to remain confidential. At the very least, the POA should be stored somewhere safe, such as in a safety deposit box, a locked file cabinet, or with a family attorney. The Agent, the person receiving power, should have a copy of the document.
Eldercare Financial Assistance Locator
- Discover all of your options
- Search over 400 Programs
Costs and Assistance Options
How much does a POA cost and are there assistance options available to create one? A power of attorney can be created without legal assistance and almost free of charge. In fact, one can find a free POA form online and simply print it and fill it out. One can also have a POA created online for as little as $35. In most states, the document must be notarized, and there will be a notary fee, so even if you opt for downloading a free form, it is not entirely free of charge. Notary fees are usually less than $50.
Should you choose to work with an attorney, one might expect fees in the range of $250 – $500. As Powers of Attorney for Assets Management can specifically designate which assets can be managed, an attorney can be helpful in identifying all assets and clarifying why one might want to or not want to include control of that asset in the POA.
State bar associations can usually make referrals to certain attorneys or organizations that provide free (pro bono) services for the creation of a Power of Attorney.