The Power of Attorney can be a powerful tool or a dangerous weapon that can be turned against its creator. We often assume that when we create a Power of Attorney, we are ensuring that the person we name can do only what we want them to do. We also assume they can do it as easily as we can. Finally, we may assume that a Power of Attorney avoids the need for conservatorship or guardianship when we become incapacitated.
In fact, a Power of Attorney is both more powerful and less powerful than we need. Basic Powers of Attorney often do not include the provisions we need to plan for nursing home care. If the Power of Attorney does not specifically authorize an action – like picking up mail or signing required form Powers of Attorney at banks and investment companies – then that action is not authorized.
This can become a real problem at banks because they often refuse to honor Powers of Attorney that are older than six months or that are not on their proprietary forms. If the Power of Attorney authorizes the Agent to sign a bank’s Power of Attorney form, that may resolve the issue. Few Powers of Attorney authorize the actions necessary to plan for nursing home care benefits.
At the same time, the Power of Attorney can be too powerful. If we are incapacitated and cannot supervise our Agent, who does? The answer is no one. The District Attorney can get involved in cases where the Agent is misusing the Power of Attorney for their own benefit but someone has to call the D.A. to tell them what’s going on.
If you are aware that a Power of Attorney or an elder’s or disabled person’s finances are being abused in Boulder County, call Adult Protective Services at 720-564-2283 right away. If you are outside of Boulder County, call your police department’s non-emergency number or your District Attorney’s office.
We had a recent case where a daughter had abused a Power of Attorney, using her dad’s checking account debit card as if it were her own for salons and pet toys. The other daughter did not find out about this abuse until after the father died. We are helping our client to take those fraudulent expenses out of what the abusive daughter inherits. But if the father had lived a few more years, the abusive daughter could have spent everything leaving their father impoverished.
One way to protect yourself from abuse is to be extremely careful in who you name to be your Agents. We attorneys see children financially abuse their parents all of the time so don’t just assume your child will take good care of you. If you have seen your child act responsibly with substantial sums of money and compassionately towards you, then consider naming them as your Agent. If your child is addicted to credit cards or carries animosity towards you, consider someone else.
A powerful way to protect yourself from abuse is to create a revocable living trust. The structure of the trust requires your successor trustee (the person in charge if you become incapacitated) to send financial reports to your beneficiaries. That will shine some daylight on what your successor trustee is doing and invite the people you care about the most to examine what your successor trustee is doing with your money. With most of your assets managed by your trust, your Agent has much less control over your future.
Finally, make sure your trust and Power of Attorney authorize the making of gifts if nursing home care is in your near-term future. That will allow the people you trust to get you qualified for Medicaid in appropriate situati