When a loved one can no longer make sound decisions for themselves, who makes those decisions? While it can be assumed that it would fall to the spouse, the child, or a sibling, this isn’t actually the case. These decisions are made by that person’s power of attorney, someone they trust that they’ve appointed to make financial, medical, and living decisions for these very circumstances.
What many people need to understand is that the power of attorney is one of the most powerful legal documents a person can have. It means a person can authorize someone else the ability to act on our behalf with regard to financial and medical matters. The document giving power of attorney allows that person to act without direct oversight.
However, the power of attorney is not a blanket document. There are different types of power of attorney that are limited in time, limited to property or financial matters, limited to healthcare, or invalid if you become incapacitated. The following are seemingly scary things you may not have known about banks and the power of attorney in regard to elders.
1. The power of attorney and executor of will are not the same thing
The mix-up and confusion regarding these two positions is understandable. The power of attorney is written authorization to represent or act on one’s behalf regarding business, private affair’s, medical, health, and financial decisions. The person authorizing this is the grantor of power, and they usually appoint someone they know and can trust as the power of attorney. This power ceases when the grantor passes away.
The Executor of a will is someone who oversees the will and trust left by the family member who is deceased. This person has no powers until the grantor is deceased and they are not automatically granted access to the accounts in the deceased’s name. They do not have absolute power, as it is sometimes depicted in television and movies.
2. The person that is your power of attorney can make decisions for you regarding medical, financial, etc.
If you grant the power of attorney to one specific person, they can make decisions on your behalf regarding financial, medical, business matters and more. This means they can make gifts of money to family members and other financial decisions. These people with the power of attorney can also make medical and healthcare decisions such as stopping medical treatment, give consent regarding other medical decisions if this person becomes incapacitated.
It’s important to know that the grantor can give a separate power of attorney regarding healthcare and medical decisions to an entirely different person, although this may complicate things if a conflict arises. Because the power of attorney is not regulated by the court system, which makes it easy for the person to abuse their power. This can be avoided by invoking clauses that prohibit them from doing certain things – like making financial gifts, and by choosing someone you know and trust.
3. Having multiple people with the power of attorney can slow down important processes
For many parents, it can be hard to make the choice to grant only one child with the power of attorney without feeling guilty or hurting feelings of others. In some cases, multiple powers of attorney can be authorized by multiple people, but this can often welcome conflict and slow down important processes and decisions when quick ones need to be made.
In some situations, the signature of the power of attorney is required in order to document a decision being made and with multiple people granted this authorization, all signatures will be required. When making medical decisions and financial decisions, this requirement can slow down processes when not all those granted with power of attorney can be in the same place at the same time. It also becomes difficult when family members, especially siblings, granted with this power find it hard to agree when it comes to the health of the principal.
4. It can be difficult to recover what you’ve lost when power of attorney is abused
One of the reasons why it’s utterly important to grant the power of attorney to someone you know and trust well is because if you appoint someone this authorization, they can easily abuse their power. In rare cases, a principal will grant the power of attorney to a designated person that doesn’t always have the best interests in mind, leaving family members without choice or say in matters regarding the principal. In cases in which a person abuses the power of attorney to seek financial gain, it’s extremely difficult to recover what you may have lost.
5. Not all banks follow the same policy when someone dies
It’s important for the principal and their loved ones to understand that not all banks follow the same policies when a loved one dies. Unless you create a trust or a policy with your loved one’s bank in advance of their passing, it can be hard to gain access to their assets that are in the bank’s control.
Unless you’re a spouse or child who is also a joint owner or member of a bank account, most banks will only allow the executor of the will to gain access to the accounts, no matter whom they are. Sometimes, a person will have to go through probate in order to have the assets transferred, which can become costly and take months, or even years if there is familial conflict. Not to mention, probate lawyers can gain up to 5 percent of the total estate’s value when dealing with probate, which can add up.
6. You can’t simply include physical assets in a will (such as real estate) and expect it to be transferred
Leaving real estate, like your home, to your children when you die is easier said than done. As much as you might think you can simply write your house and everything inside it into your will and leave it at that, it’s not so simple. You’ll have to create a living trust or sign a transfer-on-death / beneficiary deed before passing, as long as this particular document is applicable in your state.
At MIR Senior Management and Care Consultant, we understand the challenges you and your loved ones face. We can provide help and resources to a wide range of those assisting loved ones in preparing for senior living, including lawyers, guardians, and trust officers. We’ve been providing excellence in care management to caregivers and their loved ones for nearly 15 years. Contact us today for more information about our services.