When I went to the bank to execute my mother’s durable power of attorney during her recent hospital stay, the manager peered at me through the glass partition at the front desk and shook his head no. He didn’t even look at the sheaf of properly signed and notarized papers I held up pleadingly. He just said, “Sorry, if your mother isn’t able to come in herself to take care of things, you’ll need a court order.”
Luckily, I was armed with knowledge from estate-planning experts and people who had been through this before. I stood my ground.
A power-of-attorney document is an absolutely essential piece of estate planning that allows you to designate a trusted person to handle your financial matters if you should become incapacitated. If you don’t have one, the people in your life will have all sorts of trouble handling your affairs, and you may end up with bills in collection and your mortgage payments past due.
“I’ve seen foreclosures that could have been avoided if somebody had power of attorney,” says Eric J. Einhart, an officer on the board of directors of the National Academy of Elder Law Attorneys, who practices in New York.
Most advice you’ll see about power-of-attorney documents is aimed at the person filling one out (known as the principal) rather than the person who has to actually use it (known as the agent). But the agent is the one who really needs the help, because that person is the one who has to fax or email or hand the documents in person to any bank, credit-card company, medical biller, insurance company, loan servicer or government agency involved, and deal with whatever hoops need to be jumped through.
Just a note here about forgery. When time is of the essence — and when is it not? — you might be tempted to take shortcuts. If a bank won’t accept the power of attorney and caregivers need to be paid, for one example, you might think it easier to just sign the principal’s name on a check. You have permission after all, right?
The catch is that it’s simply not legal. Even accessing a person’s online account and putting a payment through is iffy. Given the prevalence of elder financial abuse, the strict rules make sense, even if they gum up the works for people who are just trying to help.
“I’m sure it’s a thing that’s done — it’s just human nature. But I would not suggest that, ever,” says Einhart.
If you’re going to try to do things the right way, here are the biggest issues you might encounter when you try to execute a power of attorney and what you can do about them.
1.They want the person to show up
If I wanted an easier time with my mom’s paperwork, I’d have gone with her to the bank before she got sick and put the power of attorney into effect, but we never got around to it. Michael Picon, a creative director based in New York, was able to do that with a friend he was trying to help, and it smoothed the process in the beginning. But by the time he made it down the list to the Social Security office, the friend was too sick to come along, and Picon hit the end of his rope dealing with the paperwork.
“It broke me,” he says. “The office was full of angry, tired, frustrated people. I had a briefcase full of papers, and didn’t have some things needed. I cried. I just couldn’t deal with it.”
But, of course, he did make it through, and he ended up writing a guide to the caretaking process, “The Power of Attorney’s Notebook: Everything You Need for Managing Your Loved One’s Estate.”
One key thing he learned: There’s no legal reason why the principal has to be there, so stand your ground and keep pushing.
2. They say something is wrong with the documents
Virtually anything could cause a financial entity to stall power-of-attorney acceptance. Every state has its own rules, and every institution has different standards. Sometimes power of attorney can be rejected because two people are named agents instead of one, the notary stamp doesn’t include the right words or the document isn’t identified as “durable” (meaning it is constantly in force, rather than only in specific circumstances).
“Unfortunately, it’s case-by-case based on the company,” says Danielle Miura, a certified financial planner who specializes in family caregiving. “Everything is tedious. It’s all just a waiting period. Sometimes they’ll accept it, and sometimes they’ll reject it.”
The only way through this is to do the best you can with what you have, especially if it’s too late to change the document. Picon says he just kept telling his story to everyone who would listen, and finally he found people who took pity on him. He hasn’t yet succeeded in some areas involving government benefits, but he’s still asking questions.
In my case, once I convinced the bank to look over my paperwork, they sent me away with homework. I had to find the death certificate for my father, who had died several years ago but was still named on the account. Luckily, I’m good at scavenger hunts, and after another two-hour appointment, I got on the account. If I can sit through the whole process again, I can access her safe-deposit box, too, but they wouldn’t address both in one appointment.
3. The principal dies
A common misconception about power of attorney is that it’s good through the whole process: illness and death. But power of attorney stops when the principal dies, and the executor takes over — and the agent and executor aren’t necessarily the same person. Then, also, heirs come into the picture, and they can ask a lot of questions.
“Usually families have trouble because somebody was not using the power of attorney correctly, for example, taking funds from the account for their own personal use. And there are a lot of cases where there’s elder abuse,” says Einhart.
Careful record keeping can forestall both bookkeeping problems and bad feelings. “Make sure you have a spreadsheet of bills or some track record so nobody is questioning you,” Miura says. Another important step is to have regular meetings with family members so they feel like they’re on the same page.
Picon still worries that, at the end of his caretaking journey, he’ll somehow end up on the hook financially, especially since his friend’s estate is more likely to end up with a negative balance rather than with an inheritance.
But Einhart says the agent shouldn’t have to worry about incurring debt by carrying out the required tasks, especially if the agent signs everything properly and keeps good notes. “The most important thing you can do is sign everything as power of attorney — the principal’s name and then your name as agent. There should be a wall between your personal wealth and your principal’s debts and obligations,” Einhart says.
One final tip: Don’t keep power-of-attorney documents in a safe-deposit box. Make sure you have them in a secure place, but not inaccessible, or else your agent is going to need a court order just to get started.
Got a question about the mechanics of investing, how it fits into your overall financial plan and what strategies can help you make the most out of your money? You can write to me at beth.pinsker@marketwatch.com.
