Power of Attorney: How Much Should Be Out In The Open, Part III

    When choosing a person to be her attorney in fact, our Aunt Gertrude (read prior posts to learn more about our dear Aunt Gertrude) must find the person whom she trusts. Aunt Gertrude has to be comfortable with having this person make decisions that are in her best interest.

    Last time we discussed some of the checks and balances that are already in place. . .the Agent (in our case, Aunt Gertrude’s niece Milly) must take actions which are in her aunt’s best interest. The agent must be loyal to her aunt and be ready to give an accounting for all of the actions which she has undertaken for her aunt.  The Agent’s Acknowledgement can be a powerful tool. . .if someone asks.

    But what if no one asks?
    “Oh, we know that Milly loves her Aunt Gertrude. Milly would never do anything wrong.” Or “I don’t want to get involved in a family matter.” These are the types of comments the  attorneys hear when trying to sort out a mess after the fact. .

    One small change that can help is to add language to the power of attorney document which requires the attorney in fact to report his actions, taken on behalf of the principal, to a third party.  And make that report simple. A “yellow pad” report is fine, as long as it is supported with receipts, cancelled checks, etc.

    If Milly goes shopping and buys groceries for her Aunt Gertrude twice a month, she must show the receipt and the cancelled check or the check register to a third party. How often? It’s up to Aunt Gertrude, really, but to be safe, make it no less than once a year. Put the language in your power of attorney document.

    Who is the ‘third party’ that she is reporting to? Again, it is up to Aunt Gertrude, but your attorney is the natural choice. It was he or she who helped Aunt Gertrude to this point. Appointing a professional  like an attorney or a CPA will put Milly on notice that someone is going to look at these receipts. Someone is actually going to see her purchases.

    The Agent’s Acknowledgement is fine, but only if someone ever looks at the actions Milly has undertaken for Aunt Gertrude. The yearly review uses the strengths of the Agent’s Acknowledgement, requiring the attorney in fact to share information about her actions with an outside party.

    Please let us know  how your Aunt  Gertrude is faring. We want to hear your stories. We will be happy to share the specific language we use in our Power of Attorney Documents.  Contact us.    

Power of Attorney: How Much Should Be Out In The Open, Part II

    We have been discussing Aunt Gertrude and Milly, our principal and attorney-in-fact, and the ways which Milly is limited by the power of attorney document. I earlier made the comment that “The real problem is that no one knows exactly what Milly is doing. And Milly has no oversight.” Actually, Pennsylvania’s statutes (chapter 56 of Pennsylvania Statutes, Title 20) do contain certain provisions which are designed to give some protection to the person appointing an attorney-in-fact.

    To begin with, an Agent’s Acknowledgement must be included in each power of attorney document,  wherein the agent (another name for the attorney in fact) acknowledges his or her responsibilities and loyalties. The Power of Attorney document also addresses the agent’s ability to give gifts (limited or unlimited). The legislature continues to refine and expand these laws in an attempt to further protect our senior citizens.

    The document also requires the formality of signatures which are both witnessed and notarized, granting the power of attorney document its place among other, equally important estate planning documents. The hope is to impress the importance of this transaction and document on both principal and agent/attorney-in-fact.

    There are penalties for those who transgress their duties, and it is those penalties which our legislature is presently addressing.

    The rise in  abuse of power of attorney cases makes it clear that this is an area where we need to be vigilant in the defense of our senior citizens. Our Aunt Gertrudes are depending on us. We are fortunate that here in Pennsylvania there is continued effort to strengthen these laws.

    The next time, we’ll address another way in which the power of attorney document, with some very small revisions, can further protect Aunt Gertrude.

    Please leave a comment or a story of your own. Thank you to all who have commented that they are enjoying our two blogs. . .

Power of Attorney: How Much Should Be Out In The Open? (Part I)

    Having named her niece Milly as her Attorney in Fact, Aunt Gertrude feels so much more secure knowing that there is someone who will ‘look out’ for her in the future. And the family members are all so proud of Milly for stepping up to the plate to help. Aunt Gertrude’s bills are being paid on time, she has a quiet confidence in Milly plus she has the peace of mind knowing that Milly is looking out for her best interests.

    So who is keeping an eye on Milly?

    “Oh, we don’t have to worry about that. She’s family” is the resounding answer I hear when I ask that question of family members.

    “Aunt Gertrude and Milly have been close since Milly was a toddler” is a typical response. And I want to believe the best about Milly. I do. We all do. After all, its much easier to have Milly carrying the load. The family trusts her. And the family knows that Aunt Gertrude is cared for.

    Sort of.

    The real problem is that no one knows exactly what Milly is doing. And Milly has no oversight. Milly may be the best thing since sliced bread. And she may not be. Once an attorney in fact takes actions on behalf of the principal, here, Milly acting for Aunt Gertrude, she quickly learns that the power of attorney document is all she needs. She can take whatever actions she chooses, limited only by the document. And the power of attorney is a powerful document. There are very few limits on what she can do.

    Families often feel uncomfortable asking a “Milly“ what is happening with Aunt Gertrude’s finances, even when they suspect foul play. They feel they are meddling, and they don’t want to get involved. But that may be exactly what is needed.

    We are going to investigate two ways that an attorney in fact is limited in what actions he  or she may take. One which is statutory and one which is new.

    Please keep sharing your stories with us, or leave a comment on our blog. We want to help our senior citizens live a happy, full life.

Senior Citizen Abuse Without A Scratch

    When you hear the phrase “Senior Citizen Abuse” your mind conjures up an image. That’s the way our minds work. When I say “dog,” you don’t think of the letters D - O - G. You picture a dog. If I say “Big brown dog” your image changes. “Big brown muddy-pawed snarling dog” and it changes again, and so on.

    I want to paint you a new picture of “Senior Citizen Abuse.” Or perhaps an alternative to the picture you now have. This Senior Citizen Abuse doesn’t include being yelled at by a mean step-sister. It doesn’t include withholding food or attention, or neglect. It is white collar in nature.

    Aunt Gertrude, who needs assistance, appoints Milly as her attorney in fact through a Power of Attorney document. Aunt Gertrude doesn’t get around as well as she used to and her vision isn’t what it was in her younger days, so she is so very thankful for her niece, Milly. Milly goes to the store to pick up her Aunt’s groceries and prescriptions. She reads her Aunt’s mail to her and sometimes even does cleaning at her house. Aunt Gertrude says she is a real blessing.

    What Aunt Gertrude doesn’t know is that Milly is robbing her blind. You see, Milly, as the attorney in fact, can write checks on Aunt Gertrude’s checking account. So when Milly goes to the grocery store for her aunt, she does her own grocery shopping as well. And though Aunt Gertrude is eligible for a better vision plan under her health care plan, she doesn’t know it. Milly didn’t read that letter to her Aunt. She likes being able to screen all of the information Aunt Gertrude receives. . .like her bank statements and the statements of her meager investments.

    If left unchecked, Milly will empty the investment account and hide the money in one of a hundred ways that are hard to track. Aunt Gertrude may have wanted to leave something to her church or her grandchildren as a legacy. But it won’t be there. And Milly will simply say that it was ‘all used  up’ caring for dear Aunt Gertrude.

I  speak to clients almost daily who know of or strongly suspect this type of abuse. So when you next hear “Senior Citizen Abuse” I want you to picture the sweet niece, Milly, helping her poor Aunt Gertrude, pushing a grocery cart that is unusually full. . .

Keep sharing your comments and stories with us. We’ll all be better equipped to care for the seniors among us.

Power of Attorney: When is the Right Time to Appoint an Attorney In Fact?

            The simplest answer to that question is “right now.” We sometimes don’t like facing certain things because of the consequences we might face. Like the man who refuses to go to the doctor because he is afraid the doctor will tell him he has high cholesterol and will want him to change his diet. So he refuses. Later he dies of a massive heart attack. Or the person who does not want to know what those unopened bank statements say. And they lose their house and their car in bankruptcy.

            Not addressing an issue rarely makes the consequences go away. In fact, not facing our issues, whether they are problems or opportunities, usually creates more trouble, not less.

            Appointing an attorney in fact can be the same as the earlier examples. Many of the times that the power of  attorney comes into play, there is an emergency which precipitates the need for an attorney-in-fact to act. For example, a person is in a car accident and their life is not threatened, but they are seriously injured, such that they are in the hospital for weeks with an outlook of long-term rehabilitation. Who takes care of the day-to-day responsibilities? Who feeds the dog? Who insures that the light bill is paid? Who makes sure that all the routine responsibilities are managed? This is no time to appoint an attorney in fact. The power of attorney document needed to be in place ahead of time.

            When medical needs arise, physicians are trained to care for the patient, not the patient’s checkbook or daily chore list. And that is as it should be.  Who takes care of these issues?

            Some of you reading this are saying, “Well, my family will step into help.” For many of us this is true, but only to a point. Your family’s best intentions will not get around HIPPA requirements. They may want to help, but the law may prevent them from doing so. A properly drafted power of attorney as well a medical power of attorney is all that is necessary.

            So when is the proper time to act? Today.  Take the time to discuss the power of attorney document with your attorney. He or she will help you decide who is the best choice for you. Each state has its own unique laws, but most are very similar. The key issue is, do it. Do it today.

            I welcome your comments and your power of attorney abuse stories. Thank you to all who have contacted us after reading our blog.
 

Abuse of Power of Attorney - Is the Fox Guarding the Hen House

    When an attorney in fact (the person who is appointed as the agent through the power of attorney document) walks into the investment adviser’s office and says “My Aunt Gertrude would like to change the beneficiary on her investment accounts,” is she taking an action that she is allowed to take?
    If Aunt Gertrude has executed a power of attorney document and named Minny as her attorney in fact, then the answer is very likely a resounding YES! Consider the following exchange:
    Financial Advisor: “And who might you be?”
    Attorney In Fact: “I’m Minny, my Aunt Gertrude’s Power of Attorney” (they always call themselves that), and hands to the FA a perfectly legal power of attorney document and her valid driver’s license.
    FA: “Who will be the new beneficiary of these investment accounts? Your Aunt Gertrude has a sizeable account and had previously left it to charity.”
    AIF: “It will all be left to the name on this paper” and hands another document to the FA.
    FA: “But this is your name” he says, looking surprised.
    AIF: “Yes, that’s right. It all goes to me.”
    This might sound like dialogue from a bad soap opera, but it happens all the time. If you know a financial investment advisor, ask him (or her) if they have ever met someone who has done exactly what Minny has done here.
    We’ve talked earlier about the need to choose the right person to be your attorney in fact. Today we’ll address what to do when you suspect or know that the actions being taken are not in line with what the principal wants or are clearly not in the principal’s best interest.
    If you have executed a power of attorney document and appointed an attorney in fact, and you are still in control of your own actions and sui juris,# then you are the master of your own fate. If you have appointed this person as your attorney in fact, you can withdraw that appointment. The power of attorney document is not stronger than your own will, assuming you are mentally competent and sui juris. You need only inform the attorney in fact that he is no longer your attorney in fact. I recommend you consult with your attorney to execute any documents deemed appropriate in order to effect the removal of the attorney in fact.
    If you are aware of a “Minny” who is changing beneficiaries of investment account for an “Aunt Gertrude,” and you know (or strongly suspect) that the actions are intended for Mnny’s own benefit and not for Aunt Gertrude’s benefit, you should act as deliberately as if you were Aunt Gertrude herself.

Minny, as the attorney-in-fact, owes a duty to Aunt Gertrude. A duty of loyalty, of honesty, and a duty to be seeking Aunt Gertrude’s best interests, not her own. You can certainly question Minny openly about the actions she is taking. You can speak to Aunt Gertrude about Minny’s actions. You can assist Aunt Gertrude with phone calls or visits to ensure that her wishes are being followed. You need not feel that you must take legal action in order to help Aunt Gertrude. Neither should you take the position that “it’s none of my business” and allow Minny to subvert Aunt Gertrude’s intentions.

"All that is necessary for the triumph of evil is that good men do nothing."

Edmund Burke

    So what if you suspect that a Minny is afoot with evil intentions? Approach Minny. Approach Aunt Gertrude. Approach the financial advisor and ask him (or her) if she has talked with Aunt Gertrude about the changes. The financial advisor will, of course, not be able to share any information with you. But your questions may be enough to raise suspicions that cause the FA to take action.
    We’ll continue to look at the Power Of Attorney document, but I would love your comments. Please share your stories with us so that we all can learn from each other’s gains and losses.

Power Of Attorney: How do I choose the right person?

• What does “attorney in fact” mean?
      Before we address the how of making this choice, a little nomenclature lesson is in order. The person you choose will be your “attorney in fact” and not your “power of attorney.” So if Aunt Mildred appoints Milly, then Milly is her attorney in fact, not her power of attorney. You will hear people say “He is my power of attorney,” when in fact what they should be saying is “He is my attorney in fact.” And, not that it matters in this discussion, but I have learned that there are a few judges who really don’t like it when you use the wrong term.

     Now, how do you choose the person to be your attorney in fact? Spouses usually choose each other. Husband appoints wife and wife appoints husband as the attorney in fact. Their power of attorney documents usually mirror one another. But must a husband appoint his wife? No. There are times when the facts or the family relationships are such that it makes more sense to have a sibling or other family member in this place of high confidence. If, for example, one spouse is a part of a family run business, there may be financial considerations that suggest dividing the power of attorney document into financial and non-financial powers.

     “Can you do that?” you ask?

     Oh yes, you can do that. The person whom you appoint can do nearly anything you can do, just as if he or she is in your shoes. The attorney is the scrivener and guide who will help you choose the person who will best suit your individual needs.

• Choose someone whose judgment you trust.

     When choosing your attorney in fact, you should consider several factors. First, choose a person in whom you have a very high level of trust and confidence. Give thought to whom you trust now for advice and assistance. Most of us can make a fairly short list of those people. Choose someone from that list. Choose someone whose judgment you trust.

• Choose someone who is your own age range or a little younger.      

     You should also consider age. If the person close to you, in whom you have a high level of trust and confidence is your 93 year old grandfather, perhaps he would not be the best choice. You are likely to out-live this grandfather (unless you are a 94 year old grandmother who has been married to him for 65 years). You need to choose someone who is your own age range or a little younger. You want someone who is going to be there, should you need him.

• Choose someone who is geographically nearby.

     You also need to consider geography. Not as in your sixth grade class, but your attorney in fact’s location in relation to where you live. Use of the power of attorney situations are often emergencies. . .occasions when there is no time to sit and think or to plan out the next moves. Things happen and someone needs to speak on your behalf right now. Having your attorney in fact a thousand miles away defeats the purpose. Choose someone who is at hand and can be summoned and present at a moment’s notice if necessary.

• Choose someone you have a relationship with.

     Should you choose a professional who you work with? Your physician will not serve as your attorney in fact (unless you are related to him or her). Ethical and legal considerations prevent this. So what about a professional like an attorney or accountant? A family member or close friend is a better choice. Choose someone you trust and have a relationship with. An attorney can be a good choice for a limited number of people, but should not be the first choice for most.

Please feel free to post a comment regarding your power of attorney stories. I would love to hear how you are handling these important issues.

The information presented herein is not intended as legal advice.  You should talk with a qualified attorney about your situation, as each person’s estate planning needs are different.