Attorney & Mediator
Attorney & Mediator

You are the Agent under a Power of Attorney and the individual dies. What are you Permitted to do then?

Simple answer: NOTHING.

A Power of Attorney is only good during an individual’s lifetime. When the person dies, their Power of Attorney dies as well – that instant.

This means that you are not to run to the bank and withdraw cash using the Power of Attorney. You are not supposed to keep paying bills off of his or her account after the individual dies. You are not to use his or her charge card.

Who has authority over the decedent’s money? If they have a trust, their successor trustee will have this power. If they don’t have a trust and they have a Will or if they don’t have a Will, no one has any authority over their funds and property until a Personal Representative is appointed by the Probate Court.

If you are named as the Personal Representative in a Will, it does not mean that you have authority the minute they die. It is a nomination. It is not effective until the Probate Court says that it is effective.

Agent Under a Power of Attorney? What are you Supposed to do?

Not enough people ask ahead of time but I am seeing lots of people that are getting into trouble with this issue.

When you assume the duties as an agent under a Power of Attorney, you are a fiduciary. That means that you are just like a bank or a stock broker – a position of trust. You have a duty to accurately account for every single penny in the account – not guesstimates – actual numbers backed up with receipts.

Often, when children assume this duty for one or both of their parents, they treat it somewhat casually – after all, it’s just mom or dad’s money – all family. WRONG. You owe the same duty to them that the bank does.

It is not okay to borrow money from their account with the intention of paying it back. I know that many convince themselves that this makes perfectly good sense – why go to a bank to borrow money when you are short? Mom or dad has thousands, and, it is only for a little while, just until you get your cash flow straightened out.

Would it be okay for your financial advisor to just “borrow” money from your account if he or she were short? How would you feel? Well, the same thing applies to you and your duty as mom or dad’s agent.

This means that it is not okay to withdraw cash and pay for your stuff and their stuff at the same time. Their money must be separate and their groceries and toiletries get paid for separately. Keep these receipts even if you throw away the ones for your personal purchases.

But, aren’t you spending your time and effort in caring for mom or dad? Aren’t you using your gas and your car? Yes. If you would like to be reimbursed for this, it has to be done appropriately. Keep track of the time you spend each month and the number of miles you drive and then charge for it (reasonable charges). Keep the log as back-up in case you are questioned.

It is not okay to write out checks to your family as gifts from mom or dad, because they would be okay with it. If your parent had an annual gifting program in which he or she gave a certain amount to children or grandchildren annually, that is one set of facts. If you are starting up a gifting program using your parents’ money, it is not appropriate.

Where do I see this? Doing probate estates and trust administration when people pass away. The Personal Representative (who is often the same person as the agent under the Power of Attorney) or the Successor Trustee must account for what the decedent had at the moment of their death. Then they account for where it goes (bills) and it gets divided and distributed.

When the Personal Representative or Trustee assembles the initial accounting of what mom or dad had, the other members of the family want to know how they came up with that amount. Usually, family members thought there was more money – a lot more money – and they want to know where it went.

If you have kept accurate records, it is easy to demonstrate that all of the monies spent were appropriate and for mom or dad’s care only. If you haven’t kept track, it will be a nightmare to reconstruct – especially if you took cash out of the account to pay for things. If you cannot account for the money, you may be required to reimburse mom or dad’s estate.

Avoid creating a family feud or adding fuel to the family feud fire. Keep accurate records and treat your parents’ money the same way the bank would.

Your Kids Are Turning 18, What Steps Should You (They) Take?

When your children turn 18, are there any steps that you should take or have them take? Yes! They are no longer minors and you do not legally have the authority or the ability to assist them at critical times.

Power of Attorney. Have them sign a Power of Attorney that gives you the right to do business and banking for them. They may think that this is an erosion of their power – since they are now adults. It is no more so than when you sign a Power of Attorney.

Why is this necessary? You, as the parent of an 18 year old, do not have the right to discuss their tuition (even though you write the checks) with the college they attend, their medical insurance coverage (even though you write the checks) or other insurances such as automobile insurance (even though you may write the checks).

They are accustomed to you assisting them with many of these issues but you may run into a roadblock with many companies unable or unwilling to discuss their issues with you. A Power of Attorney will give you the authority to handle these type of matters on their behalf.

Medical Power of Attorney. This is a necessity. When your child turns 18, you no longer have any access to his/her medical information and are not permitted, even in an emergency, to assist with direction of their medical care. It is prohibited by law.

Therefore, if your son or daughter were very ill, or in an accident, you would be notified by the first responders or the hospital. When you got there, however, you would only be able to look at them. The hospital and staff would not give you any medical information whatsoever.

Worse, there would be no one to direct their medical care and assist them by making critical medical decisions on their behalf.

If they sign a Medical Power of Attorney, also known as The Five Wishes, Patient Advocate Designation or Living Will, appointing you as their advocate if they were unable to make and communicate informed medical decisions, you would be able to act in times of emergency.

Again, this doesn’t take any power away from them. If they are able to speak and communicate, they will be in charge of their own medical decision making. If they need help, however, you will be armed with the paperwork that you need to step in and help – as you always have done.