If you are thinking about planning for your care or the care of a member of your family, the Power of Attorney is a fundamental document. This is a legal document where someone (the “principal”) gives authority to someone else (the “agent”) to do something on behalf of the principal. The scope of authority granted to the agent might be very large (a “general power of attorney”), or the agent might only be given the power to carry out a specific task or a few specific tasks (a “limited power of attorney”).
When you as a principal execute a power of attorney, you are not giving up your own authority or power to do the same things that you are allowing the agent to do. In effect, a dual authority is created under power of attorney law: either you can act for yourself, or the agent can act on your behalf in any situation where the agent has been given the power to act. When a power of attorney is “durable,” it remains in force even when you have lost mental capacity to act on your own behalf.
The general power of attorney, which we normally recommend for elderly parents and other seniors, is a powerful legal document. It gives the agent virtually unlimited powers over the principal’s money and property, and affairs. The choice of an appropriate and trustworthy agent is obviously extremely important. In granting a power of attorney, the principal may be comforted to know that the agent has strong legal obligations to act according to the principal’s instructions, and where there are no instructions always to act in the best interests of the principal. Every power of attorney is automatically revoked upon the death of the principal.
Under New York power of attorney laws, the power of the agent to make gifts is given special attention and treatment. The principal can execute a separate “gifts rider” to the power of attorney that gives the agent the authority to make gifts and transfers of the principal’s money and property to others, including to the agent himself or herself.
The general power of attorney and the gift rider often play a critical role in Elder Law planning. In order to implement a health care plan that involves qualifying for Medicaid, it is often necessary to transfer ownership of the principal’s money and property to family members or to a trust. In many cases, an elderly parent is losing, or has lost, mental capacity, and then the agent named in that elderly parent’s power of attorney must take the steps necessary to obtain Medicaid. Without a durable general power of attorney with gifting powers, nobody would be in a position to help the principal obtain the health care – particularly the long-term care – that he or she needs.
While the durable general power of attorney is fairly straightforward in concept, in practice it is a complicated document that merits careful consideration. What all the different powers mean and whether they should be granted, how and when the document should be signed, where it should be kept, to whom it should be given, are all important issues. Most people will find it advantageous to consult a power of attorney lawyer before signing one. If the power of attorney is being contemplated as part of health care planning, then it would be wise to have the document prepared by an Elder Law attorney, since numerous modifications of the “standard form” will likely be needed to allow the agent to implement the plan.
Our firm has given extensive consideration to the powers a comprehensive power of attorney should contain. This has been an outgrowth of our vast experience with people who have been required to use them in all sorts of circumstances. We have made pages of modifications to the “standard form” power of attorney form in order to enable an agent to take any action that might be needed to benefit the principal.