YOU’RE AN AGENT. NOW WHAT?
You should be happy. For years you’ve been bugging your mom to see an attorney and get her estate planning done. Then, to your great surprise, she finally did it. Will, health care directive, powers of attorney…the whole shebang. When she announced her accomplishment over your weekly dinner, her face wore an expression of pride accessorized with a subtly smug look of “I told you I’d get it done.” Unfortunately, what should have been moments of happiness and relief quickly became moments of uncertainty and apprehension when your mom informed you that she had named you as her agent. What exactly did she sign you up for? What were your responsibilities? Yikes!
This is a common scenario; parents name their kids as their agent/attorney-in-fact and the kids don’t fully understand their responsibilities. So, let’s try to fix that.
First, anyone named as an agent must understand when they are required to act. Under a health care power of attorney, health care providers are always going to look to the patient first. Only if the patient can’t communicate or understand their medical choices will the health care providers turn to the agent. At this point, the principal has hopefully executed a living will/advance directive that clearly lays out how they want to be treated. If there is no health care directive, the agent should act under the concept of “substituted judgment” and make decisions based on what they know about how the principal would likely have acted. If the agent doesn’t know what decision the principal likely would have made, they should make a decision based on what the agent believes is in the principal’s “best interests”.
Agents named under a general durable power of attorney (this deals with pretty much everything except health care) have slightly different responsibilities. Under a general power of attorney, an agent can be given powers immediately or their powers may only come into effect if the principal becomes disabled or incapacitated. If the powers are given immediately, they run concurrent with the powers of the principal (so long as the principal is still competent). If the powers are effective only on disability or incapacity, a letter from a physician stating that the principal can no longer handle their own affairs will typically be required before the powers come into force. Institutions such as banks and insurance companies will often require both the power of attorney and the proof of incapacity before allowing the agent to act.
Whether an agent’s powers are gained immediately or only “spring to life” upon the principal’s disability, an agent always must act in the principal’s best interest, even if it comes at their own expense. This is often difficult for children named as their parent’s agent because they have to wear two hats, one as the agent and another as the child. For example, unless a power of attorney explicitly gives an agent authority to give gifts to themselves, they can’t do it. Even if mom paid the first year of college tuition for the all of the agent’s older siblings, the agent can’t pay for their own tuition from mom’s money unless the power of attorney explicitly allows for self-gifting and mom can clearly afford the gift. Even if the agent is sure mom would have made they gift, they must remember that when they are dealing with mom’s money, they are wearing their agent hat rather than their child hat.
Finally, an agent acting on behalf of the principal can always seek legal advice about their rights and responsibilities. If you have questions about what you should be doing as an agent, please don’t guess. It can create big problems for both you and the principal. After taking a few minutes of your day to read our newsletter, hopefully the moment you find out you’ve been named as your parent’s agent will be one of honor and joy rather than one of trepidation.
As always, thanks for reading
The team at the Elder Law Offices of Barry M. Meyers.
Barry M. Meyers
David M. Neubeck
Sara LC Hulford
Elder Law Offices of
Barry M. Meyers, P.S.
DISCLAIMER: The content of this newsletter is: for information purposes only, subject to change by government agencies, should not be relied upon as current, and, does not constitute legal advice. Reading this newsletter does not establish an attorney-client relationship.