Myths about financial power of attorney for elder care

| Jan 23, 2019 | Financial Planning

More adults than ever before expect to care for aging senior family members. They realize their loved ones may eventually become unable to care for their financial or medical needs. The senior’s family may secure both a financial and medical power of attorney while mom or dad is still competent to sign the forms. A durable financial POA is used to make the person appointed as POA an “attorney-in-fact” to deal with financial third parties in place of a parent, with the same rights as the parent. 

When the parent’s health declines, the adult children are happy they can provide a legally sound durable power of attorney for a family member to work with third-party financial entities to pay bills and manage finances; however, they may be in for a shock.

Myth #1: Institutions must accept a legal POA

The senior’s adult children have diligently collected up-to-date lists of all third-party institutions holding their parent’s resources: one or more bank’s checking and savings accounts, Social Security income and Medicare benefits, any applicable veterans benefits, as well as insurance company information and stock brokerage account documents.

The first shock may occur at the bank. Confidently, the financial agent takes all the correct paperwork to each of the parent’s banks. The person returns home in shock, empty-handed. Every bank refuses to honor the financial POA, even though the POA’s paperwork includes a letter from the doctor stating the elder is now incompetent. The bank attorney suggests that the financial POA’s legal counsel may wish to contact the bank to discuss matters. The POA feels blindsided by the need to produce an attorney to wrestle with the bank just to pay mom’s bills.

Myth #2: A financial POA can access a parent’s SSI

Next, the Social Security Administration stonewalls the adult’s POA. It does not accept financial POAs. The person must go through a lengthy process of filling out an SSA Appointment of Representative Form. The SSA will then thoroughly vet the applicant before it permits an unknown person to touch the elder’s SSI funds.

Myth #3: A financial POA controls veterans benefits

Anyone appointed financial POA who believes they can present credentials to the U.S. Department of Veterans Affairs and walk away with benefits control is in for another rude surprise. The VA has yet another set of forms and procedures to appoint a Representative Payee. A lengthy process ensues; the weary applicant is in limbo while the VA minutely examines the person’s competence to act in place of the veteran.

Managing an incompetent parent’s financial affairs is complicated. The person who is seeking POA must understand and prepare for an abundance of rules, laws, and set-backs designed to protect the third-party institution from liability. Some people seek assistance to restore the power to a family’s POA agent.