I HAVE POWER OF ATTORNEY AND I CAN DO WHAT I WANT

I have a Power of Attorney so I can do whatever I want, right?

People need to be very careful when using a Power of Attorney as suits alleging the improper use of Powers of Attorney increase daily.

Former law held that just the existence of a Power of Attorney was enough to justify almost any transaction. Now the burden in any legal proceeding is on you, the agent, to prove that the questioned transaction was for the benefit of the principal. Said differently, transactions that benefit the agent are legally presumed improper. The most common questioned transactions are: adding your name on the principal’s bank account, transferring or changing real estate titles, changing beneficiaries on bank accounts and life insurance policies, checks written to yourself and car transfers.

If you are taking care of your mother/father (or anyone) and you use the Power of Attorney for financial transactions you need to keep detailed records. If you take dad to the doctor and personally pay the bill, then later you write a check to yourself for reimbursement, you better have the doctor’s payment receipt. If you order something on your credit card for mom and reimburse yourself, keep the original credit card order documents and staple them to the reimbursement check.  The more checks that are written to you, the more it looks like you are taking funds for your personal benefit. If your name is added to a real estate title or financial account, make sure someone else (an independent witness) can verify that mom/dad knew exactly what they were doing and that it was voluntary. Never use cash transactions as they almost always fail.

When transferring real estate, cars or other substantial personal property, the basis for the transfer should be in writing or verified with witnesses.

Many of the above transactions are now forbidden by law, unless specifically stated in the power of attorney. These are called “hot powers”. Those all involve self dealing or changing someone’s estate plan. Simply stated, if the power of attorney does not authorize the transaction, in writing, you cannot do it.

Another major item of controversy is paying yourself for personally taking care of mom/dad or whomever. No matter how many hours a day, or night, you spend caring, transporting, feeding, medicating, and tending to their most intimate personal hygiene needs, if mom or dad is not competent enough to sign the check themselves,  you need to have a prior agreement or contract in writing. The courts presume the personal care of a relative is a result of love or personal responsibility, not for profit.

A good probate attorney can guide you through any of these issues and prevent costly litigation with disgruntled relatives later.