It was Iron Bowl day some (many) years ago, and my husband and I were driving through our neighborhood and SCREEEECH BOOM CRRRRRRRUNCH some guy ran his stop sign and t-boned our car on my side. Fortunately for me, my husband had yelled “*!%@!!!”, looking in the other driver’s direction, and I instinctively jumped from my seat towards my husband. I was lucky – just a little bit sore -- but I was super mad and scared. (My husband’s beloved Thunderbird did not fare as well.)
Now here’s where I have a confession to make. Most lawyers are “do as I say, not as I do” folks, whether they’ll admit it or not. So, even though I know better, and even though it’s in my wheelhouse, I did not have a power of attorney. Or a will. Or a health care power attorney. Or a living will. I had nothing.
What if I had been seriously injured, unable to deal with the insurance company, the doctors, the hospital, the bank? Well, that would have been a mess. And that would have been incredibly difficult for my husband – on top of worrying about me, he would have had to worry about handling the day-to-day business of our lives, my life, with no guidance and little to no authority to do so.
Let’s talk, then, about the most important document you need to have: the power of attorney.
Some people take the power of attorney lightly. I mean, after all, you can go on the internet and find a form for power of attorney. But the truth is that the power of attorney is an incredibly powerful document and the most important tool you can have for your life- and long-term care planning. Because it is so powerful, it is very important that your power of attorney be a fit for YOU and your life.
So what does a power of attorney do? Generally, in Alabama, there are two types of powers of attorney: a financial power of attorney and a health care power of attorney. For both, it is crucial for you to understand the powers that you are giving someone else. Because that’s what you’re doing – you’re empowering someone else to act as if they were you, either in a money matter or with a health issue. Think about that for a minute. That means that you are giving someone the authority to access your money, to make decisions regarding your home and your stuff. That means that you are giving someone the authority to make medical decisions for you. Your money and your life, that pretty much sums it up.
That's some serious power. If you become incapacitated, somebody will have to be able to take care of you, just like you would take care of you. Somebody will have to be able to take care of your money, your house, your stuff, just like you would. So you can decide who that person will be, and you can decide how much authority they will have, and how they should use it. Or you can let a court do it.
I’ll take a minute here and point out what you probably already know: court -- that’s not cheap, and it may not give you your ideal result. The court appoints someone to take care of you. Although the judge will certainly do the absolute best by you that she or he can, it is not the same as YOU making those decisions, YOU choosing your person, YOU taking care of YOU.
YOUR PERSON. OK, you already have a power of attorney? How did you pick your person in power? Did you pick your favorite person? That may be fine. Or maybe not. A friend of mine picked her sister as her “attorney-in-fact” (or agent, as it’s called now). Her sister was a really talented nurse, who had also filed for bankruptcy twice. My friend had picked her as her person on both her financial and health care powers of attorney. Does that sound like a good idea to you? Not to me. The nurse sister is an excellent choice to be the health care attorney-in-fact, but I personally would rather have someone else as my financial attorney-in-fact. However, my friend didn’t want to hurt her sister’s feelings. This isn’t about hurt feelings. The power of attorney is about the best choices for YOU.
YOUR POWER. How much power did you give your person? Enough? Too much? Take for example a mother who executes a power of attorney in favor of her oldest child instead of her younger child. The mother becomes incapacitated and ends up in a nursing home. The oldest child decides to sell the mother’s house. The oldest child, under the terms of her mother’s power of attorney, gives herself all of the money from the sale of the house and doesn’t give any of it to the younger child. Is that what the mother intended? Probably not. Is there anything the younger child can do? Not if the oldest child acted according to the authority in the power of attorney, and if the gift was in the best interest of the mother (which it may have been, depending on the circumstances). But wait – the will says…. It doesn’t matter what the will says. The oldest child exercised her power during the mother’s lifetime. The mother was doing the right thing, but she needed a little guidance as to how her decisions would play out in a real-life situation.
YOUR PLANNING. The financial power of attorney is critical to your planning for long-term care. For example, what if your father has advanced dementia and needs to be in a nursing home? This is a very difficult time on so many levels, and something that you had hoped would never happen. You go to an elder law attorney and work on getting your father qualified for Medicaid (unless you have $6,000/month for his care, then no worries). You have his power of attorney. Your elder law attorney wants to propose a plan that would help protect some of his assets before you apply for Medicaid (which can be done – legally, of course). BUT your elder law attorney realizes that your father’s power of attorney does not authorize you to do that sort of planning (aaargh! Not enough power!). Because your father has advanced dementia, odds are he does not have the legal capacity to make a new power of attorney. You’re left with a choice – pay for a conservatorship/guardianship and then the planning, or spend all of your father’s money on the nursing home. Neither is the ideal situation.
THE TAKEAWAY. It’s much cheaper for you to make the effort to secure a single strong power of attorney than it is for you to hire an attorney to secure a conservatorship/guardianship, or to help you and your family deal with a long-term care planning crisis. Hope for the best, but plan for the worst!