Welcome back everybody to our next episode of Aging Insight. I'm Lisa Shoalmire. I'm an elder law attorney, and I'm here with my partner, John Ross. And we practice elder law here in the Texarkana and surrounding state area. And the purpose of this program is to bring you information that you can use to do a few things. We want you to be able to live your life as independent as possible, and on the terms that you want to do so. We want you to not go broke in the process, as you are paying for your retirement and your long-term care needs. And we also want you to feel like you're not a burden on your family. And we wanna give you the tools and the information you need to make all those things happen. So, John, welcome back.
Thank you. Thank you. Oftentimes when we have people that come in and talk to us in the office, one of the things they're always coming in and asking about is wills.
That's right. I can't tell you how many times I sit down with someone that I've just met, and the first thing they say to me is, "I've come here because I need a will."
Right. Well, I'll tell you what. I can, I can pretty much make a promise to everybody who's out there right now, that you personally, you individually, will never care whether or not you have a will. Whether you have a good will, a bad will, no will, whatever, none of that matters to you personally. Now, have we figured out why?
Yeah, that has to sink in for a moment. But what it comes down to, is when your will comes to be relevant, you are not here, you have passed on. So...
That's right, but there is a lot of life leading up to when that will becomes valid. And the fact is, for most people, there will come a time where they cannot make decisions for themselves.
What do the statistics say, John? Something like one out of every two of us, so 50% of us are... As we age, we get into a state of decline or incapacity that, really, we need the assistance of someone else to take care of our bills, help us get to and from medical appointments and make sure our business is taken care of.
Well, that's right, and oftentimes an example that I will use for people when I'm speaking to the community or whatever, is I'll ask if anybody has ever tried to contact the phone company. If, for example, their name is not the one on that account. If it's in the husband's name but wife's calling because she needs to ask about the bill, or she wants to change the type of service. And what you find out real fast is, unless your name is the one on that account, they won't talk to you.
Right. They ask where the account holder is. Can they speak to that person? Who are you? And it seems so silly, because we're only talking about the telephone bill or the telephone company.
Right, but if you think that the phone company is gonna be that serious about it. And they're just a phone company. But what about the IRS? What about Social Security? What about your health insurance company? What about all of these places out there that you do business with on a day to day basis, they expect to deal with you. And if you get to a point where you can not do it for yourself, somebody has got to be in a position to do that. And that's gonna be the topic for today's program.
Right, we're gonna talk about how that you can choose who you want to be able to conduct business for you, and and do the things that need to happen in the event that, either on a short term, or a long term basis, you cannot conduct your own business.
Right. I mean a will doesn't come into play until at a time of your death. So having a great will, a great last will does nothing for you while... What I like to say, while you're still living and breathing. It's not doing a thing for you.
That's right. And you know it's funny, I've had folks come into my office and they'll say, "Well, Dad has had a stroke. And he's over at the nursing home. And Medicare has stopped paying, 'cause they only pay for a limited time period. And we need to private pay. And all of his money is in a CD over at the bank. And we went over to the bank, and tried to cash that CD out so we could pay for Dad's bill. But it's just in his name, and they said that we couldn't cash it out. "And I told the... " And this is the person talking, and they'll say, "I told that bank, well, I'm the executor of my Dad's will and so I oughta be able to do it." Well, the fact is, your Dad's not dead yet. And because of that, you're not the executor of anything.
Well, and it's really for your protection in the sense that, here we have good intentions with the family, where we were trying to pay for Dad's care, and you're going to the bank to get that CD, but what if you had a family member who just made up some story and was at the bank trying to get Dad's money? So, I can appreciate the bank looking out for their customers, and being very meticulous, and needing the proper legal permission to distribute those funds.
That's right. And the document that we're talking about, and the document that we're gonna be talking about throughout today's program, is the document that you use to accomplish this very goal. Something in writing that says who you want to make those business type decisions for you, if you cannot make them for yourself. And that's a general durable power of attorney.
That's right. Now, it's a big fancy name. But, essentially what this is, in its most, simplest form, is a document that says, "Here's who I want to make decisions for me, or to be able to conduct business for me, if I cannot do it under any given circumstance." Maybe talk to that phone company, sign that check, cash in that CD, talk to the IRS, sign my tax return. Whatever it might be, you're establishing ahead of time who you want that person to be. Now notice here, that's the big part. Notice I said, "Establishing ahead of time."
Right. Because this is a document that you want to do while you're at your best, and while you're competent to consider who you would want to be that person to assist you with those affairs, and a lot of times this document, this general durable power of attorney is kind of like insurance. You know, you put it in place before you need it.
Right, because I will tell you that's another pretty common thing that we see, is where we've had people that come into the office because there's been something that they couldn't do, cashing a CD, talk to the insurance company, whatever it was. And they'll come in and they'll say, "Well, I need to get a power of attorney for Mom, for Dad, for brother, for sister, for husband and wife, whoever." And my first question always will be, "Is that person competent? Do they have the mental understanding to be able to execute that document?" Because if not, you're too late.
Right. And the competency level we're talking about here is, a lot of times when we have that health crisis, you know, we do get down, we're not necessarily at our best, but in this situation we just need the competency to be able to understand that we want to select someone that can help us with business and property matters, and we understand legally that they will be able to obtain information and do buy, sell, trade, get money out of accounts, all those things, and that you can select who you want. So the competency level here, it's not extremely high, but there are times we've had people come in and say, I need that power of attorney for my husband and he unfortunately is in the ICU and...
Unconscious and I certainly can't do anything there. And John, just briefly, what would be the alternative to, if you don't have that power of attorney in place, what do you have to do?
There is one alternative and one alternative only, and that is a court-appointed guardianship proceeding. This is where you go to the court. You have a judge declare that person incompetent. And then the court appoints a legal guardian for them. And I will tell you, that is a time-consuming process, and it's an expensive process. And so, it's really to be avoided if at all possible. And the best way to attempt to avoid that is, while you still have that competency, establishing that durable power of attorney.
Alright, well we're going to come back and talk about those other issues with general, durable powers of attorney when we come back from our break.
Welcome back to Aging Insight. Today, we're talking about the general durable power of attorney, and why it's such an important document for people. In fact, I can make a pretty good argument that the general durable power of attorney is the most important legal document you'll ever sign.
Well, and that's right. And that's why when we have that person come in talking about, asking about a will, is, a lot of times we pull them back and say, "Well, wait a minute. There's another very important document that's going to help you greatly while you're still living and breathing, while you care about what's going on and you need that reliable assistance."
Right. So think about what we're trying to do with this document. Think about all of the things that you could do right now as a competent adult American. Now, put that in writing. Everything that you could do. This is not a simple document. This is not a one-page sheet of paper that says, "Hey, I appoint my agent to handle anything that might be out there." There's lots of very specific points to this that you need to be very careful about as far as how it's drafted, and what those different things mean when you do it. For example, one of the first questions that you have to ask yourself is, "When does this power of attorney go into effect?" `
And most people think about, "Hey. I wanna manage my own business. I don't need any help with my business. And up until the time that I do. And so, if I do a power of attorney, I wanna make it to where it only becomes effective at the point that it's clear I need that help, either I'm unconscious, or due to that health crisis, or maybe I've become incompetent due to the aging processes." But a lot of people say, "That's when I want the document to come into play."
And it seems like it would be, that the person doesn't have the power until I become incompetent. But the fact is, let's think about it. Let's walk through it a little bit. Something has happened to you, and your spouse or your child, whoever it is, they've walked into a bank, for example. And they say, "I need to pull some money out of Mom's account, because she needs bills paid." And they're gonna ask you for that power of attorney, and you present it to them. And they look at it carefully, which they will. They look at it and it says, "Well, you only have this power if that person is incompetent." And the bank person there, they don't know if your Mom's incompetent or your husband's incompetent, or whoever it is. And so there, you're having to be forced to go back and get doctor's information or letters, and try to convince this person that they are in fact incompetent. What's a better idea, is if you're going to appoint the person, give them that power immediately.
Well, and that's right, because the person at the bank and the person that you're on the phone with when you're needing to use this document, they're not gonna listen to your story, that Mom has had that stroke and she can't talk to them on the phone. And you promised that the power of attorney is now effective, because Mom is incompetent. They're just not gonna take your word for it. Most of the documents that come into effect only upon incompetency require one or two physician's letters. And I don't know if any of you have had this experience. But physicians are busy people. And a lot of times they are not gonna just jump on getting that letter done for you. And so you may have a need right this moment that while you're waiting for that physician to sign a letter saying that "Mom is incompetent" and put it with that power of attorney, you're burning daylight. You're wasting precious time.
Right. So the first thing with these is to make sure you understand that there's two ways that this power of attorney can become effective. One, in the future, if you become incapacitated, then it becomes effective. The other is an immediate power of attorney, so it becomes effective right now. And between those two, my general recommendation for most people is, it be an immediate power of attorney. Even though you are still competent, your agent could handle business for you now.
And that's a convenience thing. It could be convenient. But a lot of our clients will say, "Well, I don't want Junior to be able to handle my... I'm worried about what Junior would do if he has that power right now."
Yeah. And that's the natural question from that is, "What if the person I've appointed misuses the power?" And I'll tell you, I've got a pretty good answer for that question. And that's if you have any question, whatsoever, that the person you're considering appointing might misuse it, you're appointing the wrong person. No question about it. Just because your oldest child is barking at you, and saying, "You need to go down and get a power of attorney. And it needs to be me 'cause I'm the oldest child", doesn't mean that that's the person you have to appoint. It's the person you trust, implicitly, to handle your affairs. And figure out who that person is, and that's who you appoint.
All right. And we're gonna continue to talk about some of these issues with the general durable power of attorney, when we come back from this break.
Welcome back, everyone, to Aging Insight. I'm Lisa Shoalmire, and I'm here today with John Ross. And today, our topic is the general durable power of attorney. Now, John, we've been talking about, that this is a document that helps you take care of business financial matters, property matters. Things like that. In the event that you wanna select someone to do that. And is this the only type power of attorney that's out there?
No, of course. There's other powers of attorney. What the general durable power of attorney is meant for, is this covers business-type decisions. So we talked about dealing with, like, the phone company. Dealing with the health insurance. And the problem that I see, where you run into problems with powers of attorney, is not in what the power of attorney says, but it's what that power of attorney doesn't say. That's where I see a lot of problems.
Well, and we had the opportunity to look at a lot of different documents that people bring in for us to analyze and see if it is the right document for their situation. And it looks like a lot of legal, good stuff on those documents. And then, I end up telling that person that, "Oh gosh, you know, if I were gonna give this document a grade, I would give this document a 60 out of 100."
Right. It's a legal document, but it's missing its... It's missing some things. It's missing some right answers.
Right. In fact, people often will say... They'll say, "Well, John, is this legal?" And that's the wrong question. Something can be legal, and just not be very good. And that's really where you run into problems. And oftentimes, I use the example that... I've seen powers of attorney that will have a phrase in there that says something, like, "I appoint my agent to handle my banking transactions", which you would think covers banking. Except that I've had banks tell me that that sentence doesn't cover safety deposit boxes, or closing it, or opening new accounts, or accessing the password to the online account. And what about more modern things? Like retrieving email passwords, or Facebook passwords, or Twitter passwords? What about all of the new stuff that has come around? What you've gotta do with that power of attorney is be very specific about what it is that you want that person to handle. And try to think about the things that you might not even think about. Things like gifting.
Well, and I guess that's where I was going to then. Most often when I'm looking at a document, when I see something that's missing, the client, it looks good to them. It's all a bunch of words on the paper. But then I see things that are missing that ought to be in there.
And one of those things is gifting. Can you and I sit here right now, and if we wanted to, we could make a gift of our assets, or out of our accounts, to a family member or friend if we cared to? But in a power of attorney, if you don't specifically say that an agent can make a gift, then by law, they are...
That's right. They are prohibited from doing it. And I'm not talking here about birthday gifts, and graduation gifts. That's not really what I'm talking about. Most often, that gifting power is necessary as we're trying to make arrangements for you, in solving that financial crisis, while you're looking to get the right housing that you need to address your health concerns. Sometimes we need to be able to move some assets and things around, and who do you... Who would you most prefer, if we've got to do something, who would you most prefer your assets to go to? I mean, typically, it's that family member or loved one, and so a lot of times we use gifting to make proper arrangements.
Right and the same thing relates to things like qualifying for various benefits, like Veteran's benefits or Medicaid benefits. And while, for example, the VA does not necessarily recognize a power of attorney, having specific information in that power of attorney as it relates to VA benefits might allow that family member that you have to structure your estate in such a way that you're able to qualify for VA benefits, that really might be the difference between staying at home, or having to go to a nursing home. And so again, it falls back to this power of attorney being worded very correctly.
Okay. You know another place where I see powers of attorney leaving things out would be the ability of the agent that you've selected to self deal, and to make contracts on your behalf, perhaps with the agent or the agent's family. And typically we see this in a situation where, we have an adult child who is your agent, but who is also perhaps your main caregiver. And we might be in a situation that once again to get you qualified for some VA benefits or some Medicaid assistance, we want to be able to pay that child. You know, normally, that's not something that you'd wanna do. The child was not requiring payment, really doesn't want it, but sometimes, again, that's just the way to arrange things to where you can access additional resources to help you stay at home.
Right and hopefully what we are getting across in all of this is that with that general durable power of attorney, if it's drawn correctly, the person you've appointed should be able to handle basically everything, except for medical decisions. That's covered under a medical power of attorney, which we're gonna talk about in another episode. But that general power of attorney, general durable power of attorney, if it's drawn correctly, is the key to all of this. And if you don't have one, you probably need one. There's really not very many people out there who... Really, if you're over the age of 18...
You ought to have a general durable power of attorney in place. And a good one. And you might say, "Hey you know what, I got one done. Back when, you know, I remember Nixon was President, and I got my power of attorney in place and it should be good." Get your stuff updated. Make sure it's up to date because that general durable power of attorney is probably the most important legal document you will ever sign.
Well, John, this has been a very informative show on powers of attorney, and I just wanna let you know that you have other opportunities to contact Aging Insight. You can listen to us on the radio on Saturdays. And we'll be back here next week to learn more about the issues that affect seniors.
In this episode, Lisa and John talk about how to choose who you want to be able to conduct business for you, and do the things that need to happen in the event that you cannot conduct your own business.