Power of attorney for parent with unpaid bills?

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MnD
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Power of attorney for parent with unpaid bills?

Post by MnD » Fri Sep 17, 2010 9:25 pm

My wife has just gained durable and comprehensive power of attorney for her mother who just moved from California to our state and into a nearby assisted living facility. Assisted living is being 100% funded with Medicaid plus her Social Security check, less $100 a month. We control the check book where the $100/month is going.

Her phone and TV bill is around $80/month so she has essentially zero to pay for things like past-due accounts of which she has several - mostly medical bills from California before we straightened out her Medigap/MediCal supplemental insurance about a year ago which was completely messed up. We wil be covering any and all incidental expenses not provided by the assisted living facility from this point forward.

So.........................

Does my wife as power-of-attorney have anything to worry about regarding our personal liability for her mothers old unpaid bills, given that her mothers disposable income is now on the order of $20 per month?
Could we start getting bill collectors calling us day and night?

We have no idea what her total of bills in collection are, but I guess we can pull a credit report now that we have POA to get a handle on this.

letsgobobby
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Post by letsgobobby » Fri Sep 17, 2010 11:00 pm

I don't know the answer to your primary question, but generally DPOA is only in effect when the individual has become incapacitated. Your MIL in an ALF does not mean she is incapacitated; usually a court order or at least a medical opinion is necessary to put the DPOA into effect.

markpa
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Post by markpa » Fri Sep 17, 2010 11:14 pm

I don't see why you'd have any legal liability, for any old or new charges (unless you co-signed for the ALF--if so maybe you'll be liable for any unpaid hairdresser bills, private room surcharge, etc). Watch out for un-covered prescriptions, especially if it turns into a hospice situation (there may be a time overlap, and hospice will not pay for any life-prolonging prescriptions or even theraputic perscriptions that might be perceived as life prolonging. Some of these are big $$ - like $300 for a procrit (sp?) injection, administered several times a week.

I would just shred any collection notices that come in your mother in law's name. Seriously, what are they going to do, sue her? The last thing I'd do is feel personally responsible or speak to a creditor in any way other than saying she is in assisted living and has no money, nor will she ever.

If you screw up and a debt collector somehow is able to talk to you, tell them you are just a caregiver and don't give them your name. Even if they know you are related, if you ask them if you are personally legally liable for the debt they would have to say no (if they were complying with collection laws) . The do try to work on your emotions though, saying don't you feel morally responsible, or wouldn't your mother-in-law want your help at a time like this, and how would she have felt with unpaid bills.

If she has assets such as life insurance payable to her, property, etc (anything in her estate) then eventually the creditors can file valid claims against the estate, assuming they read the proper notices and deadlines in the newspaper. Again, likely not your responsibility to keep track of this stuff.

I turned the tables and on an ovepriced $1400 prescription (not covered by medicare as my relative was in hospice at the time), and knowing that she left significant assets in the estate I asked the bill collector for a signicant cash discount. when they asked about an estate I laughed (but never told them there wasn't one). I said even though we are not legally liable for this person's debt, if we want to pay it to feel good and have closure, would you take a much lower % as payment in full. They bit, which worked out great (had they filed a claim against the estate they would have been paid in full).

the intruder
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Post by the intruder » Sat Sep 18, 2010 12:44 am

letsgobobby wrote:I don't know the answer to your primary question, but generally DPOA is only in effect when the individual has become incapacitated. Your MIL in an ALF does not mean she is incapacitated; usually a court order or at least a medical opinion is necessary to put the DPOA into effect.
Where did you get the idea that DPOA only become effective when the principal (MIL) become incapacitated or that a court order is needed? In NY a durable general power of attorney become effective when the agent accepts the power to act as attorney in fact for the principal. The agent can make all decisions permitted under the POA for the principal. Because the POA is durable the power of the agent to act for the principal continues after the principal become incapacitated. If the POA is not durable the agents power ceases when the principal become incapacitated. Of course, the agent's power to act ceases at the death of the principal.

From the NY durable general POA :

"It [POA] gives the person you desiginate (your "agent") broad powers to handle your property during your lifetime.... without advance notice to you or approval by you. These powers continue to exist after you become disabled or incompetent"

From the signature page of the Durable General POA:

"This durable power of attorney shall not be affected by my subsequent disability or incompetence."

Perhaps you were thinking of a "springing" power of attorney which only takes effect when the principal becomes disabled or incompetent.

letsgobobby
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Post by letsgobobby » Sat Sep 18, 2010 1:09 am

the intruder wrote:
letsgobobby wrote:I don't know the answer to your primary question, but generally DPOA is only in effect when the individual has become incapacitated. Your MIL in an ALF does not mean she is incapacitated; usually a court order or at least a medical opinion is necessary to put the DPOA into effect.
Where did you get the idea that DPOA only become effective when the principal (MIL) become incapacitated or that a court order is needed? In NY a durable general power of attorney become effective when the agent accepts the power to act as attorney in fact for the principal. The agent can make all decisions permitted under the POA for the principal. Because the POA is durable the power of the agent to act for the principal continues after the principal become incapacitated. If the POA is not durable the agents power ceases when the principal become incapacitated. Of course, the agent's power to act ceases at the death of the principal.

From the NY durable general POA :

"It [POA] gives the person you desiginate (your "agent") broad powers to handle your property during your lifetime.... without advance notice to you or approval by you. These powers continue to exist after you become disabled or incompetent"

From the signature page of the Durable General POA:

"This durable power of attorney shall not be affected by my subsequent disability or incompetence."

Perhaps you were thinking of a "springing" power of attorney which only takes effect when the principal becomes disabled or incompetent.
I understand the power continues after the principal becomes disabled or incompetent. What happens before that event? If I sign a DPOA to my friend, can I go to work the next day while my friend withdraws all my money from my bank accounts?

the intruder
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Re: Power of attorney for parent with unpaid bills?

Post by the intruder » Sat Sep 18, 2010 1:10 am

MnD wrote:My wife has just gained durable and comprehensive power of attorney for her mother who just moved from California to our state and into a nearby assisted living facility. Assisted living is being 100% funded with Medicaid plus her Social Security check, less $100 a month. We control the check book where the $100/month is going.

Her phone and TV bill is around $80/month so she has essentially zero to pay for things like past-due accounts of which she has several - mostly medical bills from California before we straightened out her Medigap/MediCal supplemental insurance about a year ago which was completely messed up. We wil be covering any and all incidental expenses not provided by the assisted living facility from this point forward.

So.........................

Does my wife as power-of-attorney have anything to worry about regarding our personal liability for her mothers old unpaid bills, given that her mothers disposable income is now on the order of $20 per month?
Could we start getting bill collectors calling us day and night?

We have no idea what her total of bills in collection are, but I guess we can pull a credit report now that we have POA to get a handle on this.
1. An agent who has accepted a POA is not personlly liable for debts of the principal. The agent only acts on behalf of the principal. Any document your wife signs should be followed by "(POA)" to make it clear that she is not a joint payor with her mother.

2. SS benefits are not subject to the claims of general creditors. If the only funds in your mother checking account consist of SS benefits they are beyond the reach of creditors.

3. Your wife needs to have a POA from the bank to to write checks on behalf of your MIL. She needs to sign her name on the check and add "(POA)" after her signature to make it clear that she is acting as agent.

the intruder
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Post by the intruder » Sat Sep 18, 2010 1:27 am

letsgobobby wrote:
the intruder wrote:
letsgobobby wrote:I don't know the answer to your primary question, but generally DPOA is only in effect when the individual has become incapacitated. Your MIL in an ALF does not mean she is incapacitated; usually a court order or at least a medical opinion is necessary to put the DPOA into effect.
Where did you get the idea that DPOA only become effective when the principal (MIL) become incapacitated or that a court order is needed? In NY a durable general power of attorney become effective when the agent accepts the power to act as attorney in fact for the principal. The agent can make all decisions permitted under the POA for the principal. Because the POA is durable the power of the agent to act for the principal continues after the principal become incapacitated. If the POA is not durable the agents power ceases when the principal become incapacitated. Of course, the agent's power to act ceases at the death of the principal.

From the NY durable general POA :

"It [POA] gives the person you desiginate (your "agent") broad powers to handle your property during your lifetime.... without advance notice to you or approval by you. These powers continue to exist after you become disabled or incompetent"

From the signature page of the Durable General POA:

"This durable power of attorney shall not be affected by my subsequent disability or incompetence."

Perhaps you were thinking of a "springing" power of attorney which only takes effect when the principal becomes disabled or incompetent.
I understand the power continues after the principal becomes disabled or incompetent. What happens before that event? If I sign a DPOA to my friend, can I go to work the next day while my friend withdraws all my money from my bank accounts?
What part of "It (POA) gives your agent broad powers to handle your property during your lifetime without advance notice to you or approval by you" dont you understand? The agent can act anytime on your behalf after accepting the DPOA without your consent unless it is otherwise limited to becoming active after a specific event. If the POA authorizes the agent to conduct banking transactions then the agent can act on your behalf without your consent. However, banks may require that the account holder first sign the banks's POA before the agent can act. As I noted above if you want to limit the POA to becoming effective after incompetency then a spinging power of attorney should be used.

In any event you need to consult an attorney before signing a POA.

letsgobobby
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Post by letsgobobby » Sat Sep 18, 2010 1:56 am

relax, no need to get snarky. I understand the distinction now and also the reason for my confusion. In my line of work the only time we deal with these documents is when patients are incapacitated; and family members provide "DPOAs" to help make medical/financial decisions. Here's the text from the state of Washington site:

"What is a Durable Power of Attorney for Health Care?

A Durable Power of Attorney for Health Care is a legal document that allows you to give someone permission to make medical decisions for you when a physician has determined you cannot make these decisions yourself. The person you name is given permission to consent to, stop or refuse most medical treatment for you. Typically, this person is called an attorney in fact, agent, or health care proxy."

Confusingly, most of the documents we receive include not only health care powers but also financial powers. I'm not sure what they are entitled, and I've read that generally it is better not to mix financial and health care DPOAs into a single document, but this is what we receive. We frequently get requests from family members of patients to provide documentation that their family member is incapacitated so that they can carry out financial transactions such as paying monthly rent, etc. Therefore the implication is that without such a testimony, the family members could not perform such actions. Apparently this is not true, and I should stop wasting my time writing such letters (and more to the point, evaluating for capacity) and just tell the family members to read the documents they have.

It's also possible the documents we receive actually do say (for both financial and health care powers) that "This power of attorney shall become effective upon the disability of the principal," in which case the whole issue of incapacity is indeed relevant.

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dm200
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Post by dm200 » Sat Sep 18, 2010 8:10 am

letsgobobby wrote:I don't know the answer to your primary question, but generally DPOA is only in effect when the individual has become incapacitated. Your MIL in an ALF does not mean she is incapacitated; usually a court order or at least a medical opinion is necessary to put the DPOA into effect.
No, this is not true at all. Unless the durable general power of attorney states that some sort of incapacity is needed to activiate it, such a POA is valid regardless of the capacity/incapacity of the person granting the POA. In fact, our attorney specifically recommends against such language in the POAs he drafts for clients.

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dm200
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Post by dm200 » Sat Sep 18, 2010 8:14 am

If your wife has the DPOA, and is handling the finances for your MIL, then it seems that she (your wife) would be getting the letters, calls, etc. about unpaid bills, even though she has no legal obligation to pay such bills.

the intruder
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Post by the intruder » Sat Sep 18, 2010 11:25 am

letsgobobby wrote:relax, no need to get snarky. I understand the distinction now and also the reason for my confusion. In my line of work the only time we deal with these documents is when patients are incapacitated; and family members provide "DPOAs" to help make medical/financial decisions. Here's the text from the state of Washington site:

"What is a Durable Power of Attorney for Health Care?

A Durable Power of Attorney for Health Care is a legal document that allows you to give someone permission to make medical decisions for you when a physician has determined you cannot make these decisions yourself. The person you name is given permission to consent to, stop or refuse most medical treatment for you. Typically, this person is called an attorney in fact, agent, or health care proxy."

Confusingly, most of the documents we receive include not only health care powers but also financial powers. I'm not sure what they are entitled, and I've read that generally it is better not to mix financial and health care DPOAs into a single document, but this is what we receive. We frequently get requests from family members of patients to provide documentation that their family member is incapacitated so that they can carry out financial transactions such as paying monthly rent, etc. Therefore the implication is that without such a testimony, the family members could not perform such actions. Apparently this is not true, and I should stop wasting my time writing such letters (and more to the point, evaluating for capacity) and just tell the family members to read the documents they have.

It's also possible the documents we receive actually do say (for both financial and health care powers) that "This power of attorney shall become effective upon the disability of the principal," in which case the whole issue of incapacity is indeed relevant.
I wasnt being snarky. I was pointing out the plain language of the NY Statutory power of attorney that is printed on all the POA forms used in NY state. I dont know how much more obvious the language could be. It appears that the principals who sign POAs dont understand what they are reading.

I think the confusion in WA state is due to the use of the description Health care Power of Attorney. In NY and NJ the document is called a health care proxy.

Also there are valid reasons why a doctor wil be asked to provide documentation of incapacity for financial purposes such as if a relative is asking a court to be appointed guardian for another person or where SS benefits are going paid to a representative payee for a retiree who cannot handle thier own affairs, because SS will not acccept a POA.

kenbrumy
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Post by kenbrumy » Sat Sep 18, 2010 2:05 pm

This seems to have descended into a description of what and when a DPOA is in effect. State laws differ but there are some similarities I am sure. I'll discuss Texas' law and the specifics that affected my wife's DPOA over her parents.

A DPOA can be immediate where an individual signs over to another individual the power to conduct business in their name. It can be specific such as closing on a piece of property or general where they give total power to that individual to act in their behalf. The current recommendation from most estate attorney's is to appoint someone as your DPOA if a doctor certifies you as not being competent to make decisions on your own behalf. The DPOA is usually kept with the will or the copy given to the person that will have the DPOA.

The OP didn't say whether the DPOA was based on her mother's health or her mother just said she didn't want to deal with any of this anymore. The OP's wife needs to be sure that she truly has the right to the POA and, if not, get any medical authorization necessary. My wife found that doctors are pretty willing to do these letters when the situation calls for it.

The OP's wife hopefully has a medical POA that will allow her to discuss medical issues with the facility she is in and with any doctor or hospital. The DPOA and medical POA are separate documents.

The OP's wife needs to make at least ten copies of the DPOA and get each one of them Medallion Guaranteed at a local bank she does business at. Wells Fargo did them for free for my wife. Any communication will require the OP's wife to send this Medallion Guaranteed DPOA with any communication to the SS Administration, Medicare or any financial institution.

As for creditors that can't be paid from her assets. You and your wife are in no way liable. You will find it necessary at some point to have all of the mail sent to your address. It would probably be a good idea to do this sooner rather than later because your wife needs to see all correspondence from the creditors, SS and Medicare. The assisted living facility will also not appreciate collection calls to your mother and they may just pass the calls on to her since she has a phone available.

When they contact you, I suggest your wife send a non-medallion guaranteed copy of the DPOA. With it, send a standard form letter that says that your mother has no assets and can not make any payments against the balance due. You could have a simple financial statement included showing that the assisted living takes everything but $20 and that is being used for haircuts and personal products required for daily living not provided by the assisted living facility.

They will eventually call your wife. She should take one call and inform them that all she had to say was in the letter she sent. They should feel free to sue her mother but there are no assets to pay them with and no estate to resolve the issue after her death. Then she should tell them that based on the Fair Credit Act, they should not contact her at any time in the future for any reason. Dave Ramsey's website actually has some good stuff for that part. If they start harassing her she can be one of the people that sue collection agencies for a couple of hundred dollars a violation. Some debtors actually do this for a living. :lol:

Don't ever say or sign anything indicating that she or you are responsible for her debts or expenses unless you really want to be. Never say "yes" at any time while on the phone with a collection agency since they will feel free to edit any call to meet their needs. My wife typically signs for her father with his name followed by hers with a note that she is acting as POA. Once an organization has the Medallion Guaranteed copy of the DPOA on file that will be sufficient.

Under no circumstances ever give, lend or let them touch the original DPOA. My wife was asked for it many times and they don't need it for any reason. The Medallion Guarantee is all anyone needs to have, see or touch.

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Post by Patchy Groundfog » Sat Sep 18, 2010 2:13 pm

I don't see much use for the "springing" power of attorney for financial matters. The bank will want proof of incapacity, so it may be easier than getting a guardianship through the court, but not much. Banks can be somewhat difficult about durable powers, too, so you might want to talk to the branch manager personally when you take them a copy of the document, just to make sure.

If you worry about giving someone a durable poa before you're incapacitated, you can leave the only copy with your attorney, who would at least ask a few questions and probably contact you before handing it over. Just make sure everyone knows it exists, and where. I would think, though, that you're more likely to be taken advantage of after you've become incompetent.
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MnD
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Post by MnD » Sat Sep 18, 2010 2:47 pm

Thank you kenbrumy! This is the exact situation and your information was very helpful. She voluntarily assigned DPOA and medical POA because she just doesn't want to deal with things anymore.

No assets, no income that the facility doesn't take (other than a small amount for personal care items) and a number of unpaid accounts from where she just moved from.
Last edited by MnD on Sat Sep 18, 2010 9:52 pm, edited 1 time in total.

kenbrumy
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Post by kenbrumy » Sat Sep 18, 2010 3:00 pm

Patchy Groundfog wrote:I don't see much use for the "springing" power of attorney for financial matters. The bank will want proof of incapacity, so it may be easier than getting a guardianship through the court, but not much. Banks can be somewhat difficult about durable powers, too, so you might want to talk to the branch manager personally when you take them a copy of the document, just to make sure.

If you worry about giving someone a durable poa before you're incapacitated, you can leave the only copy with your attorney, who would at least ask a few questions and probably contact you before handing it over. Just make sure everyone knows it exists, and where. I would think, though, that you're more likely to be taken advantage of after you've become incompetent.
In Texas a DPOA is much cheaper and simplier to do than to get guardianship. The lawyers will suck an estate dry if you go into the guardianship process and burden you with expensive paperwork every step of the way. Getting true guardianship for an indigent will also require several thousand dollars to complete the process.

We had absolutely no difficulty with the bank with the DPOA and the doctor's letter stating he could no longer manage his own affairs. They were very helpful and gave us no problems with anything. The same couldn't be said for a few financial institutions that didn't want the money to go away. A few financial institutions were very helpful.

Your last part about letting people know is very true. A person should discuss the POA with the eventual recipient well in advance of need.

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FrugalInvestor
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Post by FrugalInvestor » Sun Sep 19, 2010 12:19 am

kenbrumy wrote:
Patchy Groundfog wrote:I don't see much use for the "springing" power of attorney for financial matters. The bank will want proof of incapacity, so it may be easier than getting a guardianship through the court, but not much. Banks can be somewhat difficult about durable powers, too, so you might want to talk to the branch manager personally when you take them a copy of the document, just to make sure.

If you worry about giving someone a durable poa before you're incapacitated, you can leave the only copy with your attorney, who would at least ask a few questions and probably contact you before handing it over. Just make sure everyone knows it exists, and where. I would think, though, that you're more likely to be taken advantage of after you've become incompetent.
In Texas a DPOA is much cheaper and simplier to do than to get guardianship. The lawyers will suck an estate dry if you go into the guardianship process and burden you with expensive paperwork every step of the way. Getting true guardianship for an indigent will also require several thousand dollars to complete the process.

We had absolutely no difficulty with the bank with the DPOA and the doctor's letter stating he could no longer manage his own affairs. They were very helpful and gave us no problems with anything. The same couldn't be said for a few financial institutions that didn't want the money to go away. A few financial institutions were very helpful.

Your last part about letting people know is very true. A person should discuss the POA with the eventual recipient well in advance of need.
We found the situation to be quite similar in our state. Once my wife had the DPOA for her mother she had no problem handling her banking, bill paying and other financial matters. Anytime a question has been asked providing a copy of the DPOA has been sufficient. As others have mentioned, for any documents or checks signed on her mother's behalf my wife includes the "POA" notation after her signature although most of the bill paying is just handled online through the bank's bill pay system.

Edit: In our state we found it nearly impossible and very intrusive to get guardianship. After learning the details of the process we ruled out that avenue as a realistic option.
Last edited by FrugalInvestor on Sun Sep 19, 2010 1:25 pm, edited 1 time in total.
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the intruder
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Post by the intruder » Sun Sep 19, 2010 9:28 am

kenbrumy wrote:
Patchy Groundfog wrote:I don't see much use for the "springing" power of attorney for financial matters. The bank will want proof of incapacity, so it may be easier than getting a guardianship through the court, but not much. Banks can be somewhat difficult about durable powers, too, so you might want to talk to the branch manager personally when you take them a copy of the document, just to make sure.

If you worry about giving someone a durable poa before you're incapacitated, you can leave the only copy with your attorney, who would at least ask a few questions and probably contact you before handing it over. Just make sure everyone knows it exists, and where. I would think, though, that you're more likely to be taken advantage of after you've become incompetent.
In Texas a DPOA is much cheaper and simplier to do than to get guardianship. The lawyers will suck an estate dry if you go into the guardianship process and burden you with expensive paperwork every step of the way. Getting true guardianship for an indigent will also require several thousand dollars to complete the process.

We had absolutely no difficulty with the bank with the DPOA and the doctor's letter stating he could no longer manage his own affairs. They were very helpful and gave us no problems with anything. The same couldn't be said for a few financial institutions that didn't want the money to go away. A few financial institutions were very helpful.

Your last part about letting people know is very true. A person should discuss the POA with the eventual recipient well in advance of need.
Guardiannship is expensive not because of the lawyers but because it is a court proceeding which requires that all of the documentation and procedures required for a trial be presented to the court. Many states have a simplified procedure called conservatorship which avoids most of the cost of a guardiainship.

However a DPOA is the cheapest alternative to guardianship or conservatorship.

Also the laws of each state are different in terms of acceptance of a DPOA. Under a change in NY law, all financial institutions are required to accept the NY DPOA and cannot requrie that their own POA be subsituted. The agent is now a fiduciary to the principal. Also finacial institutions outside NY generally accept the NY POA.

Since SS does not accept POAs, a separate procedure must be followed to be appointed an emergency payee for a SS recipient.

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