Different Kinds of Powers of Attorney

Many people know they should have a Will, but Powers of Attorney (POAs) may be even more important because they assist you during your lifetime.

Many people recognize they should have a Will.  But, in many situations, the most important planning document may be a well-drafted power of attorney as described in The Miami News-Record’s recent article entitled “Power of attorney options match different circumstances.”

When a person can’t make his or her own decisions because of health, injury, or other circumstances, a power of attorney (POA) is essential. A POA is implemented to help their loved ones make important decisions on their behalf. It helps guide decision-making, enhances comfort and provides the best care for those who can’t ask for it themselves. A POA permits the named individual to manage their affairs.  Unlike a Will, the client themselves are at risk if they don’t have a POA.

To know which type of POA is appropriate for a given circumstance, you should know about each one and how they can offer help. Now, keep in mind there more different kinds of powers of attorney than what I discuss here, but these apply to virtually everyone at some point.

Durable Financial Power of Attorney. This is the most common and is the default for most planning. These give a person decision making authority limited to the powers provided in it.  The term “durable” means that it continues to be in effect when you are incapacitated.

Some of the key issues to determine are whether you give the agent the ability to make gifts, including to whom they can gift, the ability to change beneficiary designations, change your estate planning documents and other issues.

Springing Power of Attorney. One key issue of the POA is when it starts.  For example, it can be effective immediately upon the execution of the documents, or it can start once the POA creator becomes incapacitated.  This is a “springing” power of attorney because it “springs” into action upon the event of incapacitated.   Some people may not feel comfortable granting someone else power of attorney, while they’re healthy. This POA takes effect only upon a specified event, condition, or date.

Medical Power of Attorney. Especially in a hospice setting, it permits another person to make medical decisions on the patient’s behalf, if they lose the ability to communicate. This includes decisions about treatment. In this situation, the agent takes the role of patient advocate and communicates with the physicians.

Limited Power of Attorney. This POA provides the agent with the authority to handle financial, investment and banking issues. It’s usually used for one-time transactions, when the principal is unable to complete them due to incapacitation, illness, or other commitments.  The most obvious example is a limited POA for real estate transactions.

Powers of attorney are far more complex and important than people realize, and the law changes on them frequently.  There are many other reasons to update your estate plan as well such as described here https://galligan-law.com/twelve-reasons-to-update-your-estate-plan/   If you don’t have this document, ask a qualified elder law or estate planning attorney to help you create one.

Reference: The Miami (OK) News-Record (July 7, 2020) “Power of attorney options match different circumstances”

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Estate Planning Issues Affecting the Sandwich Generation

If you're a member of the Sandwich Generation, make sure your parents and adult children have the necessary estate planning documents in place.
If you’re a member of the Sandwich Generation, make sure your parents and adult children have the necessary estate planning documents in place.

July is National Sandwich Generation Month, a time to honor those who are caring for both their children and their aging parents. This is a particularly stressful time for members of the Sandwich Generation who may not only be parenting their children but also spending the last few months homeschooling them. Older children who have lost their jobs or were unable to return to college after spring break due to the coronavirus may now be living at home. At the same time, members of the Sandwich Generation may be acting as caregivers for parents who are no longer able to look after themselves, or who are at a higher risk for contracting COVID-19.

Some of the stress of caregiving can be alleviated by making sure your aging parents and adult children have legally valid and up-to-date estate planning documents in place, and if they do not, encouraging them to have these important documents prepared. This is a relatively simple step to ensure that there will be no delays or uncertainty if you have to take action in an emergency to make medical and financial decisions for them. If they have the necessary estate planning documents in place, you will have the peace of mind in knowing that you will be able to avoid delays when you need to act quickly to preserve their safety and well-being.

What estate planning documents should you have for any person in your care?

  • A financial power of attorney – This will allow you to pay bills, manage financial accounts, file tax returns, talk to insurance companies, deal with issues related to benefits, hire a caregiver, and sell property on behalf of your parents. A financial power of attorney is also helpful in the event you need to handle financial matters on behalf of your adult child (over the age of eighteen), for example, cashing a paycheck for your child or signing a new lease on your child’s behalf.
  • A medical power of attorney – A medical power of attorney enables you to make health care decisions for your parents, if they are unable to do so themselves.  A medical power of attorney is also important for your children who are 18 or older. Once your child reaches age 18, you no longer have the authority to make medical decisions for your child.
  • A HIPAA Authorization – The Health Information Portability and Accountability Act (HIPAA) requires medical records to be kept private unless an individual consents in writing to sharing of protected health information with a named individual. If you are your parents’ caregiver, they should fill out a HIPAA authorization permitting your parents’ health care providers to keep you informed about their medical conditions and treatments. You should also keep in mind that you are not authorized to receive any medical information regarding a child of yours who is 18 or older. If your adult child wishes you to be involved in his or her health care you need a HIPAA authorization signed by the child allowing you to receive his or her medical information.

It is crucial for your parents to put these estate planning documents in place before they develop any cognitive loss that would prevent them from having the capacity to sign a legal document. If they develop dementia, for example, and are not able to understand the objective or content of a power of attorney or other document, they will be legally unable to execute the document. In that case, you will have to go to a court and ask to be appointed your parents’ guardian to manage their health care and financial affairs.

It is also important that these documents be put in place by your adult child, regardless of any health conditions, because once your child is a legal adult, you can no longer automatically act on your child’s behalf. The worst case scenario is that your adult child is unconcious or in an accident and you are unable to quickly get information from your child’s health care providers.

Members of the Sandwich Generation do not always remember to take steps to lighten their load. But one important step that can make things easier for you as a caregiver is to make sure that your parents and adult children have the necessary estate planning documents in place so that you can quickly make decisions on their behalf if you are called upon to do so.

For more information see https://galligan-law.com/everyone-needs-an-estate-plan/

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Social Security From a Divorced Spouse

A divorced spouse may be eligible to receive Social Security benefits based on a former spouse's work record.
A divorced spouse may be eligible to receive Social Security benefits based on a former spouse’s work record.

If you are divorced, there are a number of options for receiving Social Security benefits based on a former spouse’s earnings record. This is true, even if your former spouse remarries. The amount of benefits you receive won’t have an impact on the benefits to which your ex-spouse and his or her current spouse are entitled.

You can claim benefits on a former spouse’s record as long as you satisfy certain criteria. First, the marriage must have lasted 10 years or longer. You must also be unmarried at the time you claim Social Security benefits and be 62 or older. Another criterion is that the benefits based on your own employment record must be less than the benefits you’d receive based on your ex-spouse’s work record. Last, your former spouse must be entitled to Social Security retirement or disability benefits.

You can apply for benefits on your former spouse’s record, even if he or she hasn’t retired, provided you divorced at least two years before applying. If you file as a divorced spouse after your full retirement age, your benefit will be equal to half of your ex-spouse’s full retirement amount or disability benefit.

The same rules apply for a deceased former spouse.

You should know that, if you’re receiving a divorced spouse’s benefits, the general rule is that the divorced spouse’s benefits will cease if you remarry.

For more information on estate planning after a divorce see https://galligan-law.com/estate-planning-life-stages/planning-after-divorce/

Reference: nj.com (June 30, 2020) “I’m divorced. Can I get Social Security from my ex-husband?”

 

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