Plan Ahead for Disability with a Power of Attorney

by Christina Medvescek on Mon, 2004-03-01 07:00

One way to stay a jump ahead of ALS is to consider who will handle your financial affairs if you lose your ability to make or communicate decisions. Otherwise, a time-consuming and potentially costly court procedure may be necessary for a spouse, relative or companion to handle your financial transactions or sell your property.

Power of attorney

David Jayne

A power of attorney grants one person the legal authority to act for another. It’s important to name this person — called an agent — in advance because you can’t confer power of attorney once you’re incapacitated.

Granting someone else power of attorney doesn’t take away your own power to handle your finances for as long as you can.

Incapacitated means being unable to make or communicate decisions. So as long as you can communicate you still can "sign" important documents even if you can’t write, by giving instructions to someone to sign for you, in the presence of a notary.

Having a power of attorney in place is a safeguard against a time when you might not be able to make or communicate a decision, for whatever reason.

There are several kinds of power of attorney. A general power of attorney is for situations when you’re temporarily unavailable to handle your own affairs (for example, due to surgery or extended vacation). But this power automatically ends if you become incapacitated.

More appropriate for someone with ALS is a durable power of attorney, sometimes called durable power of attorney for finances. Its "durable" nature ensures that your agent can still act on your behalf after you become incapacitated.

Some people choose to create a springing power of attorney that goes into effect only when they become incapacitated. This requires creating a way for others to decide that the time has come to "spring" the power of attorney.

A durable power of attorney for health care authorizes your agent to make medical and health care decisions if you’re unable to communicate your wishes. This type of authority will be covered in a later article.

What powers are given?

Roger W. Anderson, author of Plan While You Can: Legal Solutions for Facing Disability (1stBooks, 2003), suggests thinking carefully about the financial tasks you do over the course of a year before drawing up a durable power of attorney. Some common powers are:

  • Writing and cashing checks
  • Handling real estate and other property transactions (even when jointly owned)
  • Collecting Social Security
  • Medicare and other government benefits
  • Handling investments
  • Handing transactions with banks and other financial institutions
  • Filing and paying taxes
  • Operating a business
  • Making gifts to individuals or charities
  • Managing your retirement accounts

Choosing an agent

The key qualities to look for in an agent are trustworthiness and financial decision-making ability. Do you trust this person to look out for your best interests, and not simply his or her own?

Many people choose a close family member or friend as agent. Lawyers or other professionals can be appointed, although they usually charge a fee.

It’s possible to appoint more than one person as an agent, as long as they can communicate and can get along well enough to make joint decisions. Don’t appoint joint agents just to keep your adult children happy, if they’re likely to squabble over every action. You also can appoint backup agents in case the original person can no longer serve.

A power of attorney can be revoked — undone — at any time. If your spouse is your agent and you get divorced, the power of attorney is automatically revoked.

How do you set up a power of attorney?

The simplest way is to hire a lawyer to draw up a document based on your needs and wishes. But you also can do it yourself. Standardized power-of-attorney forms are available online, through bookstores and sometimes the state health department or attorney general’s office. Banks and title or escrow companies also usually have forms.

If you draw up your own document, be sure the language is both broad enough and specific enough to allow your agent to handle a variety of financial transactions. In particular, real estate companies can be picky about letting someone else buy or sell your property. Consider filling out the power-of-attorney forms provided by your bank and mortgage company if you’re concerned they may not honor your own document down the line.

Also take care not to sign a standardized form that transmits powers you don’t want to give, like the power to commit you to a mental institution.

To be legal, the document must be notarized. Although laws vary from state to state, it’s wise to go above and beyond what’s required and have two witnesses sign the document in the presence of a notary. Neither witness should be the person named as the agent.

Although thinking about the future with ALS can be troubling, people often report a feeling of calm once they’ve taken time to make a plan ensuring their finances will be handled appropriately no matter what happens.

Greg Gadarian, a Tucson, Ariz., attorney specializing in disability issues, provided guidance for this article.

Christina Medvescek
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