12 Apr What does becoming someone’s ‘power of attorney’ mean?
Q. My brother-in-law is a widower and estranged from his children. He is being advised by his doctor that due to his health, he will need long-term care under Medicaid. He does meet the requirements. There is talk of having my husband be his power of attorney. Would there be any financial implications for my husband if he agrees to this?
A. We’re sorry to hear your brother-in-law isn’t doing well.
A power of attorney is a legal document with which a principal authorizes an agent to act on the principal’s behalf and for the principal’s benefit.
It usually focuses on addressing the principal’s financial matters such as banking, paying taxes and selling or buying property, said Catherine Romania, an estate planning attorney with Witman Stadtmauer in Florham Park.
It can be “springing” so that it becomes effective only when the principal becomes incapacitated, she said.
Then there’s a medical power of attorney or living will, which is a legal document by which a principal authorizes an agent to make medical decisions for him when the principal is not capable of making the decision, she said.
“In either case, the agent does not become personally responsible for the financial expenses incurred by the principal unless the agent agrees to take such responsibility in his/her individual capacity,” she said. “Therefore, it is very important in executing documents as an agent that you indicate you are doing so as an agent.”
For example, you, Jim Smith, would sign for principal Mary Smith as follows: “Mary Smith, by Jim Smith, attorney-in-fact,” or “Jim Smith, as agent for Mary Smith, under power of attorney.”
“When signing a contract with respect to nursing home care, be wary of agreeing to individually be the `responsible party’ as that term may be defined to assign additional obligations,” she said. “Instead, sign everything as agent under the power of attorney.”
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This story was originally published on April 12, 2022.
NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.