Q. “Dad suffered a stroke and is in the hospital in ICU. I do not have signing power on his bank accounts and I need to pay his bills. I am told that I need a Power of Attorney so that I can take care of his finances. Can you help?”
A. We frequently receive frantic calls like the above, and it saddens me that we usually have to advise the caller that it may now be too late. A Power of Attorney is a legal document and can only be signed when the signer, also called the principal, has legal capacity. If the principal is delirious, in a coma, or otherwise mentally incapacitated, he or she does not have the required capacity to sign a power of attorney or, indeed, any other legal document. This advice often comes as a surprise to the well-intentioned family member who hopes to help a loved one manage his or her affairs.
In cases like this, I find myself wishing that the caller had contacted us sooner, before the crisis, so that we could have prepared the necessary documents to deal with just this problem. Incapacity, especially if brought on suddenly by an injury, stroke or other acute event, can strike without warning, and is especially problematic for seniors in declining health. Incapacity can also be a gradual process, brought on by declining memory, dementia or other mental problems.
Keep in mind that signing a Durable Power of Attorney (“DPOA”) does not necessarily mean that the signer instantly gives up control over his financial affairs. Indeed, the DPOA can be a “springing power”, which means that it only becomes effective when, for example, a physician certifies in writing that the principal no longer has capacity to manage his or her affairs. It can also provide that the principal’s power to manage his own affairs is restored if he later regains capacity. Further, a DPOA can be a comprehensive legal document which delegates to a trusted agent authority to do almost everything that the principal could do on his own, or it can be a limited power which authorizes the agent to handle only certain types of transactions, such as the payment of bills from a specific checking account.
It is a common misconception that powers of attorney are all alike. They are not. Indeed, a DPOA can be as broad, or as limited, as the need and comfort of the principal requires. By way of example, it can authorize the creation or modification of “Living Trusts”, the purchase or modification of insurance policies, the making of gifts to loved ones, and/or Medi-Cal planning for long-term care. The important point, however, is to take steps to create one which meets your needs before a crisis strikes and while you are in full possession of your faculties. In that way, it can serve you and your loved ones well in the event of future need, and likely avoid the need for a court-supervised, and often expensive, conservatorship proceeding.