AN ATTORNEY'S VIEW:
THE PROS AND CONS OF DURABLE POWERS OF ATTORNEY

by Robert Gazzola, Esquire

A durable power of attorney can be an invaluable tool in aiding an elderly individual in need of assistance, or it can be a means to facilitate fraud. How does one insure that it is the former and not the latter? There is no foolproof method, because the key factor in choosing a person to whom to give your power of attorney is trust. Is the recipient completely trustworthy? This obviously is a judgment call with no guarantees.

Once a person has crossed the initial hurdle of deciding to trust someone with a power of attorney, its scope must be determined. 

Scope

A power of attorney can be broad or narrow. If it is broad, it is very useful and effective; if narrowly drawn, the converse is true. Again, this is a judgment call dependent largely on trust. However, one must also consider that in the event of incapacity without a power of attorney, the only means of obtaining decision-making authority is through the appointment by a court of a guardian or conservator, a comparatively expensive and onerous process. If a trustworthy candidate is available, a durable power of attorney granting full authority is recommended.

Responsibilities

What are the responsibilities of a holder of a power of attorney or attorney-in-fact? Generally, they are to act in a fiduciary capacity for the individual who gave the power (Grantor) and to do what he or she requests, no more and no less. Frequently, an attorney-in-fact pays the bills, prepares and files tax returns, and manages the finances of the Grantor. In such a case, the attorney-in-fact should inform the Grantor of all of his or her actions and should seek approval in advance of proposed actions. An attorney-in-fact must avoid the tendency to do what he or she thinks best for the Grantor without consulting with or keeping him or her informed.

  • An attorney-in-fact must bear in mind at all times that he or she is merely the agent of the Grantor and the decision-maker is the Grantor. Of course, if the Grantor becomes incapacitated to the point that he or she cannot make decisions, the "durable" part of the power of attorney takes effect and the attorney-in-fact must make decisions on behalf of the Grantor based on his or her knowledge of the Grantor's wishes and his or her interpretation of what is in the Grantor's best interest.
  • An attorney-in-fact should maintain accurate and detailed records of all of his or her actions and, in particular, records of income and expenses on behalf the Grantor. Failure to do this is a quick way to get into difficulties when someone misinterprets the actions of the attorney-in-fact.
  • An attorney-in-fact should prepare a budget for the Grantor based on known expenses and income. If the income is not adequate for the expenses, then the sale of assets should be discussed with the Grantor to make up for the shortfall. If the Grantor's resources are inadequate for his or her needs, alternate living arrangements should be considered, including applying for Medicaid, if a nursing home is a possible alternative.

In summary, a durable power of attorney is highly advantageous, but should be granted with care and monitored. Similarly, one should not accept the designation of attorney-in-fact unless one is willing to act as a fiduciary and perform the considerable duties and accept the responsibilities involved.

5/29/98

Bob Gazzola is a principal in the law firm of Quinn, Racusin & Gazzola Chartered, 1400 K Street, N.W., Suite 1010, Washington, D.C. 20005-2403, Phone No. 202-842-9300, Fax No. 202-682-0148, and practices guardianship and conservatorship law in the District of Columbia, Maryland and Virginia, as well as estate planning and probate law.

 

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