Warning to Agents Under Durable Power of Attorneys and Others

If someone has appointed you as his/her financial Agent under a power of attorney which relates primarily to financial affairs, or you are informally assisting a person in managing their financial affairs, there are a few very important cautions.

In New Hampshire, in order to accept a power of attorney, you must sign the Acceptance page. Previously, signing this Acceptance did not impose any duties upon you until such time as the power of attorney was activated either by the principal issuing a statement that it should be activated, or a health care professional opining that the principal was so incapacitated as not to be able to exercise reasonable judgment with regard to his/her financial affairs.

New Hampshire nursing homes recently pushed through the Legislature a bill which makes a person holding a financial power of attorney, as well as others having financial control over the affairs of a principal who is facing nursing home care, personally financially responsible for funds the nursing home does not receive from Medicaid (as opposed to Medicare) if the principal is financially destitute and has not applied for Medicaid in a timely fashion. Governor Hassan signed this bill over the objections of many of us in the estate planning field because there were other aspects of the bill that she believed were important. Whether this provision will be repealed is unknown.

Meanwhile, we would advise that you NOT sign the Acceptance of this power of attorney until such time as you are actually empowered to use it and know the principal’s financial situation and are prepared to fill out a Medicaid application on behalf of the principal in a timely fashion. In the case of a single person, that “timely fashion” is not necessarily when the principal enters a skilled care unit for custodial care, but rather when the principal’s finances are such that, given the costs of the principal being in skilled care, the assets are likely to run out before the principal dies.

In the case of a married couple, on the other hand, it is essential that the Medicaid application be filled out as soon as a person enters a skilled care nursing facility if the maximum amount of funds are to be kept available to the “at home” spouse.

As a further caution, there have been many instances of a person who is becoming increasing unable to manage their financial affairs, not paying the premiums for the Medicare supplement insurance and that insurance being canceled when they need it most, as well as someone who has long term care insurance ceasing to pay the premium just before the time they will need long term care. If you are acting under a Power of Attorney for someone in these circumstances it is important you are familiar with their entire financial picture.

Although your responsibilities under a financial Power of Attorney may not be as extensive as they might be if you were a Court-appointed Guardian or the Trustee of the person’s Trust, which held their real estate, personal property or other assets, you should, nevertheless, ascertain whether other insurance premiums, such as homeowners insurance, and if they are still driving, car insurance, are being paid in a timely fashion.

And, once a power of attorney has been activated, you have some responsibility in this regard toward the inheritors of the estate, since if the insurance premiums go unpaid, the principal or his/her estate may spend large amounts for medical bills which would have been covered by Medicaid, a Medicare supplement insurance plan, or long term care insurance had the premiums been paid.

The bottom line is that you should not sign the Acceptance of the power of attorney until such time as you are ready to undertake these responsibilities and the principal will allow you access to the principal’s financial records to date, and if you are assisting a person with their finances, you need to know about all of their financial issues.