I recently became my father’s designated Power of Attorney (POA). When I asked to perform this function for him I thought “Sure. Why not?” After all, I want to be involved in overseeing my father’s affairs to ensure that his interests are well served.
Acting as my father’s POA gives me broad and sweeping powers to engage in financial activities on his behalf. What I did not know when agreeing to this role was exactly what I was required to do to fulfill this role under the Uniform Power of Attorney Act (UPOAA). Maine and Colorado, the two states where I split my time, are among the 22 states that have enacted the UPOAA into law. This year, seven more states (Mississippi, Georgia, North Carolina, New Hampshire, Texas, Wyoming, and the District of Columbian) have introduced this legislation to make the UPOAA law.
The UPOAA is designed to keep unscrupulous family members, friends, and others from raiding the assets of the elderly and benefitting financially from their actions. This is an admirable intent, but the UPOAA restricts what payments, gifts, and loans I can receive from my father once I am appointed his POA.
For example, shortly before I became my father’s POA, he proposed making me a loan to help with home repair projects. I would pay him a reasonable interest rate on the loan. My father offered to have the loan forgiven upon his death. It seems reasonable to me that he should be able to do that. I did not ask him for the loan. He suggested it.
The loan was not made before I became his POA. However, according to an elder law attorney I spoke with in Colorado, once I became his POA such a loan is not allowed because a POA is not allowed to benefit financially while in the position of acting as a POA.
At 93, my father requires assistance and care. According to this same attorney, under the UPOAA, I am able to care for my father and compensate myself at the market rate for such services ($15 – $20 per hour) but I am not able to earn any other income while acting as his caretaker. In other words, I would have to abandon my other businesses and the income I make from them to take care of my father.
I spoke with Barbara Schlichtman, an attorney with the Maine Center for Elder Law, about how the UPOAA is interpreted in Maine. It seems in the Pine Tree State there is more latitude in the Act’s interpretation. However, those who are designated as a POA need to understand the responsibilities and restrictions that come with this appointment.
Many baby boomers currently are or may become the Power of Attorney for their spouse, relative, loved one, sibling, or friend. How many of them are aware of the roles, responsibility and rules that come with this appointment? Managing someone’s financial affairs takes time and can be burdensome if it is not something for which you have an interest or talent. Before saying “Yes” to acting as a POA, make sure you know what you’re getting yourself into.