Is it Time to Update your Power of Attorney?

Is it Time to Update your Power of Attorney?

Phillip George –Attorney

If you are like most folks, once you get your Power of Attorney signed you put the documents on the shelf, or in a safe, until you need to use them. Some of us have had our old Power of Attorney stashed away for years or even decades. Is it time to update your Power of Attorney?

The answer to this question is that it is probably time to at least take a look at your existing Power of Attorney Documents. This is especially true for those folks who signed their Power of Attorney prior to January 1, 2017. What happened on January 1, 2017? That is when Washington’s newly adopted Uniform Power of Attorney Act took effect.

On January 1, 2017, the newly adopted Uniform Power of Attorney Act became the law of the land in Washington. The new act was an attempt to streamline our previous Power of Attorney laws which had come into effect back in the 1970’s. The intent behind this new act was to remove ambiguity created in the previous law and to put in place safeguards from possible abuse by an agent. To accomplish these goals there were several provisions added to this new act. These new provisions included the following:

Are you naming co-agents to act on your behalf?

For a lot of folks, naming two or more of their children to act as co-agents makes a whole lot of sense. However, with this new act, if you name your children as co-agents, they must exercise their authority jointly UNLESS you have language that specifically allows them to work independently. What does this mean? This means that if you have named two of your children to act as your agents in your Power of Attorney then they both have to be present to sign off on actions and make decisions. This can become a huge mess if one of these children are living outside of the state.

Does your Power of Attorney allow for “gifting”?

As an elder law attorney, I often need to help my clients access Medicaid benefits to pay for uncovered Long Term Care costs. Medicaid rules state that a person can only access Medicaid if they have less than a certain amount of assets in their name. In order to get my client qualified for Medicaid I have to gift the assets out of their name and into the name of their spouse or sometime their children. This is one of the primary uses most folks have for a Power of Attorney. However, the new law states that the general power to make gifts is limited to the amount of the federal gift tax exclusion, which is currently $15,000 per year, unless your Power of Attorney specifically states you can gift in excess of this amount. What does this mean? It means that if your agent needed to move money out of your name to help you access Long Term Care benefits through Medicaid and your Power of Attorney was not worded correctly then your agent would only be able to move money out of your name in increments of $15,000 per year. This would effectively make it almost impossible to use your Power of Attorney to help you access Medicaid.

Is your Power of Attorney “durable”?

This will probably sound a little silly to most folks. If you want your Power of Attorney to be effective after you are declared incapacitated then your document has to contain language that expressly states that the document is not affected by your disability. What happens if your documents do not include such language? Without such an express statement your Power of Attorney can be terminated as soon as you become incapacitated or disabled.

When does your Power of Attorney automatically terminate?

Under the old Power of Attorney laws, a persons Power of Attorney would terminate upon the final signing of a dissolution (divorce) decree. Under the new law, your Power of Attorney would terminate as soon as you filed the initial paperwork to dissolve a marriage or a domestic partnership.

How can you reduce the liability for your Agent?

The new law allows you to exonerate your agents from liability for certain actions. Why is this important? If you have appointed your child as your agent and your child is moving assets to help you access Long Term Care benefits you can add language that would prevent someone else (maybe a disgruntled brother or sister) from filing charges against your agent. This offers your agent a measure of protection when acting on your behalf to achieve your goals.

Is it time for you to look at updating your Power of Attorney? As you can see, the new Power of Attorney Act has brought about plenty of changes. Unless you are certain that that your current Power of Attorney will allow your agent(s) to accomplish your goals then you would be well advised to sit down with an Elder Law Attorney to see how your documents stack up.