Many older people moving into a nursing home or retirement community are experiencing cognitive decline. In legal terms, they no longer have the capacity to make financial or medical decisions for themselves. So a trusted person—usually an adult child—will sign the entrance contract on their behalf as power of attorney.
There tends to be a lot of confusion over entering into an agreement for long-term care for a loved one who is cognitively impaired. If you are signing your name under "Responsible Party," do you know what you are signing up for?
A recent MarketWatch article, titled "How a parent’s health-care bills could hurt you," says you should be aware of the issues when signing your name in lieu of your parent’s on a contract without adding any clarifying language. In most cases, you are acting as a guarantor who is personally responsible for the payments.
This can come up when dealing with a family member's hospital and doctor bills which are not covered by insurance. Typically, the patient or patient’s representative signs a form stating that they will be responsible for such expenses before the treatment begins.
Without noting your signature, you could be responsible for some hefty bills—monthly fees at a retirement facility or nursing home can be $10,000 or more.
That might not be what you signed up for!
Estate planning and elder law attorneys will counsel you to set up a “durable” power of attorney. A durable power of attorney lets a trusted individual (in legal terms "the agent") retain power of attorney even when the family member who signed the document (the “principal”) is now incapacitated.
For example, as the named agent for your family member on a financial power of attorney document, you have access to his or her banking to pay the retirement or nursing home on their behalf. Again, you need to remember one thing when signing a contract and agreement; otherwise, you will be personally guaranteeing the payments.
The MarketWatch article recommends you separate your responsibility as power of attorney from the financial responsibility of your family member by signing their name as the responsible party on the contract, and after that write, “by [your name] as power of attorney,” followed by the date.
So it would look something like this:
by Alvin Hancock as power of attorney, July 22, 2014
Do not get into trouble and put the care of your family member in jeopardy. Talk to an estate planning attorney to set up a durable power of attorney to help you take care of your family member and protect your money.
For more information on estate planning, visit www.HeritageElderLaw.com
Reference: MarketWatch (July 10, 2014) "How a parent’s health-care bills could hurt you"