Why Won’t IRS and Social Security Administration Like My Power of Attorney?

The IRS and the Social Security Administration (SSA) don’t recognize traditional powers of attorneys (POAs). Forbes’s recent article entitled “Two Times When Your Power of Attorney Isn’t Going to Work” explains why.

The IRS says that you must use Form 2848, “Power of Attorney and Declaration of Representative” to allow anyone to act on your behalf. This form requires you to state the tax matters and years for which the agent is authorized to act. That’s different from a traditional POA for financial matters, which usually has blanket statements allowing the agent to take any or a broad range of actions on your behalf in certain matters.

A married couple that files joint tax returns must also have each spouse separately complete and sign a form. There is no joint form.

Technically, the IRS might accept other POAs as the instructions to Form 2848 indicate this. However, the POA must meet the requirements of Form 2848 to be accepted as a substitute. That can be a tall order.

The Social Security Administration is similar. It says on its web site that it doesn’t recognize POAs. When you need someone to manage your Social Security benefits, you contact the SSA and make an advance designation of a representative payee.

A 2018 law created this feature that lets you name one or more individuals to manage your Social Security benefits. The Social Security Administration must usually work with the named individual or individuals. You can rank up to three people as advance designees. Therefore, if the first one isn’t available or is unable to perform the role, the SSA will move to the next person on your list.

Someone who already is receiving Social Security benefits can designate an advance designee at any point, and a person claiming benefits for the first time can name the designee during the claiming process. The designation can be made using your “my Social Security” account on the Social Security web site or by contacting the Social Security Administration by phone (800-772-1213) or at the local field office. A designee can also be named through the mail by using Form SSA-4547 – Advance Designation of Representative Payee.

Representative payees generally must be individuals, but it also can be a social service agency, nursing home, or one of a number of other organizations recognized by the SSA to serve as payees. If you don’t name any representatives, the SSA will name a representative payee for you, if it decides you need help managing your money. A relative or friend can apply to be representative payees, or the SSA can make the selection.

Reference: Forbes (Jan. 28, 2021) “Two Times When Your Power Of Attorney Isn’t Going To Work”

 

The Difference between Power of Attorney and Guardianship for Elderly Parents

The primary difference between guardianship and a power of attorney is in the level of decision-making power, although there are many intricacies specific to each appointment, explains Presswire’s recent article entitled “Power of Attorney and Guardianship of an Elderly Parent.”

The interactions with adult protective services, the probate court, elder law attorneys and healthcare providers can create a huge task for an agent under a power of attorney or court-appointed guardian/conservator.  Children acting as agents for a parent under a durable power of attorney or appointed as guardians or conservators by a court may be surprised about the degree of interference by other family members who disagree with their decisions for a loved one.     In addition to interference from siblings, family members and well-meaning neighbors and friends, a guardian, conservator, or attorney-in-fact that is named in a durable power of attorney may also encounter problems with health care providers who may be hesitant to recognize the need for an agent.

There are two types of durable powers of attorney.   One type of DPOA is called a springing durable power of attorney.   There are condition precedents in the document that must be satisfied before the DPOA and the attorney-in-fact named in the document have the authority to act on behalf of the principal.   For example, the document may require that one or two physicians provide a letter that state that the principal is unable to manage his or her financial affairs.    Another type of DPOA is effective immediately upon signing.     The latter is more common in older clients, as the chances of having health issues that render them incapacitated and the need to have agent “on board” without the impediment of securing letters to “push” a DPOA into effect more likely than with, for example, a healthy middle-aged individual that would prefer to have additional steps completed before access is granted to financial accounts.

In Massachusetts, a guardian has control over the person and can make decisions about the Protected Person’s living arrangements and health care decisions.   A conservator has control over the Incapacitated Person’s assets, such as bank accounts, investments, etc.     The equivalent of a conservator is the attorney-in-fact under a durable power of attorney.   Whether appointed by a court to take care of financial affairs of a person who did not execute a durable power of attorney prior to becoming incapacitated or the person named under a durable power of attorney to do everything that the principal could financially, the choice of this individual for an elder who no longer has the legal capacity to make medical or financial decisions is an important role.

Unlike the attorney-in-fact named in a durable power of attorney, court-appointed guardians and conservators are required to deliver regular reports to the court detailing the activities they have completed for the Protected Person or Incapacitated Person, as the case may be.    Regardless, however, both roles, DPOA or guardian/conservator must work in the best interest of the individual.

Some popular misperceptions about power of attorney and guardianship of an elderly parent include:

  • An agent under power of attorney can make decisions that go against the wishes of the principal
  • An agent cannot be removed or fired by the principal for abuse

Agents under a medical power of attorney, that is, health care proxy, and court-appointed guardians and conservators have a duty to go beyond normal efforts in caring for an elderly parent or adult.   They must understand the aspects of the health conditions and daily needs of the parent, as well as learning advocacy and other skills to ensure that the care provided is appropriate.

Ask an experienced elder law attorney about your family’s situation and your need for power of attorney documents with a provision for guardianship.

Reference: Presswire (Jan. 14, 2021) “Power of Attorney and Guardianship of an Elderly Parent”

 

How to Be an Effective Advocate for Elderly Parents

Family caregivers must also understand their loved one’s wishes for care and quality of life. They must also be sure those wishes are respected. Further, it means helping them manage financial and legal matters, and making sure they receive appropriate services and treatments when they need them.

AARP’s recent article entitled “How to Be an Effective Advocate for Aging Parents” says if the thought of being an advocate for others seems overwhelming, take it easy. You probably already have the skills you need to be effective. You may just need to develop and apply them in new ways. AARP gives us the five most important attributes.

  1. Observation. Caregivers can be too busy or tired, to see small changes, but even slightest shifts in a person’s abilities, health, moods, safety needs, or wants may be a sign of a much more serious medical or mental health issue. You should also monitor the services your family member is getting. You can take notes on your observations about your loved one to track any changes over time.
  2. Organization. It’s hard to keep track of every aspect of a caregiving plan, but as an advocate, you must manage your loved one’s caregiving team. This includes creating task lists and organizing the paperwork associated with health, legal, and financial matters. You’ll need to have easy access to all legal documents, like powers of attorney for finances and health care. If needed, you might take an organizing course or work with a professional organizer. There are also many caregiving apps. You should also, make digital copies of key documents, such as medication lists, medical history, powers of attorney and living wills, so you can access them from anywhere.
  3. Communication. This may be the most important attribute. You need communication for building relationships with other caregivers, family members, attorneys and healthcare professionals. Be prepared for meetings with lawyers, medical professionals and other providers.
  4. Probing. Caregivers need to gather information, so don’t be shy about it. Educate yourself about your loved one’s health conditions, finances and legal affairs. Create a list of questions for conversations with doctors and other professionals.
  5. Tenacity. Facing a dysfunctional and frustrating health care system can be discouraging. You must be tenacious. Here are a few suggestions on how to do that:
  • Set clear goals and focus on the end result you want.
  • Keep company with positive and encouraging people.
  • Heed the advice of experienced caregivers’ stories, so you understand the triumphs and the challenges.
  • Be positive and be resilient.

Reference: AARP (Sep. 24, 2020) “How to Be an Effective Advocate for Aging Parents”