By Ruder Ware Alumni
December 1, 2009
Mom (or Dad) has become more than a little forgetful. Dad (or Mom) is deceased (or is mentally incompetent). Mom has some medical conditions, but she still lives in the home in which you grew up. She is on Social Security. She has some savings, some stocks, some insurance, and the family cottage up north.
You have several brothers and/or sisters. As with most families, there is some “emotional baggage” from long-unresolved conflicts among Mom and her children. Perhaps you live closer to your Mom than your siblings. Or not. Perhaps you have more financial, experienced-based, or psychological resources. For whatever reasons, it seems that you are the one most suited to be Mom’s “power of attorney.” You quickly sign a “Durable Power of Attorney” and a “Power of Attorney for Health Care.” You think nothing of it. You should.
You do not realize it, but in the eyes of the law, which dates from the Roman Empire, you are now a “fiduciary.” What does that mean? In Latin “fides” means “faith, honesty, confidence, trust, veracity, honor.” A fiduciary acts as a trustee in the best interests of another person in scrupulous good faith and candor. Generally speaking, this means:
When making financial or health care decisions on Mom’s behalf, making certain that you keep Mom’s best interests firmly in mind;
Never putting any other person’s interests (this includes you) above Mom’s best interests;
Keeping complete and accurate records of everything you do on Mom’s behalf so that you would be able to truthfully account under oath in a court of law that all of the decisions, expenditures, gifts, donations or transactions of any kind were made in Mom’s best interest.
To serve as a fiduciary is a serious undertaking. Those who do so in a thoughtless manner, or in a manner influenced by sibling rivalries or family “elephants on the table” may cause Mom and themselves trouble. Those who do so willfully and knowingly may cause themselves big trouble not only in civil law, but in criminal law as well.
In order to act in Mom’s best interests you will probably have to become educated about things such as advance funeral planning, how life insurance policy payments to beneficiaries may be structured, tax ramifications, and many other topics. One area of particular concern is whether Mom might outlive her assets (as most elderly persons do). Eventually, Mom may need Medicaid in order to be cared for in a nursing home. The rules that govern eligibility for Medicaid are strict. If Mom is not eligible for Medicaid as soon as her need for nursing home services arises, the results for Mom can be harsh. You need to understand clearly how the Medicaid eligibility rules apply long before you sign the Medicaid application (while wearing your “fiduciary hat”).
You do not want financial or legal problems to arise for Mom, for Mom’s estate, or for yourself. In order to prevent problems like those from arising, you need sound legal advice from one who is well-versed in the law of Medicaid eligibility, estate planning, probate, and fiduciary duty, among others. If such problems have (or potentially have) arisen, you may need representation for a variety of court proceedings.
If you have questions regarding the above, please contact Russ Wilson, the author of this article, or any of the attorneys in the Trusts & Estates Practice Group of Ruder Ware.
This document provides information of a general nature regarding legislative or other legal developments, and is based on the state of the law at the time of the original publication of this article. None of the information contained herein is intended as legal advice or opinion relative to specific matters, facts, situations, or issues, and additional facts and information or future developments may affect the subjects addressed. You should not act upon the information in this document without discussing your specific situation with legal counsel.
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