Serving as Agent

No, we’re not talking about your being Tom Cruise’s agent to negotiate a
contract for Mission Impossible IV. We are talking about your Aunt Nellie who
was just admitted to a nursing home, and although sometimes lucid, needs help
managing her affairs. Under her durable power of attorney, you were named
agent, and it is now your responsibility to take care of her financial
matters.

While your family is a regular Brady Bunch, you are worried that your sibs,
Anastasia & Drizella, may not feel comfortable with you controlling money
they view as their future inheritance. What can you do to help Aunt Nellie and
protect yourself? Meet a lawyer to review your responsibilities under Aunt
Nellie’s power of attorney. The cost is probably a legitimate expense to pay
from Aunt Nellie’s funds. Set up a file system and diligently record and
document everything. The following is a list of the tabs you should set up in a
binder to keep everything organized, and what should go in each. You can take
these notes and files and show them to Anastasia and Drizella to show where the
missing monies went.

The original Power of Attorney: Make numerous copies of the
Power of Attorney you are operating under (you will need copies for every bank
or other person you deal with). Safeguard the original you are in possession of
and find out if there are other originals in existence. For instance, did the
drafting attorney retain an original? Does Aunt Nellie have an original in her
safe deposit box or under her mattress? Does the alternate agent named after
you, if there is one, have an original?  

Cliff’s Notes: Keep in your binder any notes you made
and/or annotations to the Power explaining your role as agent based on your
meeting with an attorney (taking a step backwards, don’t forget to take notes
when you meet with an attorney about your role as agent!).

Effective Date: Some powers of attorney are effective when
signed; others require you to have one or more doctors’ letters stating that
Aunt Nellie cannot take care of her affairs. Banks or others may have you sign
a statement (affidavit) attesting to the validity of the power. Save copies in
your binder. It might even be helpful for you to have Aunt Nellie’s lawyer
prepare an affidavit for you to sign to give to people to encourage their
acceptance of the power. Whatever the requirements, document that you can serve
and save the proof.

Contracts: If you sign a contract for Aunt Nellie (e.g.
with the cable television company so she doesn’t miss an episode of Survivor)
copy the contract as you signed it for the binder. Make notations as to why you
signed the contract (e.g., to keep Aunt Nellie entertained), and state the
provision in her power of attorney that gave you the authority to do so.

Legal Actions: Is Aunt Nellie a party in any civil or
criminal proceedings? If she is, contact any attorney that Aunt Nellie is
working with or has retained so they are aware of her situation.Failure to do
this may cause Aunt Nellie to lose the opportunity to pursue an action (i.e.,
failure to toll the statute of limitations), or may cause a default judgment
against her for failure to produce a timely response or to appear in court.

Checks: Copy every check you write (or get carbonless
copies called safety checks) and staple the bill you paid with to the copy of
the check. File them in the binder in check number order.

Deposits: Keep a copy of every deposit in chronological
order. Identify the source of any deposits. You should review prior bank
statements and tax returns with Aunt Nellie’s accountant to see what cash
receipts you should expect. Make up a checklist so you can monitor them and
verify that they have been deposited. You don’t want the gardener keeping the
rental payments for the tenant in Aunt Nellie’s vacation home because you
didn’t know to pick it up.

Cash: If you withdraw cash using Aunt Nellie’s bank card,
be sure to have receipts and contemporaneous records as to what it was spent
on. While you should avoid cash, sometimes there is no choice. Many caretakers
and others will be tipped in cash. Just be prepared for the potential
challenges later (yes, even from loving sibs). If possible, have a witness to
the payments who will also sign off on the documentation you have.

Reimbursements: Sometimes you can’t avoid paying for
something yourself. Aunt Nellie needed her Twinkie fix and the corner newsstand
wouldn’t take a check. You can reimburse yourself for appropriate
expenditures, but keep detailed contemporaneous records and copies of receipts
to support each reimbursement. Bear in mind that anytime you reimburse yourself
for a cash expenditure, the sibs’ lawyer will accuse you of having used the
money for yourself.

Gifts: Many but not all powers permit gifts to be made. Be
sure you have the authority to do so, and that you understand any limitations
or restrictions. Document all gifts, why they were made, and to whom. Be very
careful if you make gifts to yourself or your heirs. Verify that you can with
an attorney. Document everything. Carefully consider any gifts that aren’t
equal to all heirs as they may be the basis for lawsuit in the future.

Accountings: Consult with an accountant periodically and
have a summary of cash flows completed along with bank statements reconciled.
Having an independent accountant do this, at Aunt Nellie’s expense, will give
more independence and credibility to your actions and have you prepared to
complete a formal accounting if a court ever requires it (it may!).

Communication:While you may be under no obligation to
explain actions as an agent when times are good, it is a good idea to have full
disclosures to any interested party (e.g., your loving siblings or cousins).
 Let them know what you are
doing.Periodically send them your accountings so they know what is going on.The
best defense is an offense.If you are dragged into court to explain your
actions, having made good-faith disclosures voluntarily may go a long way to
show your good intentions.

Good luck serving. You’ll get Brownie points, but remember “no good deed
goes unpunished” so be prepared.