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Posted March 15, 2006

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Legal: Obtaining Power of Attorney, Step by Step

Q. My wife is suffering from dementia, and it is necessary at this time for me to obtain power of attorney to apply for a reverse mortgage so I can afford nursing home care for her. What would be necessary to accomplish this? Thank you.

Bill F., Sun City, California

A. In response to your question obtaining a power for attorney from your wife:

1. The first question is whether your wife is still capable of knowingly executing a power of attorney. I did one the other day for a man suffering from the early stages of dementia who was a little vague about who the President is, but he was still living at home, unequivocally knew his wife, knew how many children they had, knew that they owned a house together, and understood that he was no longer capable of managing the family finances.

Can your mother still sign her name, or at least make a strong handwritten mark if arthritis or some other ailment has affected her signature? The typical power of attorney requires the notary to sign an "acknowledgment," a statement to the effect that the person giving the power (the "principal") knew what he/she was doing, and by his/her signature recognized that the "agent" would have the powers listed. If the notary is comfortable that the principal can genuinely acknowledge what he/she is doing, you may be successful in having the document properly executed.

If the principal cannot meet this minimal level of ability to function, it is too late to resolve the matter with a power of attorney; you will need to apply for a guardianship.

2. Even if you can get a document signed and notarized, however, you are likely to learn that banks and the reverse mortgage company are reluctant to accept the power of attorney, particularly if your wife is already in a nursing home.

Whenever possible, when an individual is at least borderline on the ability to understand what he/she is doing, I look to get a separate statement from a doctor to the effect that the doctor was comfortable that the person knew what he/she was doing. Doctors are generally reluctant to use the word "capacity" in such a statement, but I have found that doctors will be willing to say that they are fully familiar with the person's medical and psychological status, are acting at the request of the individual (to allay fears about privacy), and on the basis of that information believe that the individual "understood the significance of what he/she was doing" in signing the document.

3. Even if you can get the document signed and have a doctor's affidavit to accompany it, you may find that the bank or broker arranging the reverse mortgage will still look for an added level of comfort. Thus it would be helpful if the mortgage company could at least call your wife on the telephone and ask her whether she knows who her husband is, and whether she trusts him to make financial decisions about managing money.

4. The wording of powers of attorney varies from state to state, but you need to be sure that one of the powers given specifically relates to "real estate transactions" and that the underlying state law includes obtaining a mortgage on property as an action covered by that authorization. If not, most states allow customization of authority given in a power of attorney, and you will need to add a specific power to the effect that you would be authorized to sign documents necessary to take out a reverse mortgage on the home.

There is a temptation to have the principal accept the many standard powers typically available when a power of attorney is being signed, and then add others that can involve very complex reading that is not likely to be understood by a person with limited ability to function. The "standard" language in most powers of attorney is generally comprehensible, but it is usually prudent to have the principal authorize only those types of actions that may reasonably be necessary in his/her case. And if custom powers are added, the wording should be brief and straightforward.

5. If the commonly accepted format for powers of attorney in your state does not include the collection of the agent's signature with the principal as a witness, banks and agencies may be unwilling to accept it. The signature of the agent is not required in New York, where I practice, but I routinely add it to the final page of the document -- providing an extra line at the end for the "specimen signature" of the agent, and a second line that reads, "Signature of principal as witness to the agent's signature."

6. Finally, I will confess to some prejudices here, but I also think that, particularly in these borderline cases, it is prudent to have an attorney prepare the document, even if the standard form is used. (I prefer to use the standard form because banks and others readily recognize it as a document with acceptable wording.) If the document has been prepared and witnessed by an attorney, whose name and identification as an attorney appear on it, I think the chances of having it accepted are enhanced. An attorney is also more likely to be sensitive to subtleties of wording that may be necessary in particular cases.

Just last week, the appeals court in New York, ruling on issues that arose in a guardianship case, found that a power of attorney executed before the guardianship petition was filed was invalid. I don't know who the notary was on the document, but if there ever is a court challenge to the validity of a power of attorney, the court is likely to be more receptive to the testimony of an attorney as the witness/notary than to testimony by someone who has experience only as a notary. And the case shows rather vividly that a power of attorney can be set aside.

This answer is provided by Howard F. Angione, an attorney in Queens, New York, whose practice is devoted to the needs of the elderly and those who care for them. Mr. Angione was the principal editor of Elder Law and Guardianship in New York, a practice guide for attorneys, and of the 5th Edition of Harris Trusts and Estates, a three-volume work for attorneys on probate in New York State. He also is a member of the executive committee of the Elder Law Section of the New York State Bar Association.

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