Moving a parent into a care facility is often a wrenching decision for families. Despite the emotions involved, it’s important to remain clear-eyed when it comes to signing the contract. Otherwise, adult children could find themselves on the hook for much more than they bargained for.
A recent MarketWatch article, titled "How a parent’s health-care bills could hurt you," says there is a lot of confusion over entering into an agreement for long-term care for a family member who is cognitively impaired.
According to the article, 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.
Reference: MarketWatch (July 10, 2014) "How a parent’s health-care bills could hurt you"