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Know what you are signing when using powers of attorney

Michigan residents need to be sure they know what they are signing when they sign contracts for a parent or loved one. Many people who become powers of attorney for a loved one who has become cognitively impaired misunderstand what it means when they sign their own name on a contract. For instance, children of an elderly parent often find themselves in a position where they need to move their parents into a nursing home. If they have a power of attorney for their parent, they are within their rights to sign the contract on their parent’s behalf. However, they may be unknowingly signing as a guarantor for the payments, instead of just signing that they will make the payments for their parent from their parent’s money.

This doesn’t just happen with nursing home contracts either but may happen when signing for other things for parents or loved ones, such as medical procedures, a cellphone or doctor’s bills. When reading contracts, be sure to look for words such as “responsible party” and ensure it is not you. Often people mistake “responsible party” as just meaning “contact person,” which they are agreeable to being. Sometimes, accidentally signing as a guarantor for a long-term facility or nursing home can also have an adverse effect on the parent’s Medicaid application. Medicaid pays for long-term expenses when an elderly person’s assets are exhausted and their income level meets certain criteria. If someone else has signed as a guarantor on the contract, it could result in holding up the payments, and the guarantor will be responsible for the payments until the issue is straightened out. Per an elder attorney, the best way to avoid most situations like this when signing a contract is to sign as the person – in their own name -- and then add the following next to the signature, “by [your name] as power of attorney.” Powers of attorney serve a good purpose, but when signing one, Michigan residents should ensure that their attorney has fully explained the responsibilities and the caveats.

Source: Market Watch, "How a parent’s health-care bills could hurt you," Elizabeth O’Brien, July 10, 2014

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