Critter Corner: How Much Should an Agent Under a Power of Attorney Be Paid?

Dear Ernie and Jannette,

Both my parents signed Power of Attorney documents naming my sister as their financial agent. They now both have dementia and live in an assisted living facility. My sister wants to pay herself to do things like take them to the doctor, pick up their prescriptions, do some occasional shopping, and other caregiving tasks. She claims she spends 10 to 20 hours per week running these errands for them. Should an agent under a power of attorney be compensated, and, if so, what is a reasonable amount?

Thanks!

Wei Tumuch

Dear Wei,

The first place to look to determine whether an agent under a power of attorney is allowed to charge is the power of attorney document itself. If the power of attorney document is silent on the issue, then you look at the state law, which can vary tremendously.

In Virginia, under § 64.2-1610, unless the power of attorney otherwise provides, an agent is entitled to compensation that is reasonable under the circumstances.

In Maryland, under §17–114, unless the power of attorney otherwise provides, an agent is not entitled to compensation.

In DC, the law is silent on this issue.

How to Determine the Rate of Payment

There must be some reasonable basis to justify the rate of compensation.

When determining the rate of payment, one question you can ask yourself is “What would it cost to hire someone else to perform the same services in your community?”

Unfortunately, this may be difficult to determine since there may be no service that does everything your sister describes, but you may be able to get some guidance at least for some of what she lists. Either way, ask your sister for a detailed ledger of all that she does on a daily basis for your mother and how long each task takes. This should help in your research.

Then, take some time and talk with her and come to an agreement on the proper compensation. Keep in mind when you are discussing this with her that her position may be difficult at times. She may have day-to-day decisions, worries and obligations that others cannot understand unless they have been in that position. Yet, at the same time, you want to feel like what she is being compensated is fair and that no one is being exploited or taken advantage of. Following your research and your discussion, you may want the have an attorney draw up a written agreement. Hopefully, you will both be on the same page and things will go smoothly!

On a side note, when she is compensated, remind her to claim the payments as income on her personal income tax return. Also, if the payments have any bearing on her being eligible for Medicaid in the future, she should speak with an experienced elder law attorney, such as Mr. Farr.

Hop this is helpful!

Ernie and Jannette

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