How Much Should A Person Be Paid To Act As Power of Attorney?

How Much Should An Agent Under A General Durable Power of Attorney be Paid?

This is a difficult question confronted by many individuals acting as power of attorney for family members or friends.  There is no perfect statutory answer in Pennsylvania, but it is clear that a person actively acting as power of attorney is entitled to fair and reasonable compensation for the work they are doing.  Most Agents will charge on an hourly basis, but there are occasions where they will charge on a flat fee amount on a monthly basis.  I most commonly see hourly rates for family members acting as Agent in the $20.00 to $40.00 range.

Typically, a son or daughter will be the person acting as Agent under a power of attorney document on behalf of their parents.  Before setting a fee structure, an Agent should know that there are two groups that could bring payment complaints.  They are:

  1. The children and beneficiaries of the incapacitated person. They may not like to see their future inheritance being reduced by the payments being made to the Agent.
  1. Medicaid Department of Human Services. If the incapacitated person ultimately needs long term care and a Medicaid application becomes necessary, the PA DHS reviewing agent might question if the POA is truly being “paid” or if this is actually a “gift” that would render the applicant ineligible for Medicaid.

In either case, the Agent should:

  • Obtain a letter from the primary care doctor for the incapacitated person stating that they are in need of someone to actively act as Agent.
  • List all of the tasks they perform for the incapacitated person.
  • Research what it would cost to hire someone else to perform the same services in your area.
  • Keep a detailed ledger of all that they do on a daily basis for the incapacitated person and how long each task takes.
  • Claim the payments as income on their personal income tax returns. It will be hard to argue to the PA DHS that this is income and not a gift if you are not actually claiming the payments as income when you are filing with the PA Department of Revenue.
  • If the incapacitated individual is able to understand and sign an agreement, a detailed family care contract should be signed by the parties.

Overall, a hard working Agent deserves payment.  They have day-to-day decisions, worries and obligations that others cannot understand unless they have been in that position.   Others might think the Agent just drops by a couple of times a week to check on the incapacitated person.  In reality, there can be endless hours of dealing with the care facility, the doctors and staff, financial institutions, bill payments and the general ups and downs of the health and mental state of the incapacitated person.  This can be an exhausting a thankless job that can limit a person’s ability to work and care for their own family.  Monetary payment may be necessary to allow someone to properly perform the necessary jobs under the POA.  In the end, other family members should be thankful that someone has taken on the responsibility of handling the incapacitated person’s affairs.

Other than having a proper and comprehensive Elder Law focused power of attorney document, some of the other most common planning considerations are:  Creation of Last Will & Testament, Creation of a Medicaid Asset Protection Trust, use of a Medicaid Compliant Immediate Annuity, qualification of the Family Caregiver Exception, creation of the Caregiver Agreement, Irrevocable Burial Reserve, Monthly Gifting Exception, and Living Will.

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For assistance developing a comprehensive estate plan or nursing home asset protection plan in Pennsylvania, please contact Douglas L. Kaune, Esquire at (610) 933-8069 or email him at Doug’s entire practice is focused on elder law, Medicaid application, estate planning, trust planning, estate administration and protection of clients’ assets from nursing home spending and estate and inheritance taxation. Unruh, Turner, Burke & Frees, P.C. is a full service law firm which has three convenient office locations in Phoenixville, West Chester and Paoli, Pennsylvania. The firm primarily services clients in Chester, Montgomery, Delaware, Philadelphia, Bucks and Berks Counties, but can represent clients throughout Pennsylvania.