When people begin making end-of-life plans, they often think of setting up a will or a trust. But another important safeguard you should know about is a document called a power of attorney (POA).
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If you have concerns about your parent’s ability to handle their financial decisions or medical decisions as they age, you should learn about powers of attorney (POA). Powers of attorney allow your parent to name you or someone they trust to make financial and medical decisions when they cannot.
What Does a Power of Attorney Do?
With aging parents, family members and caregivers have increasing concerns about their well-being and decision-making ability to make financial and health care decisions. If they have a will or trust in place, that document helps administer their estate after death. However, prudent estate planning also considers and addresses times of incapacity or incompetence during their lifetime.
There are available estate planning tools, including a financial power of attorney, a medical power of attorney, and an advance medical directive or living will. The power of attorney document appoints an attorney-in-fact or agent to act on your parent’s behalf for financial and medical matters. Without these legal documents in place, a loved one or other family members may need an elder law attorney to petition the court for conservatorship or guardianship over your parents’ financial and medical affairs. This court proceeding requires evidence of the parent’s incompetency of a parent and the fiduciary fitness of the potential guardian and conservator.
Types of Power of Attorney
Medical Care Power of Attorney or Living Will
A medical care power of attorney appoints an agent to make health care decisions. An advance medical directive or living will outline the measures for health care decisions and end-of-life care. They operate with two goals when a parent cannot make health care decisions due to incapacity or incompetency.
- An advance medical directive or living will spell out your parent’s wishes concerning the type of medical care they want. For instance, a parent can direct their desire to be kept alive by artificial means and the treatment they want if they have an incurable disease. A medical directive is sometimes a separate document merged with an overall health care directive or medical power of attorney.
- The medical power of attorney grants the authority to the agent to make medical decisions for the parent according to the medical directive.
Overall, these directives and powers spell out the parent’s wishes for treatment and give authority to the agent to carry out these wishes. When discussing this with your parent, it is helpful to explain that your parent directs how they receive treatment. Furthermore, it relieves the stress and anxiety of a child authorized to make decisions because they know they are carrying out a parent’s wishes.
Financial Power of Attorney
The financial power of attorney authorizes the agent or attorney-in-fact to manage financial matters for the parent. The parent can direct the scope of authority granted under a power of attorney. They can give the power to conduct a single action (limited power of attorney) or broad and sweeping authority as allowed under the law. They specify what authority to give, such as the power to:
- Pay bills and expenses
- Engage in real estate transactions
- Pay taxes
- Manage investments and retirement accounts
- Manage bank accounts and insurance transactions
- Operate a principal’s business
- Make gifts to third parties
- Seek elder law or other legal advice on the parent’s behalf
The parent also directs when a power of attorney takes effect. For instance, the parent may desire a power of attorney not to take effect until the parent becomes incapacitated or incompetent, called a springing power of attorney. Or the parent may want a power of attorney to take effect immediately and continue even if the parent becomes incompetent or incapacitated, called a durable power of attorney. Or a power of attorney may take effect only for a specific time or transaction, such as a real estate closing, or to manage the sale of a business sale, called a limited power of attorney. The parent maintains the authority to revoke a power of attorney at any time, provided that the parent is competent at the time of revocation. All power of attorney authority ceases upon the death of the principal.
Regardless of the authority provided to an agent or attorney, they must always act in the parent’s best interest, keep accurate records, and avoid conflicts of interest.
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Steps To Get a Power of Attorney for Your Parent
Your parent must decide to obtain a power of attorney and select an agent or attorney-in-fact of their own choosing. By explaining the purpose of these estate planning tools, your parent will understand their value. It will also help a parent know that they can prescribe their wishes and desires while still competent and able to do so. For instance, a parent can determine in advance where they wish to receive medical treatment and health care, what assisted living facility in receiving elder care, and whether an adult child can receive financial support. There is great comfort and peace of mind knowing someone is following their wishes for health care and financial matters.
Your parent must have the mental capacity to understand and make these decisions. No one must coerce them in the agent they choose or the authority they grant. Unfortunately, if your parent is not competent to make these decisions, you must petition a court for appointment as a conservator or guardian.
Here are the steps your parent can take to make you their agent or attorney-in-fact:
The Parent Selects the Agent or Attorney-in-Fact
First, your parent will need to choose their agent without undue influence from others. It should be someone trustworthy and capable of handling all of the tasks and decisions in a fiduciary capacity. If there are several children in the family, one child mustn’t exercise influence or control over a parent to coerce a nomination of an agent. It is prudent to nominate a successor agent if the primary agent is unable or unwilling to act.
The Parent Chooses the Authority To Give the Agent or Attorney-in-Fact
Generally, with an elderly parent, the authority to act given to the agent takes place immediately, is broad in scope, and continues when the parent is incapacitated. As a practical matter, the parent continues to handle their own affairs until incapacitated or incompetent. Often, a parent is of sound mind but tired and prefers the agent take over for convenience.
The Parent Creates a Health Care Directive or Living Will and Power of Attorney
Once they have decided on their agent and the agent’s authority, your parent will need to use a power of attorney form or work with a lawyer to create a power of attorney. Often, people make a financial power of attorney and then a separate health care power of attorney. Sometimes, a document contains both a health care power of attorney form and living will. This is a relatively straightforward process for both you and your parent.
Our online estate planning solutions provide state-specific financial and health care powers of attorney, living wills, and instructions on proper signatures, notary requirements, and safekeeping instructions.
The Parent Signs Their Power of Attorney With Witnesses/Notary Public
Once your parent completes the form, they must make it made valid according to their state laws. Usually, your parent will need to sign a power of attorney in front of witnesses and a notary.
It is important to note that your parent must be of sound mind when signing the power of attorney form. This means they must make decisions for themselves and not have any medical conditions that would cause them to be declared legally incompetent.
The Parent Delivers Their Power of Attorney to the Necessary People
Depending on your state or country of residence, you may need to register the power of attorney form with the court. Your parents should give copies to their agent, attorney, banks, or any other necessary party.
When To Get Power of Attorney Over an Elderly Parent
It would help if you got power of attorney over your elderly parent while they can still make decisions for themselves. Truthfully, people of any age can benefit from having a power of attorney in place, especially a durable, springing power of attorney and a healthcare directive.
Some parents want to establish power of attorney after a diagnosis (such as Alzheimer’s or glioblastoma). Other parents may want you to take care of their bills and financial details as they travel during their retirement. No matter the reason, a power of attorney can bring peace of mind to all parties involved.
Your parents took care of you for much of your life. By establishing a power of attorney now, you are working with them to ensure that you can legally help take care of them. If your parents have yet to discuss their retirement and end-of-life plans with you, then there is no time like the present to bring it up.