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A power of attorney (POA) is an important element of planning for your elderly parent’s future. It allows another person to take care of your parent’s affairs, ensuring bills get paid and medical decisions can be made in the unfortunate circumstance that your elderly parent is unable to do those things on their own or merely needs help with such tasks.

It is critical to understand that a power of attorney can only be created while the principal is of sound mind. Once an individual lacks decision making authority, it is too late and family members must petition a court to have a conservator appointed.

It always makes sense to have a power of attorney in place, regardless of any situation. It is better to be prepared than to have to scramble to think of what an elderly parent would really want and to have to go to court to have a conservator appointed.

With a power of attorney in place, you can be confident that your parents are prepared, and their wishes will be respected when they need help.  In this article, we’ll explain the types of power of attorney and the reasons for having one, so that you feel prepared to discuss this process with your loved one.

Common Reasons to Seek Power of Attorney for Elderly Parents

  • Financial Difficulties: A POA allows you to pay the bills and manage the finances for parents who are having difficulty staying on top of their financial obligations.
  • Chronic Illness: Parents with a chronic illness can arrange a POA that allows you to manage their affairs while they focus on their health. A POA can be used for terminal or non-terminal illnesses. For example, a POA can be active when a person is undergoing chemotherapy and revoked when the cancer is in remission.
  • Memory Impairment: Children can manage the affairs of parents who are diagnosed with Alzheimer’s disease or a similar type of dementia, as long as the paperwork is signed while they still have their faculties.
  • Upcoming Surgery: With a medical POA, you can make medical decisions for the principal while they’re under anesthesia or recovering from surgery. A POA can also be used to ensure financial affairs are managed while they’re in recovery.
  • Regular Travel: Older adults who travel regularly or spend winters in warmer climates can use a POA to ensure financial obligations in their home state are managed in their absence.

Power of Attorney: The Basics 

At its most basic, a power of attorney is a document that allows someone to act on another person’s behalf. The person allowing someone to manage their affairs is known as the principal, while the person acting on their behalf is the agent.

Your parents are not giving up control: If your parent signs a POA allowing someone to act on their behalf, they can still act on their own behalf so long as they retain the mental capacity to do so. An agent doesn’t have the exclusive right to act and make decisions for the principal. The principal can always override the agent and can revoke the agent’s authority at any time, provided they retain capacity.

Additionally, a POA only allows someone to do the things that are agreed upon within the document and the agents must act as a fiduciary. This means that if you’re the power of attorney for your parent, you must manage their affairs to their benefit, not your own. Different types of POAs can also give the agent different powers, so it’s important to understand the type of POA you need. The different types are:

(Financial) Durable General Power of Attorney

A durable power of attorney comes into effect on the day it’s signed, unless otherwise specified, and endures until it is revoked or upon death.  It provides the agent broad rights to manage the financial affairs of the principal. A durable power of attorney remains effective if the principal is incapacitated, hence the adjective “durable.”. It can be revoked at any time provided the principal has legal decision-making capacity. All powers of attorney expire upon the principal’s death.

A power of attorney does not become personally liable for any of the principal’s debts or bills.

Medical Power of Attorney

A medical power of attorney gives an agent the right to make decisions about the principal’s health care.It is otherwise similar to a financial general durable POA.

Springing Power of Attorney

A springing power of attorney terms don’t become effective until the principal is incapacitated. In most cases, this is when a doctor determines the principal can no longer manage their finances.  This may require certification from two doctors. This type of POA allows the principal to stay in control while they have the capacity, but it is ready to spring into action once they’re incapacitated. However, it may take time to get a certification of incapacitation, which would mean a delay in handling their affairs while waiting for paperwork. Additionally, many financial institutions are hesitant to work with a springing power of attorney and universally prefer a general durable power of attorney which goes into effect immediately.

Limited Power of Attorney

A limited power of attorney limits the agent to make decisions about specific tasks. It is often used to authorize someone to pay bills or sell a house, and the agent can only take action that’s specified in the document. These POAs are generally only active temporarily and will be revoked if the principal becomes incapacitated.

Risks Inherent in a Power of Attorney

A POA gives someone control over your parent’s affairs, which can leave them open to abuse or financial exploitation. It’s important to remember that the agent is a fiduciary. They can face harsh penalties if they don’t act in your parent’s best interests. Your parent can also revoke a POA at any time as long as they aren’t incapacitated. Despite these safeguards, your parent should always appoint someone he/she trusts who is willing to discuss options and listen to your parent’s wishes and desires.

LeonardLaw Protects the Interests of Seniors – even from their own families

While children should encourage an aging parent to prepare a power of attorney, LeonardLaw does its utmost to determine whether the parent is being coerced or unduly influenced or lacks sufficient mental capacity.

Understand the Legal Obligations of a POA

An agent must at a minimum do the following

  • always make decisions to benefit the principal
  • keep his/her finances separate from those of the principal’s
  • keep good records and be able to show how your decisions abide by your parent’s wishes

LeonardLaw welcomes family members and agents to participate in the review of powers of attorney to ensure that everyone understands the extent and limitations of the document and, importantly, to encourage parents to share their wishes. Whole legal documentation is the first step, communication among a parent and his/her POA is the most critical step.