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What Is Power of Attorney and Why Do You Need It?

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  2. Navigating the Aging Journey
  3. What Is Power of Attorney and Why Do You Need It?

power-of-attorney.jpgWhen it comes to taking care of aging parents, there is one issue that needs to be addressed sooner rather than later: setting up power of attorney.

Your parents need to set up power of attorney (POA) voluntarily and before they become mentally incapacitated, or the validity of the agreement may be called into question. If you believe your parent is no longer competent to make his own decisions and there is no POA in place, then you may be stuck going through a complicated and costly court process to set up a conservatorship or guardianship.

If a parent chooses you to serve under power of attorney (POA), then you will be referred to in the document as an “agent” or “attorney-in-fact,” and your parent will be the “principal” or “grantor.” The principal decides how much power he wants the agent to have. The powers can be wide-ranging, allowing the agent to sign tax returns, pay bills, access bank accounts, manage government benefits, sell stocks and oversee real estate. Or perhaps the POA will limit the agent to just certain transactions—it is up to the principal to decide.

The parent may want to divide responsibilities by having one person be the medical POA and another person be the financial POA. Your loved one could also appoint two or more people to share POA responsibilities. The advantage of this is that more than one person can provide extra oversight to the management of the parent’s financial affairs and healthcare decisions. The disadvantage is that these co-agents can disagree on how to handle the parent’s affairs, causing family strife and slow decision-making.

Remember, just because you are the agent of your parent’s POA doesn’t mean that you own any of her property. You are bound by principles of “fiduciary responsibility,” which means that you must act only in her best interest.

There are different types of power of attorney. One option for you and your aging parent is a durable power of attorney (DPOA). A DPOA is effective as soon as it is signed and ends when your parent passes away. Under a DPOA, you can begin to act as an agent immediately and continue to do so even if your parent becomes incapacitated. Your parent, however, can continue to act for herself as long as she is not incapacitated, including the right to cancel or revoke the DPOA at any time by tearing it up, signing a new one or writing that she wants to cancel it. But if the parent becomes incapacitated, she may lose the right to change or terminate the DPOA. A judge would likely require a medical examination to see if she is capable of doing this.

Another option is a springing power of attorney. It becomes effective only when a specific event occurs, such as when the parent has been determined by a doctor to be incapacitated. A springing power of attorney must be carefully written to specify when exactly it goes into effect. This option might be attractive to a parent who is concerned about not granting a power of attorney to anyone until she can no longer take care of her affairs. But it may also be more difficult to execute once the parent becomes incapacitated and, for that reason, it could make more sense for a parent to enter into a DPOA and reach an understanding with the agent about how and when it will be used.

A conventional power of attorney, which also might be called an ordinary or nondurable POA,  automatically ends when your senior parent becomes incapacitated. This is the opposite of what you want, so avoid this kind of POA.

It is best for an experienced local lawyer to draw up power-of-attorney documents to make sure they meet state laws, as well as the specific needs of the parent. These state laws, which vary widely from state to state, may require very specific language for the POA to function as a DPOA or for the agent to be able to use or not use certain powers. You and your parent should visit the lawyer together. The attorney can help allay any fears your parent might have, as many elders might be anxious over what they perceive as a loss of control over their affairs.

Deliver copies of the POA to any entities with whom your parent has authorized you to interact. Make an appointment with your parent’s bank and bring your parent if possible. Many banks have their own procedures for dealing with POAs, so there may be additional forms to sign.

Although you can download POAs from legal websites, beware of this option. If the do-it-yourself POA forms are not set up correctly or don’t meet state laws, your POA might not be accepted by financial institutions or hospitals. And if your parent is incapacitated, you could be out of luck in setting up a new POA.

If your parent chooses you to be a POA, be prepared to take on quite a bit of work. But the effort involved is worth the peace of mind you will gain knowing that your parent’s affairs are in order and their best interests are being considered.

A Power of Attorney Guide for Your Parents
What Is Power of Attorney and Why Do Seniors Need One?
Power of Attorney Explained
When Should You Get Power of Attorney for a Parent?
How to Become the Power of Attorney for a Disabled Elderly Parent
Who Will Act for You If You Can’t?
How Do I Get Power of Attorney on Behalf of My Parents?
Financial Power of Attorney

Consumer Financial Protection Bureau’s guides to managing someone else’s money
Home Instead Senior Care of Montgomery County, MD

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By Jill Renkey for Home Instead Senior Care

Since 1998, Home Instead Senior Care has provided companionship, meal preparation, laundry/light housekeeping, incidental transportation, medication reminders, and personal hygiene assistance to seniors in Montgomery County, Maryland, and Northwest Washington, DC. For more information, please call (301) 588-9710;

This blog is a place for readers to learn strategies for coping with aging loved ones and to obtain insight into the caregiving process. The content of our articles should not be regarded as medical, psychological, or other expert advice, and any reliance on the information provided therein is at your own risk. TFM Enterprises, Inc. d/b/a Home Instead Senior Care (the “Company”) makes no guarantees or promises regarding the accuracy, reliability, or completeness of the information presented and may not be held liable for its use or application. The information contained in this blog is not a substitute for professional advice. The Company reserves the right to delete and/or modify the content of this blog at any time.


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