You might remember your folks helping you open your first bank account and write your first check. And while that was a long time ago, you may not be ready for those roles to reverse, with you taking the financial lead for your parents. Unfortunately, it’s not uncommon that a parent would need an adult child’s help managing the finances, particularly if that parent starts to lose mental sharpness or the ability to make logical decisions.
Of course, that doesn’t mean you’ll simply start signing checks for your parents. You need the legal right to manage their finances, which you can get in one of two ways, depending on the situation. If your parents aren’t currently suffering from dementia or any condition that has lessened their ability to process information and make logical decisions, you and they can execute a power of attorney (POA). But if your folks are incapacitated, you have to take a different approach and petition the courts for legal guardianship or conservatorship.
How to get a POA for elderly parents in good health
Executing a simple power of attorney is not, in itself, difficult. But since POAs are binding legal documents, you should have a base level of knowledge about how they work before you move forward. Understanding the POA landscape can also help you talk through the topic objectively with your folks. For that reason, these five steps to obtaining a power of attorney for elderly parents begin with learning the POA basics.
1. Learn the basics of powers of attorney
In general, a power of attorney gives one person the right to make binding decisions on behalf of someone else. In that agreement, the person who’s receiving the rights is called the agent, and the person who’s sharing the rights is known as the principal. If a POA grants you the authority to make financial decisions for your mom, you are the agent and your mom is the principal.
Scope of power
POAs can assign financial, legal, and medical rights to the agent. You’ll often hear POAs named by the type of powers they assign, such as medical power of attorney, which allows the agent to make healthcare decisions for the principal, or financial power of attorney, which gives the agent authority to manage the principal’s finances. There’s even a parental power of attorney, which gives someone else the right to make decisions for your kids.
Whatever rights are provided to the agent are detailed within the POA document. They can be broad or specific, as needed to suit the situation. A typical financial power of attorney, for example, would give the agent broad control over all property and financial assets in the principal’s name. But that may not always be appropriate.
If you and your parents need a more limited arrangement, for example, you could execute what’s called a limited power of attorney or LPOA. Maybe you are a stockbroker by trade and your parents want you to manage their investment accounts. But they don’t need you to have authority over their property or checking account. In that case, an LPOA could give you access to their investments and nothing else.
Beyond the scope of rights assigned in a POA, there’s also the questions of when the document becomes effective and how long it remains in force. Three terms are used to clarify these details: durable, non-durable, or springing. Each can apply to a financial power of attorney, medical power of attorney, or limited power of attorney.
Durable vs. non-durable
A durable power of attorney becomes effective as soon as the principal signs it. The POA then remains in force until the principal passes away or revokes the agent’s rights.
Any rights under a non-durable power of attorney are automatically revoked if the principal becomes incapacitated. Non-durable POAs are often used for single transactions and specific situations. For example, say your dad is closing escrow on a property while he’s travelling internationally. In that case, he could execute a non-durable POA so you could sign the closing documents on his behalf. If your rights are limited to that single transaction, the POA would be limited as well as non-durable.
Springing power of attorney
A springing power of attorney delays the agent’s rights until a specific condition is met. That condition could be a future date or, more commonly, it could hinge on the principal’s health. Say your mom wants you to have power of attorney if she cannot function independently, but she’s not comfortable giving you those rights today. You could execute a springing power of attorney to take effect when two medical doctors confirm that your mom can no longer make her own decisions.
Springing powers of attorney are legal in most U.S. states, but they do present some challenges in practice. Physicians may be reluctant to sign off on your parent’s inability to make decisions, and financial institutions may be wary of accepting a springing POA even when it’s signed by two doctors.
2. Talk it through with your parent(s)
At this point, you should have a better idea of what type of power of attorney would suit your situation. If your parent is functioning today, but has been diagnosed with a degenerative condition, for example, you’d likely want a durable power of attorney. That way, you can take over the finances and healthcare decisions seamlessly, without having to get sign-off from her medical team. If you’re worried about your parents’ finances while they travel around the world for a year, a non-durable, financial power of attorney might be more appropriate.
Whatever your plan is, you’ll need your parents to agree with it to move forward. Be delicate in how you present the POA concept to them, as this is usually a sensitive topic for the elderly. A good place to start is by expressing your love and concern. Then, ask if they’ve already arranged for someone to help them with their finances and medical care if the time comes when they can’t care for themselves. You never know — they may have already executed a power of attorney with a close friend.
If your parents are open to executing a power of attorney with you, the next step is to talk through the details. Make sure there’s a shared understanding of what rights you’d have, when they’d be effective, how long they’ll last, and how you’d use them.
3. Consult with a lawyer
The laws governing powers of attorney vary from state to state. For that reason, it’s highly recommended that you consult with an elder law attorney to draft the POA document. That way, your POA will reflect the unique needs of you and your family. The attorney can also give you and your folks a detailed review of the rights granted by the POA and share scenarios in which those rights might be used.
4. Document your rights
The next step is to document the arrangement between you and your parents in the actual POA document. As noted, a qualified elder care attorney can draft this document for you. It should explicitly outline the scope of your rights as the agent, any exceptions to those rights, and any factors that would cause the POA to become invalid.
Alternatively, you can find simple power of attorney forms online. Know that while these might get the job done, they are generic — and generic language can be problematic in legal situations. It might not effectively address your situation. And, if the POA is ever contested down the road, a form you downloaded for free online may not hold up to legal scrutiny.
5. Execute the document
To execute the document, you and your parents will sign the POA, as agent and principal. State law dictates any other requirements; normally, you need to have two witnesses sign or have the document notarized. Your attorney can clarify the requirements in your state.
How to get power of attorney for parent with dementia
If your parent already has some level of cognitive impairment, you’ll have to take an entirely different approach. Legally, a parent who’s already incapacitated cannot sign a power of attorney. Even if you talked your parent into executing the document, a judge could invalidate the POA if your parent wasn’t of right mind.
The alternative is to petition the courts to appoint you as your parent’s conservator. This is a complex legal proceeding, and you will need an elder law attorney to help you. The success of your petition relies on your ability to prove that your parent can no longer make sound life decisions. There are long-lasting implications to that conclusion, and the courts take the evaluation seriously.
The process will be detailed and thorough. Once you file a petition with the court, the court assigns a committee of medical professionals and social workers to examine or interview your parent and report their findings back to the judge. Know that your parent will have his or her own legal representation, which is also assigned by the court. That lawyer will be responsible for explaining the conservatorship process to your parent, and also submitting an opinion as to whether the parent appeared to understand. A hearing will be held, during which anyone can testify for the conservatorship or against it. The judge then reviews all of the information at hand and rules on your petition. If the judge agrees with you, he or she will assign the rights you need to care for your folks. That normally would include access to their finances so you can pay for their care.
A proactive step to avoid hearings later
Executing a durable power of attorney for parents now — before health problems set in — is a proactive step that’ll help you sidestep a conservatorship hearing down the road. But that’s only an option if your parents agree with your concerns, and they trust you won’t use your POA powers unnecessarily. If they’re uncertain about moving forward, offer to schedule a consultation for all of you with an elder law attorney. Sometimes, an objective opinion can help. Beyond that, all you can do is keep the lines of communication open and continue to build that trust.