Caring for elderly parents and loved ones involves more than just attending to their physical needs. You may have observed that your father is experiencing memory issues, raising concerns about his ability to manage financial matters. Or perhaps your fiercely independent mother needs a gentle nudge to organize her affairs. Do you have the necessary legal tools to make decisions on their behalf? Have they completed a power of attorney (POA)?
The caregiver role is multifaceted and can be emotionally, mentally, and even physically taxing (hello, compassion fatigue!). However, staying organized can significantly reduce the daily stress associated with caregiving. To shed light on the workings and implications of power of attorney, we consulted Joan Miller, a senior partner at an elder law and estate planning firm.
What is Power of Attorney and How Does it Function?
Power of attorney (POA) is a legal document that grants someone the authority to make decisions on your behalf. It’s typically established when individuals are arranging their legal affairs. The POA can become effective immediately upon signing or can “spring” into action at a later date when the individual is unable to act for themselves. It can be tailored for a specific purpose, time frame, or be broad in scope — even allowing for the protection of a beloved pet within the document.
Different states may have varying terminologies and categories for POA. For instance, some refer to it as a medical POA or a financial POA. In New York, the financial POA is distinct from the healthcare proxy.
“Everyone should have a POA as one of the four essential documents,” Miller advises. “Alongside a will, a healthcare proxy, and a living will, a POA clarifies your wishes should you face a terminal medical condition. Especially in light of COVID-19, it’s crucial to specify what you want your family to be able to do in emergencies.”
What is a Durable Power of Attorney?
A durable POA allows the appointed individual (the agent) to act on behalf of the principal (e.g., your mother) if she becomes incapacitated due to illness or injury. Its “durable” nature means it remains effective even when the principal cannot communicate their wishes.
“I’d estimate that 99.9% of the POAs I’ve created are durable,” Miller noted.
It’s vital for the principal to designate someone they completely trust with this power. The choice is personal and can include family members, friends, or professionals.
What if Both of Us Want to Be Power of Attorney?
If your sister lives closer to your mother but you handle finances better, there are several ways to navigate this arrangement:
- Your mother can designate you as the primary agent and your sister as the backup.
- She can assign both of you, requiring joint signatures for any decisions.
- Alternatively, both of you can be named agents, where either one can act independently.
Decision-Making Authority of Financial and Medical Agents
The financial agent’s authority can include tasks such as:
- Filing taxes
- Investing funds
- Paying bills
- Selling property
- Applying for public benefits like Medicaid
The medical agent can make decisions regarding:
- Medical treatments and procedures
- Choosing healthcare providers
- Arranging assisted living options (subject to the financial agent’s approval of costs)
The Importance of Signing a Power of Attorney Promptly
It’s crucial to establish a POA while your parents are still competent. If they lose mental capacity, it becomes impossible for them to sign a POA, forcing you to seek guardianship through the courts—a costly and time-consuming process.
Miller recommends planning well ahead of retirement age. “Many people sign their POA, tuck it away, and then, when the time comes, their children may need to retrieve it to start acting on their behalf.”
How Competent Must Mom Be to Sign a Power of Attorney?
If your mother is showing signs of early-stage Alzheimer’s, you may wonder if it’s too late for her to sign a POA. The answer isn’t straightforward.
Does she recognize you? Can she understand the concept of granting you authority over her finances? It’s not about remembering every detail but having enough cognitive awareness to understand her choices.
Can I Download a Power of Attorney Form Online?
While generic POA forms are available online, Miller cautions against using them: “They often lack necessary language that may be crucial in the future.” For instance, including provisions that allow the agent to make gifts on behalf of the principal can be vital for tax planning or Medicaid considerations.
When Does Power of Attorney Expire?
A POA is terminated when:
- The principal passes away
- A new POA is created, revoking the old one
- It has a specified expiration date
Once you take on caregiving responsibilities, having the right tools, including a power of attorney, is critical for safeguarding your parents’ financial and medical decisions.
Can Someone with Dementia Change Their Power of Attorney?
An individual can only revoke or alter their POA if they haven’t been declared legally incapacitated. Even those with dementia may still retain the ability to make legal changes. Courts will evaluate their capacity in various areas, such as medical, financial, and independent living capabilities.
Who Can Override Power of Attorney?
Only a court has the authority to revoke a power of attorney. If a family member or friend files a petition to remove you as the POA, it could result in a court-appointed guardian taking over decision-making responsibilities if the judge finds evidence of misconduct.
This article was originally published on February 14, 2021.
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Summary
Understanding power of attorney (POA) is vital for anyone taking on caregiving responsibilities for aging loved ones. Establishing a POA ensures that trusted individuals can make critical financial and medical decisions when the principal is no longer able to do so. It’s essential to act before mental competency declines and to consult with experts to create a comprehensive and effective POA.
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