As parents age, they may struggle with self-care and tasks like bill payments. That’s when a power of attorney comes in handy, as it grants legal authority to a trusted individual to manage their affairs and make decisions, especially during incapacitation.
Read on to find out how to prepare a power of attorney for your loved ones so you can assist them with medical and financial decisions when necessary.
How Does Power of Attorney Work?
A power of attorney (POA) is a legal document that lets your loved one (the principal) designate a trusted individual as their agent (or attorney-in-fact) to manage their affairs based on specified terms and limits.
There are several kinds of power of attorney documents, including:
- Durable and non-durable power of attorney
- Financial power of attorney
- Medical power of attorney
- Limited power of attorney
By selecting the correct type of power of attorney, the person creating the POA can decide when the agent’s powers begin and end and what actions the agent can take on their behalf.
Why Do You Need a Power of Attorney for Elderly Parents?
As your loved ones age, they may encounter challenges managing their personal, financial, or medical affairs due to various reasons. With a POA in place, you can act as their agent and take over for them, making sure that their interests and wishes are upheld.
Common scenarios where a power of attorney can be extremely helpful include:
- Medical decisions;
- Financial management;
- Real estate transactions;
- Legal affairs.
How to Get Power of Attorney over a Parent (5 Steps)
Step 1: Ensure Legal Capacity
Legal capacity refers to the ability to make legal decisions for oneself. Your parent must be of sound mind and have the mental capacity to comprehend the consequences of creating and executing a POA. If they don’t understand what they are signing, then they cannot legally make a POA.
A person could be declared mentally incapacitated for several reasons, including:
- Alzheimer’s disease;
- Intellectual disability.
What if my elderly parent is incapacitated?
A power of attorney can only be made by an individual who understands its implications. Your elderly parent cannot sign a power of attorney if incapacitated. Instead, you can petition for legal guardianship to manage the affairs of the incapacitated adult. Ensure you check your state’s requirements before pursuing guardianship.
Step 2: Address Concerns
Handing over authority can be intimidating sometimes, especially when your parent is still fully capable of managing their own affairs — You don’t want to overstep in any way.
Before creating a POA for your parent, you and your parent need to understand the limitations of an agent’s power. Even if an agent is granted complete authority over all affairs, the agent generally cannot, on behalf of the principal:
- Create or modify the principal’s will;
- Change or revoke the principal’s trust;
- Give eyewitness testimony;
- Name someone else as the agent;
- Take over guardianship of someone else;
Your parent can also determine whether they want the POA to take effect immediately or upon a later date or event (“springing”) in most states (more on that in the next step). Such specific wishes should be stated in their POA. However, some states (i.e., Colorado) presume the POA takes effect as soon as it’s signed by the principal (unless otherwise stated).
What happens when there's a conflict?
Ideally, there is no conflict between the principal’s and the agent’s decision since the agent has a fiduciary duty to act in the principal’s best interest. If there is a conflict and the decision is already made, the principal would have to undo the agent’s actions, and the agent would be guilty of wrongdoing.
Step 3: Choose Type of POA
Depending on what powers your parent wants to give you, you can help them create one or more types of power of attorney form to cover various potential future needs:
- Create a medical power of attorney if your parent wants you to make medical decisions for them. It grants you the authority to make medical and health-related decisions on behalf of your parent, especially when they can’t make decisions themselves due to incapacitation or mental incompetency.
► READ MORE: Living Will vs Medical Power of Attorney
- A financial power of attorney is essential when they need you to manage their finances, bank accounts, or other financial decisions. This POA type allows you to handle their financial matters, such as paying bills, managing investments, and dealing with real estate transactions.
- A general power of attorney grants you broad powers to act on your parent’s behalf as it encompasses a range of financial and medical decisions, including real estate and other legal matters. It is commonly used to permit banking on a person’s behalf and allow the agent to enter into contracts.
- Use a limited power of attorney if your parents want their POA specifically tailored for a particular purpose or time frame. It’s often used for a single transaction or event, like selling a property when they are abroad. The power usually expires once the specified task is completed or the time frame lapses.
► READ MORE: 5 Types of Power of Attorney
Depending on when your parent needs the power of attorney to take effect and end, the above types of POA can be durable, non-durable, or springing.
A durable POA remains in effect even if your parent becomes incapacitated. This means that you continue to act on their behalf regardless of their mental capacity.
Conversely, a non-durable power of attorney becomes void once your parent is incapacitated or mentally incompetent. It’s primarily used for specific transactions and is not meant for long-term or disability planning.
Lastly, a springing power of attorney “springs” into effect upon a specified date or the occurrence of a specific event or condition, such as the incapacitation of the principal. This makes it useful for those who want to plan for future events.
Determining the Principal's Incapacitation
Declaring a person’s incapacitation can be difficult and time-consuming. Most states require the declaration of incapacitation either in writing or orally by one or two licensed physicians; however, physicians may be reluctant to do so, as such declaration is often subject to legal conflicts. Most attorneys suggest principals not apply incapacitation as the trigger for a POA to come into effect.
Step 4: Determine Range and Scope
Next, specify the range and scope of authority you will possess as the agent on the power of attorney. Discuss the following thoroughly with your parent while drafting their power of attorney document(s):
- Decision-making capacity: Start by assessing what decisions your elderly parent is able to make independently and which ones they’d prefer assistance with. Some parents may only need help with complex financial decisions, while others might want their agent to oversee healthcare decisions.
- Specific limitations: While outlining the powers granted, delineate any limitations. For instance, your parent might specify that you cannot sell a particular family heirloom or make gifts from their funds.
- Duration and triggering events: If your parent is considering a springing POA, help them pinpoint the exact date, circumstances, or events that will activate it. Conversely, for limited POAs, define the date or events that will terminate the POA, such as the completion of a specific transaction.
- Overlapping powers: In scenarios where multiple POAs exist (e.g., one for medical and another for financial), ensure clear communication regarding overlapping subject matters. Defining boundaries prevents confusion and potential conflicts.
Having an open dialogue with your parent during this phase is paramount. The decisions here directly influence their autonomy and your ability to act in their best interests.
Step 5: Sign and Notarize
Before your parent signs the POA document, ensure it clearly states your roles, responsibilities, and limitations as an agent. Consulting with an attorney specializing in elder law or estate planning is highly recommended.
Upon signing, make sure that:
- Your parent is mentally competent and understands the document’s implications;
- There are one or two witnesses present;
- There is a notary public present.
While state laws may vary, most jurisdictions require a power of attorney to be notarized (especially if it involves real estate transactions) and witnessed by one or two adult witnesses. Typically, witnesses must not be beneficiaries of the principals or directly involved in the principal’s estate to avoid conflicts of interest.
Even if your state does not require a power of attorney to be notarized, notarization is always recommended as it adds an extra layer of authenticity to the document.
Once the document is signed and notarized, make multiple copies. You should have one; other copies can be given to banks, medical facilities, or any other institution where you might need to exercise your authority. Help your parent store the original in a safe, accessible place, like a safety deposit box or with an attorney.
Navigating how to obtain a power of attorney for an elderly parent or loved one is a journey best undertaken together. As you move forward and plan together, remember that this is more than a legal task — it’s a pledge of support and care during unpredictable times.