Article originally published by Lisa J. Gary, Esq. on caring.com
A power of attorney (POA) can be an important element of planning for your elderly parent’s future. It allows another person to take action on your parent’s behalf, 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. Christina Jeter, Esq., of The Jeter Law Firm, PLLC, advises, “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.”
Arranging a power of attorney for your parent is a good way to open up a discussion with them about their wishes and needs for the future. Jeter continues, “Having those respective POAs in place means that an elderly parent has had time to think about what they really want for their medical care and their finances when they aren’t coherent to make such decisions.”
With a power of attorney in place, you can be confident that you’re prepared and your parent’s wishes will be respected when they need help. In this guide, we’ll explain the types of power of attorney, when a POA for an elderly parent makes sense, and go through the steps of choosing and setting up a power of attorney so that you feel prepared to complete this process for your loved one.
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. It’s important to note that POAs are generally governed by state law and there may be some differences between states. Generally, these differences are minor, but when arranging a POA, it’s important to talk to an attorney who understands the law in your state.
You also need to understand what a POA cannot do. A POA only allows someone to do the things that are agreed upon within the document. 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 capacity to do so. An agent doesn’t have the exclusive right to act and make decisions for the principal.
Additionally, agents must act as fiduciaries. This means that if you’re the power of attorney for your parent, you must manage their affairs to their benefit, not your own. The Consumer Financial Protection Bureau has advice about the legal responsibilities that agents agree to when signing a POA. You should remember that your authority as an agent is limited to what the document and the state allow.
Different types of POAs can also give the agent different powers, so it’s important to research the type of POA you need. The different types are:
General Power of Attorney
This type of POA gives the agent broad rights to manage the affairs of the principal. It lasts for a specified time, which can be noted in the document. It can also be revoked by the principal at any time and will automatically end when the principal is determined to be incapacitated. This type of POA is often used when someone can still take care of their affairs but would rather someone else do so. As these POAs end at incapacitation, they’re not a great choice for end-of-life planning or medical directives.
Durable Power of Attorney
A durable power of attorney lasts after the principal’s incapacitation. What you can do with a durable POA is based on both the document and state laws. In some cases, you may only be able to manage the principal’s finances and will need a separate medical power of attorney to make health care decisions. These POAs are used when a person can no longer handle their affairs, and it can end in several ways. They can be revoked upon the principal’s death or when a guardian is appointed. The principal can revoke the POA if they’re no longer incapacitated. For example, if a person wakes from a coma, they can take back control of their finances. There may also be conditions in the document that, if fulfilled, end the POA. A durable power of attorney comes into effect on the day it’s signed unless otherwise specified.
Springing Power of Attorney
A springing power of attorney is a type of durable POA. In this case, the 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; however, the POA or state may have a different definition of when a person becomes legally incapacitated. For example, it 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 may mean a delay in handling their affairs while waiting for paperwork.
Medical Power of Attorney
A medical power of attorney gives an agent the right to make decisions about the principal’s health care. It’s a type of durable POA that lasts until it’s revoked or the principal is determined to be competent again. It may also have an expiration date listed in the document. This type of POA is needed for people who can’t make decisions about their medical care and is common for later-life planning and making legal preparations for people with disabilities.
A medical POA is different from a living will, which states what medical procedures a principal does and does not want done. In the case of a medical POA, the agent can make all health care decisions for the principal. Because of this, your parent needs to make their wishes known to the agent before they’re incapacitated. The American Bar Association has detailed information available about medical powers of attorney and the process of giving someone that power.
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.
Why Do You Need a Power of Attorney?
A power of attorney allows someone else to take care of your parent’s affairs. It can be temporary, for example paying bills while someone is on a long vacation, or lasting, such as making medical decisions after a car accident. As parents get older, it makes sense to be prepared for health issues that may mean they need help. A POA allows children, or another agent, to step in when the need arises. Jeter states, “Any person with an elderly parent should have the conversation with their parent about getting a power of attorney in place if one does not already exist. In my practice, I advise people not to wait when it comes to getting a power of attorney because there are just too many things that can come up in life.”
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.
Potential Downsides to Power of Attorney
There are many reasons why a POA is useful for older adults and their families, but they’re not without downsides. 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, you should always appoint someone your parent trusts to act as their agent.
Appointing a power of attorney can also cause problems within families. People may be upset that they weren’t appointed as the agent. There may also be disagreements about the choices the agent makes. To help avoid these problems parents should talk to all relevant family members about their wishes and why they chose their power of attorney.
How to Choose a Power of Attorney
Choosing someone to act as a power of attorney is a critical decision. The agent can act on behalf of your parent, so it must be someone your parent trusts and is comfortable with. It should also be someone willing to discuss options and listen to your parent’s wishes and desires.
Things to Consider Before Choosing a POA for Elderly Parents
Consider Options Outside the Family
There is no reason why a power of attorney must be related to the principal. In some cases, a non-relative may be a better choice. This may be because an older adult’s family lives in another state or due to children having trouble acting objectively when handling their parent’s affairs.
“Another risk that comes up is that a child of an elderly parent may not understand that it is still the parent’s choice and legal document,” Jeter explains. “If a child were to seem a bit too involved, a POA could be deemed invalid due to undue influence. This could lead to court costs, attorneys’ fees, and legal battles that could have been avoided.”
You may consider choosing clergy, a family friend or another community member as an agent. You can also hire a professional to handle the power of attorney. Banks and trust companies may take on this role, as can accountants and lawyers. Keep in mind that professionals are likely to charge fees, which can quickly become costly. If you do choose to hire a professional, interview them carefully, and make sure they understand your parent’s wishes. You may also wish to choose a professional based on what the POA is for, such as choosing an accountant to handle financial affairs.
Understand the Full Scope of Your Parents’ Needs
Discuss with your parent what type of POA it will be and what they need it to do. You should understand how much responsibility and work is involved currently and if that’s expected to change in the future. For example, paying monthly bills takes less time than making decisions about nursing homes or medical care for a parent with dementia. Make sure your parent’s wishes are recorded in the document. According to Jeter, “If a POA is not clear about what should and should not take place, it leaves room for the representative to still have to make whatever decision they consider to be best. That’s why it’s important to work with an attorney to really tailor the POA to the client’s true needs. There is no one size fits all — ever.”
Understand the Financial Implications of Becoming a POA
A power of attorney does not become personally liable for any of the principal’s debts or bills. However, that doesn’t mean there are no financial implications to being a POA. You must keep your finances separate from those of the principal’s and always make decisions to benefit the principal. You may also open yourself up to legal action if you make poor decisions or can’t explain your decisions. Violating any POA clauses can also open you up to legal or financial liability.
To avoid this, make sure you understand what you’re signing when you agree to be a power of attorney. You may even want to consider reviewing the agreement with your lawyer to make sure all the clauses are clear. It’s also important to keep good records and be able to show how your decisions abide by your parent’s wishes, which can help protect you from legal fights.
Setting Up a Power of Attorney For an Elderly Parent
It’s important to understand the basics of a power of attorney before you set one up. Read this guide carefully and look for other information from trusted sources such as government departments. Many states have elder law specialists available to give free or low-cost advice to seniors. These lawyers have plenty of experience arranging power of attorney documents and understanding local laws. You can check with your local Area Agency on Aging if you need legal help.
When you’re ready to set up the POA, follow these steps:
- Talk to Your Parents: Discuss what they need in a POA and what their wishes are when it comes to their finances and health care. You must also confirm their consent and make sure they agree with everything discussed.
- Talk to a Lawyer: Everyone who gets a POA has different needs and the laws are different in each state. It’s important to get legal advice so that your parent’s wishes are taken into consideration and the document is legal.
- Create the Necessary Documentation: Write down all the clauses you need that detail how the agent can act on the principal’s behalf. This ensures your parent’s wishes are known and will be respected. Although you can find POA templates on the internet, they are generic forms that may not stand up to legal scrutiny and probably won’t have all the clauses you require.
- Execute the Agreement: Sign and notarize the document. Requirements for notarization and witnesses differ, so make sure you check what’s required in your state.
A POA can give you and your loved one peace of mind that someone can manage their affairs in an emergency. Jeter notes, “Despite the risks, … it is important to have well-drafted POAs in place, and not wait until an emergency arises. I advise people to begin getting these things in place as soon as they become adults, and don’t delay if they are older. Life doesn’t stop happening just because people are not prepared.”
Frequently Asked Questions
The four types of power of attorney are limited, general, durable and springing durable. Limited and general POAs end when the principal becomes incapacitated, so they’re not often used by older adults when planning for the end of life. A durable POA lasts even after a person becomes incapacitated, so is more commonly used by seniors. A springing durable POA is a type of durable POA that only comes into effect when certain criteria are met, usually when the principal becomes incapacitated.
The biggest drawback to a power of attorney is that an agent may act in a way that the principal would disapprove of. This may be unintentional if they are ignorant of the principal’s wishes, or it may be intentional because they’re acting in bad faith. As POAs don’t have court oversight, they can be susceptible to abuse or exploitation.
POA agreements may also not be honored, largely due to the lack of court oversight. Many banks, for example, ask you to sign their forms rather than accepting a POA. Lastly, the principal must be competent to execute a POA, which can be a disadvantage if it’s not set up before they become incapacitated.
As your parent’s power of attorney, you’re responsible for ensuring their nursing home bills are paid for through their assets and income. However, you aren’t responsible for paying those bills from your assets. Federal regulations signed in 2016 prohibit nursing homes from requiring that a third party guarantees nursing home payments, but you should still ensure that you haven’t signed as a guarantor. If you’re signing the agreement on their behalf, note that you’re acting as their POA.
If, in your role as POA, you’re planning on disposing of any of your parent’s assets, make sure you understand the state’s Medicaid asset requirements. If you sell certain assets at below market price, it could stop your parent from being eligible for Medicaid benefits to pay for their nursing home care.
The first step to getting power of attorney over an elderly parent is to research powers of attorney, understand how these documents work in your state and the scope of available powers. Talk to your parent so they understand why you want to take this step and the benefits and drawbacks of the action. Consult a lawyer who can help you draw up a document that details your parent’s rights and the agent’s responsibilities, whether that’s you or another person. Finally, execute the document by getting all parties to sign it and have it witnessed as required by state law.
No, if your parent already has cognitive impairment, they can’t legally sign the documents required to set up a power of attorney. This is one reason why it’s a good idea to set up a POA early. Even if your parent does sign the papers, it’s unlikely to hold up in court. In this case, your best course of action is to go to court to be appointed as your parent’s guardian or conservator.
- “Powers of Attorney.” Texas State Law Library. https://guides.sll.texas.gov/powers-of-attorney Accessed 22 June 2021
- Texas RioGrande Legal Aid. “Powers of Attorney – Fact Sheet” Texas Law Help. https://texaslawhelp.org/article/powers-attorney-fact-sheet Accessed 22 June 2021
- “Help for agents under a power of attorney.” Consumer Financial Protection Bureau, May 2019. https://files.consumerfinance.gov/f/documents/cfpb_msem_power-of-attorney_guide.pdf Accessed 22 June 2021
- Singleton, Amanda. “Powers of Attorney: Crucial Documents for Caregivers”. AARP, October 31, 2019. https://www.aarp.org/caregiving/financial-legal/info-2019/types-of-power-of-attorney.html Accessed June 22, 2021
- “Limited Power of Attorney”. Legal Information Institute, Cornell Law School. https://www.law.cornell.edu/wex/limited_power_of_attorney Accessed June 22, 2021
- “Springing Durable Power of Attorney.” Legal Information Institute, Cornell Law School. https://www.law.cornell.edu/wex/springing_durable_power_of_attorney Accessed June 22, 2021
- “Giving Someone a Power of Attorney for Your Healthcare (multi-state guide and form.” American Bar Association, August 25, 2020. https://www.americanbar.org/groups/law_aging/resources/health_care_decision_making/power_atty_guide_and_form_2011/ Accessed June 22, 2021