By the time you think mom or dad needs a power of attorney, it may already be too late. While most attorneys are willing to help where the parent is asking a child to handle the parent’s finances or where the parent has a physical impairment, waiting until the parent either does not understand his or her situation or is incapacitated means there is only one path left – the expensive path of a guardianship obtained through the courts.
In other instances, the parent may have executed a power of attorney many years ago, and the law has changed or the age of the power of attorney means no one will accept it. There are also separate documents that mom or dad may sign to allow a child to handle a specific bank or investment account, but cannot be used for other matters.
Yet this is an easy and relatively inexpensive problem to avoid. However, it requires planning prior to the parent’s disability, and the parent must be willing to act. In addition, the power of attorney should be updated over the years as the law changes or as the parent’s situation changes.
A power of attorney is simply a document that allows an agent, here a child, to act for the parent in financial matters. These documents are often very detailed as to the types of transactions the agent can undertake, and cannot undertake, and often designate when an agent can act for the parent.
Thus, while mom or dad is fully capable of handling their finances, a “springing” power of attorney, one that takes effect on incapacity, may be an acceptable document for the parent who does not want to give the child access and control unless it is absolutely necessary. However, as the parent becomes older, the slow decline into dementia or Alzheimer’s disease may mean that a “durable” power of attorney may be the right choice. What is important is that the parent has to be the one to decide what he or she wants to do, and understand what he or she is signing.
In either instance, the durable power of attorney must cover the financial areas that mom or dad needs to deal with, including possible estate planning situations, applying for Medicaid, handling taxes, buying or selling assets and possibly even arranging for mom or dad to move into a nursing home.
There are no guarantees that anyone at any age will not lose capacity, through illness, an accident, or by slow degeneration over time. Every adult should consider having a power of attorney, preferably discussing the issue with an attorney who will point out what powers might be needed and direct the person to the right type of document. While many states, including Maryland, have statutory powers of attorney that must be accepted if properly executed, those powers given to the agent may not meet the needs of the parent. Attorneys practicing in estate planning and in elder law have experience addressing these matters, and can help mom or dad make the decision that is right for them.