Power of Attorney: How It Works and How to Get It for Your Parents

What Is a Power of Attorney?

A power of attorney is a legal agreement that grants a designated individual the authority to act on behalf of another person. The person who receives the authority is known as the agent, while the person who is the subject of the POA is called the principal.

How a power of attorney works

A power of attorney contract authorizes an agent to manage all or part of a principal’s (in this case, your parent’s) affairs under an agreed set of circumstances. These contracts may be ongoing or restricted to a specific period or set of circumstances (for example, for the duration of a principal’s cancer treatment). POAs are often used when a principal becomes temporarily or permanently ill or incapacitated.

Before establishing a POA, the principal must select a reputable agent to manage their affairs. To create a legally binding contract, you either need to get the paperwork from your attorney or find the instructions for a POA in your state online. Once the document is complete, both the agent and principal need to sign it (typically in front of a notary) for the POA to be enforceable.

For example, if your aging mother struggles to keep her finances straight, and bills are piling up, you can set up a general power of attorney with you as an agent. Once you and your mother complete the paperwork and have it notarized, you’ll have the right to speak with companies and creditors and pay bills on her behalf, bringing them up to date.

Why You Might Need a Power of Attorney

A POA grants a chosen relative or friend the ability to make decisions when a person is unable (or unwilling) to do so. Here are a few reasons you may feel it’s time to set up a power of attorney.

Financial responsibilities

If your parent is struggling to manage their finances, falling prey to scammers, or is squandering their retirement funds, it may be time to establish a financial power of attorney. Other indicators that your senior parent may need assistance handling their financial assets and obligations include unopened or unpaid bills, costly splurges, voicemails from creditors, and purchases denied for insufficient funds.

Alzheimer’s or dementia

If your senior parent has Alzheimer's or dementia, it's critical that you establish their power of attorney swiftly. In many cases, a power of attorney agreement is no longer possible once their condition has progressed enough that they're considered mentally incapacitated. In order to take necessary care steps such as paying your loved one’s bills or choosing to move them to a memory care facility, you’ll have to establish a guardianship or conservatorship, which can be time-consuming and costly.

Upcoming surgery

Since no one can grant POA permission while under anesthesia, your parent will need to choose a healthcare agent before their operation. Plus, a POA ensures they have someone on their side who will respect their final wishes should their surgery end in complications. Once they fully recover from the surgery, they can revoke the POA.

Travel

For seniors planning a lengthy or overseas trip, it’s usually best to set up an adjustable power of attorney agreement that you can adjust to your desires concerning when and how your agent may operate. For example, in your POA document, you can stipulate specific wishes for your POA on your behalf, such as handling emergencies while you are unreachable or out of town.

Medical diagnosis

When a senior receives a difficult or terminal diagnosis, it’s important to establish a power of attorney. By doing so, you create it so they can hand off the challenges of managing their finances while they’re in treatment. You also ensure that if they become too incapacitated to make their own health care choices, someone with their best interest in mind can carry out the person’s wishes.

Types of Power of Attorney

There are four types of power of attorney agreements. Some allow the agent to oversee all your medical and financial affairs, while others apply to specific areas. Additionally, different POAs come with different time constraints.

General power of attorney

A general POA allows the agent to act on behalf of the principal in legal and financial matters. A general power of attorney becomes invalid if the principal becomes incapacitated, so it's not a smart choice for seniors with dementia or Alzheimer's.

A senior may use a general POA to allow an agent to pay bills or enter into a home health contract on their behalf. Most commonly for seniors, agents use this responsibility to manage a principal’s finances, sell property, and make end-of-life medical decisions.

Limited power of attorney

A limited power of attorney permits the agent to act in place of the principal (your aging parent) in specific areas for a set amount of time. For example, a person may delegate authority to someone for a business transaction, such as a real estate acquisition.

Durable power of attorney

A durable power of attorney is a legal document that gives a certain person or organization the power to manage your legal, property, and financial affairs when you are unable to do so. This includes signing documents, accessing your bank accounts, and buying or selling property. It is labeled as “durable” because it persists or remains in effect even after the principal becomes incapacitated. Although the agent in a durable power of attorney is given the authority to pay the principal's health care bills, they cannot make medical decisions, such as whether to change treatment plans or turn off life support on the principal’s behalf.

Springing power of attorney

In contrast to POAs that take effect at signing, a springing power of attorney only becomes active once the principal is declared mentally or physically incapable by a medical doctor. When setting up a springing POA, the principal can indicate a specific doctor who they trust to make a competency assessment.

While this may sound ideal in certain situations, a springing POA can pose numerous problems. If the senior’s doctor or doctors don’t consider you incapacitated, the power of attorney does not take effect, regardless of how chaotic things get or the areas of your life where you could use the assistance. For instance, your rent, taxes, health care, or credit card bills could remain unpaid for long periods, and no one would have the legal authority to take over your finances or discuss them with someone else on your behalf.

How to Get a Power of Attorney

To help your parent set up a power of attorney, follow the steps below.

Discuss the issue

If your parent hasn’t already brought up establishing a power of attorney with you, it’s important you broach the topic. Start by explaining the efficacy of POAs. Then touch on why it's imperative they create one as soon as possible.

Remember to approach the conversation patiently, as nobody enjoys relinquishing independence, even if their health is waning. If necessary, drop the conversation, ask them to think about it, and address it again once they’ve had a few days to think about it.

Once they agree, discuss the different types of POA with your parent and choose the one that best fits their needs and circumstances.

Select an agent

Next, it's time to choose an agent to serve as your parent's POA. Help them select this person (possibly you) by having them identify their most trusted family member. Then narrow the options by determining which person possesses the skills and temperament that makes them most suited to the role. Once your parent selects their choice for POA, approach that individual about the role and make sure they understand the obligations that come with the position before they make a decision.

Find a lawyer

Find an attorney who specializes in elder law and has a positive reputation in your community. If you’re not sure where to begin your search, try asking friends, family, and medical professionals for firsthand recommendations. Ratings and reviews on Google, Yelp, and the Better Business Bureau are also helpful indicators of a firm’s reputation. These review sites can also give you a general idea of how expensive each firm's prices are.

Document your rights and execute the document

While your lawyer probably has a number of POA templates you can use, you can also find the forms online with a quick online search. Once everyone agrees on the type of POA and any other terms, make the document legally binding by signing it with a witness or having it notarized, depending on your state’s laws. Additionally, make sure your attorney and your agent get a copy of the signed document. Keep the document with other important files and paperwork, ideally in a fireproof document holder. Avoid placing the contract in a safe deposit box unless your agent can also access it.

Getting a Power of Attorney if Your Parent Has Dementia

Since the criteria for legal incapacity are quite broad, there is no official point at which a person with dementia is considered legally incapacitated. Given this, it’s imperative that a parent with dementia sets up a power of attorney while their mental faculties are acute. Thus, they’ll ensure their wishes are communicated and know they selected a trustworthy individual as their agent who will carry out their requests.

If your parent waits to establish a POA and they have experienced more cognitive impairment as a result of dementia, a frustrated family member or friend may be able to challenge the validity of the power of a power of attorney, insisting it was set up after your parent became incapacitated.

Setting up a POA after your parent’s dementia has progressed from early to mid- or late-stage becomes exceedingly difficult and often is just not possible. Instead, you’ll need to go to court with your parent and establish guardianship or conservatorship.

The Importance of Being Proactive

Having a clear-cut power of attorney agreement provides seniors and their families peace of mind. They know that if the older adult suddenly becomes incapacitated or unable to communicate, their power of attorney will honor and carry out the senior’s wishes for their assets, investments, health and legal affairs.

It’s best to be proactive and develop a POA while your parent is still in good health rather than putting it off and having to go through an expensive and lengthy court process to establish guardianship or conservatorship. By doing so, you can rest easy knowing that your parent's needs will be met quickly and their wishes respected if they ever need assistance from their POA.

To learn more about the legal concerns of aging, be sure to check out our guide to estate planning.