Whether you’re just now stepping into a caregiver role or you’ve been a caregiver for years, you’ve probably already realized that caregiving isn’t just about taking over after driving retirement to get your mom to doctor appointments or picking your dad’s meds up from the pharmacy. You’re also helping them make decisions about their finances and keep track of medical records.
One of the most important things you can do as a caregiver for your parent is to make sure they have a designated power of attorney.
What Is a Power of Attorney?
A power of attorney (POA) is a legal document that allows your parent to decide whom they trust and want to act on their behalf and in their best interests should they become incapable of making decisions for themselves.
The duty of a power of attorney agent is to always act in the best interests of the principal.
When Should You Get Power of Attorney for a Parent?
Everyone over the age of 18 should have a power of attorney. Why? First, life is unpredictable, and once you become a legal adult, nobody else is legally allowed to make decisions on your behalf or talk to doctors about your medical condition.
Second, incapacity isn’t the only reason you might need a POA. For instance, a college student who is studying abroad might set up a POA so that their parents can handle their affairs while they’re out of the country.
The reason why POAs are strongly recommended for seniors is that it’s more likely that a health emergency could happen. Even if your parent is in good health right now, it’s wise to plan ahead for potential challenges. You simply never know when an injury or illness may take away your mom or dad’s capacity to manage their finances or make important decisions about medical care.
In fact, the best time to start considering a power of attorney is before a parent requires any caregiving.
What Are the Different Types of POA?
Your parent will probably need to create more than one power of attorney:
A financial POA grants the agent the authority to access and manage your parent’s monetary and/or property assets. For example, your parent might give the agent authority to pay bills, file taxes, make and manage investments, transfer money between different bank accounts, handle insurance claims, collect outstanding debts, sell or rent out property, or deal with retirement pensions and government benefit programs.
A medical POA grants the agent the authority to make healthcare related decisions based on your parent’s wishes. For example, your parent might give the agent authority to do things like choose their doctors, decide between treatment options, select an assisted living community, or communicate their wishes in an end-of-life situation.
A general POA takes effect immediately and grants an agent the authority to do anything that your parent can do legally. For example, a general POA might enable the agent to sign documents for your parent, pay their bills, and conduct financial transactions on their behalf. A general POA will terminate when your parent becomes legally incapacitated, so your parent may use it to grant an agent a comprehensive set of powers to help out while they are away from home for extended periods of time or if they need some assistance due to other reasons, such as physical illness or disability.
A limited or special POA grants the agent limited powers and/or time to act in a specific situation. For example, a limited POA might enable the agent to manage your mother’s move from her current home into an assisted living community or represent her in the sale of her current home. A limited POA usually expires when the task is completed or the timeframe ends.
A power of attorney can also be durable or springing:
A durable POA can be general or limited in scope, but it goes into effect when signed and stays in effect after your parent becomes unable to handle matters or make decisions on their own. For example, your parent may want help handling certain responsibilities right now as well as in the event that they lose the capacity to make decisions in the future. That’s what this kind of POA is for. Without a durable power of attorney, no one can represent your parent if they become incapacitated unless a court appoints a conservator or guardian. A durable POA remains in effect until your parent terminates it or they pass away.
Like a durable power of attorney, a springing POA can allow the agent to act for your parent if they become incapacitated, but it does not become effective until they become unable to handle matters or make decisions on their own.
How Do You Choose Who to Name as a POA?
Regardless of what type of power of attorney your parent’s use, it is important for them to think carefully about who they choose to be their agent. Typically, individuals choose a trusted family member to handle the responsibility of making health and/or financial decisions for them. It’s important to consider factors like health, geographic location, and personal and religious beliefs when choosing an agent.
Your parent might also want to consider naming a different agent and authorizing different powers for each person based on the best person for each job. For example, your parent might want to select one person to act as an agent for financial decisions and someone else to act as their agent when it comes to healthcare decisions.
Always let your parent make the final decision.
What Can a POA Do?
The powers of an appointed agent can be broad or narrow, depending on how the POA document is written. Here are a few examples of the kinds of decisions an agent can make:
A healthcare agent can decide:
- What medical care your parent receives, including hospital care, surgery, psychiatric treatment, home healthcare, etc., depending on their financial means and the approval of their financial agent
- Which doctors and care providers your parent uses
- Where your parent lives, including decisions regarding assisted living and memory care
A financial agent can:
- Access your parent’s financial accounts to pay for health care, housing needs, and other bills
- File taxes on your parent’s behalf
- Manage your parent’s property
What Can’t a Power of Attorney Do?
One of the biggest misconceptions seniors have about POAs is that they will lose their independent right to make decisions for themselves when they sign it or when the power kicks in.
However, with a durable power of attorney, your parent continues to have all the rights they had before they signed the POA. They can still sign documents, withdraw money from their bank accounts, and make other legal decisions until a court order says they lack the capacity to do so.
An agent cannot:
- Change your parent’s will
- Break their fiduciary duty to act in your parent’s best interest
- Make decisions on behalf of your parent after their death
- Change or transfer POA to someone else
What Happens If There Isn’t a Power of Attorney?
If your parent doesn’t have a POA and something happens to them, you may have to go to court to get the authority to handle their financial matters and make medical decisions on their behalf.
But during a health emergency, there won’t be time to do this. Instead, a stranger could end up making those decisions.
Where Can You Get a Power of Attorney?
POA forms can be downloaded from the internet. However, do-it-yourself POA options have limitations. An experienced attorney can make sure your parent’s POA has everything they need and that it covers all the fine print in your state’s laws.
Where Do You Keep These Documents?
The original POA document should be kept in a secure location where the agent will have easy access to it, such as a home safe or a bank’s safety deposit box.
Making multiple copies of the POA document is also smart. They can be kept in different safe locations, including with a lawyer. Your parent should also have a copy.
It’s smart to plan ahead and ask your parent to put a durable POA for financial and healthcare matters into place before they’re needed. This will save you, your parent, and the whole family from big problems if a major health emergency happens.
For checklists, worksheets, and tools to help you keep a single record of your loved one’s most critical information in one designated place so you are prepared in an emergency, download our Getting Your Affairs in Order eBook.