As parents age, one of the most caring acts adult children can do is help them prepare for the future. An important part of this preparation is establishing a power of attorney (POA). This legal document allows aging parents to appoint someone they trust to manage their affairs if they become unable to do so themselves.
With the right planning and support, a POA can empower aging parents by providing them with care and assistance when needed most. This article explores everything you need to know to help your parents create an effective POA.
What is a power of attorney?
A POA is a legal document that gives one person, known as the agent or attorney-in-fact, the authority to act on behalf of another person, called the principal, in specified matters.
The agent can be authorized to make legal, financial, and healthcare decisions for the principal. The principal must be mentally competent when granting a POA.
Why have a POA for aging parents?
There are several key reasons to help aging parents establish a POA:
- Manage finances: paying bills, managing bank accounts, filing taxes, etc.
- Make healthcare choices—decisions about medical treatment if parents cannot
- Handle affairs if absent; take care of business while away traveling.
- Prepare for incapacity: Make decisions if parents become incapacitated.
- Avoid guardianship: This allows parents to choose an agent rather than a court.
Having a trusted POA in place can give aging parents peace of mind that their affairs will be properly handled if needed.
Types of Power of Attorney
There are several types of POAs, each with a different purpose and authority:
- General POA: broad authority to handle all legal, financial, and business matters.
- Limited or Specific POA: only covers specific matters, assets, or time periods.
- Durable POA: Remains in effect if the principal becomes incapacitated.
- Medical POA: Gives authority over healthcare decisions.
- Spring POA: Goes into effect only if the principal becomes incapacitated.
Understanding the differences can help determine the right type of POA for your parents’ needs.
Choosing an Agent for Parents’ POA
Selecting the right agent is a critical decision. Consider these tips:
- Discuss preferences. Talk to parents about their needs and who they trust.
- Choose responsibly. Pick someone financially responsible and with good judgment.
- Consider family vs. outsider: weigh the benefits of choosing a family member or a neutral third party.
- Avoid conflicts of interest. Don’t choose someone who may financially benefit.
- Understand duties: The agent has a duty to act in the principal’s best interest.
Choosing someone parents trust who will also look out for their best interests is key.
Obtaining a POA for Parents
Follow these steps to properly obtain a POA:
- Consult an attorney. Have an attorney draft the POA document.
- Formally execute: Parents must sign the POA with witnesses present.
- Evaluate capacity: Parents must have mental capacity when signing.
- Record and distribute: Record POAs with appropriate agencies. Give copies to parents’ doctors, banks, etc.
- Authorize immediately or upon capacity. POA can take effect right away or only if parents become incapacitated.
Proper execution of the POA helps ensure it is valid and enforceable.
Managing a parent’s POA responsibly
As an agent, you have important legal and ethical responsibilities.
- Act in their best interest. Avoid any conflicts of interest.
- Keep records: Maintain detailed records of all actions and decisions.
- Communicate regularly. Keep close contact with parents and any co-agents.
- Limit authority: only take actions necessary and allowed by the POA.
- Avoid co-mingling funds. Never mix your parents’ finances with your own.
- Consult support system: seek guidance from family and professionals as needed.
Fulfilling duties responsibly maintains parents’ trust and ensures their needs are met.
Potential Challenges and Solutions
Even with proper planning, POAs can present challenges:
- Refusal by third parties: Some financial institutions or doctors may refuse to accept POA. Have multiple originals available.
- Disagreement among children: open communication and a focus on parents’ wishes help navigate conflicts.
- Changing needs: Update POA if parents’ situations evolve. Consult the support system for guidance.
- Burden on agent: Being a POA for parents can be demanding. Share duties with others if needed.
- Declining capacity: Move to activate POA if parents show signs of incapacity. Evaluate regularly.
Seeking professional advice can help overcome challenges if they arise.
Conclusion
A POA allows aging parents to designate someone they trust to manage their affairs if needed. While a big responsibility, being your parents’ POA can give everyone involved confidence and peace of mind. With proper planning, communication, and support, you can ensure this legal tool empowers your loved ones when the time comes.
