Power of Attorney for Elderly Parents

As time passes, many adult children find themselves confronted with the responsibility of caring for their aging parents. Navigating the complex terrain of legal, health and financial matters can be a daunting task, but with a little bit of planning it can be made a whole lot easier.

Establishing a power of attorney is a crucial step in preparing for the uncertainties that lie ahead, and in reducing stress when crises emerge. Working with your elderly parents to prepare for the future not only fosters a sense of security and control for them, but also transforms a potentially overwhelming process into a constructive and positive experience.

A power of attorney (or POA, as it's often called) is a legal document that gives one person (sometimes called the agent, or “attorney-in-fact”) power to make decisions on behalf of another (usually referred to as the "principal"). The person with power of attorney (the agent) has the power to make legal, financial, or medical decisions on behalf of the principal. This power can be either very specific and limited to certain actions or very expansive, and is generally used when the principal is incapacitated due to illness or disability, or when they are unable to be physically present to sign legal documents. 

Although we’ll be focusing in this article on broad U.S. terms and POA definitions, keep in mind that each state has its own power of attorney laws, regulations, and even terminology.

There are a few different types of power of attorney:

• General power of attorney is used when the principal is able to take care of their own affairs but for whatever reason chooses or prefers not to. Perhaps they spend their winters out of the country: POA allows someone in their home country to manage local finances and property should the need arise. General POA usually lasts only for a limited period of time which is specified in the document, can be revoked at any time, and will end automatically if the principal is incapacitated. For this last reason it is not a good option for end-of-life care or medical emergencies.
• Limited power of attorney allows the agent to perform very specific tasks on behalf of the principal, and only those tasks. This might be something like managing the principal’s retirement accounts. Like General POA, limited POA lasts only for a specified period and will end automatically if the principal is incapacitated.
• Durable power of attorney gives the agent the power to make legal and financial decisions.  This document is effective immediately, is revocable and does not terminate if the principal becomes incapacitated. This type of POA will only terminate upon the death of the principal and is always recommended, as the agent can continue to act on behalf of the principal should their health deteriorate.  The agent can handle financial affairs like medical bills or selling property, but they cannot make healthcare decisions on behalf of the principal.
• Medical power of attorney (sometimes called a healthcare power of attorney, or healthcare proxy) is a type of durable power of attorney that gives the agent the power to make medical decisions if the principal is incapacitated.
• Springing power of attorney is a type of sub-document within the durable power of attorney: it states the conditions under which the principal is considered incapacitated, thus triggering the durable power of attorney. These conditions can vary, for example it might require that one or even two doctors certify that the principal is unable to handle financial decision-making.

The future might seem far off and you may have no current medical conditions that might lead to incapacity. However as we age, the likelihood that we will need this document increases. At the very least, power of attorney can become essential after one enters end-of-life care. Almost everyone can benefit from having a power of attorney document, even young people. If you are ever in an accident, having a durable power of attorney document can help your designated agent make decisions for you, or handle money and property while you’re incapacitated. Common reasons seniors might need power of attorney documents:

• Chronic illness: POA can help take certain responsibilities off your plate while you combat long-term health crises.
• Planned or emergency surgery: Giving someone medical power of attorney can help them make healthcare decisions for you while you’re under anesthesia or in recovery.
• Memory issues: Seniors with memory problems, especially those diagnosed with dementia or Alzheimer’s, should choose and sign a POA as soon as possible, while they still have the ability to do so. This will allow their agent to handle their affairs, even if they’re as simple as making sure that bills are paid on time.

Perhaps the biggest benefit of power of attorney is that you can choose who to give this power to. Without a power of attorney document specifying a different agent, legal and medical decisions fall to your next of kin. This may not be the ideal solution for everyone. For example, some may be too young, too far away to effectively manage POA. Perhaps you would prefer to give a sister, who is a doctor, medical power of attorney, but designate a close friend (who is also a CPA) financial power of attorney. There are many ways to customize this legal document, and you don’t have to choose family members when designating power of attorney. You can even choose professionals to act in this capacity — lawyers, accountants, etc. — but they will likely charge you for their work as your POA agent.

Each family and individual has different dynamics and needs: creating a power of attorney document will help ensure that you have people you trust in charge of your affairs if and when you need them.

When guiding a parent through the selection of a power of attorney (POA), open communication and respect for a parent's agency are essential. Start by having some candid discussions about their preferences, values, and concerns. In some cases, it may actually make sense to appoint separate individuals for medical, financial, and legal affairs, tailoring each role to the specific skills and values alignment of each person.

For medical decisions, choosing a family member who will respect the wishes and treatment preferences when it comes to medical care is essential. Financial matters often benefit from the oversight of someone with financial acumen, while legal affairs may be entrusted to an individual with great administrative skills. Ultimately, the goal is to create a comprehensive and well-rounded support system that aligns with the parent's wishes, providing them with peace of mind as they navigate the challenges of aging.

How to give someone power of attorney

Once you designate a power of attorney and discuss your wishes and preferences, the next step is to make it legal. If they agree, you need to put it in writing, and there are a few different ways to do this.

• Downloading forms: Although you can download POA templates and even find websites that will help you fill them out, it’s best to have a professional prepare these documents, especially as there is no standard POA form for all 50 states, and each state has very different requirements.
• Find an elder law attorney that specializes in family law or estate planning: If you can’t afford legal fees, look into whether you qualify for pro bono legal services, or check your state’s bar association to see if any local attorneys provide POA for free or at a discounted rate. An attorney will be able to help you make sure your POA satisfies your state’s requirements and that it reflects your wishes clearly. Make sure that you identify the parties, specify the powers the POA will grant the agent(s), and that the POA states whether it is limited or durable.
• Notarize it, record it, file it: These steps vary widely from state to state, but many require that POAs be notarized. Filing with the county might be optional, but many estate planners/attorneys recommend a public record of the POA be created. Some states require that POA documents be filed with the local government before they can be considered valid.

How much does a power of attorney cost?

If you have POA documents prepared online, or print and fill out your own, it might cost as little as the fee to get them notarized (usually around $50). If you hire an attorney to prepare your POA, their services can cost several hundred dollars. Ask attorneys whether they charge a flat fee for POA or by the hour, and remember that their legal expertise is almost certainly worth the investment.

Attorneys also often offer a POA document along with other estate planning documents, such as a health care power of attorney and Last Will and Testament, as part of an estate planning package.  It may be worth inquiring about this type of package, so you can get all of your estate planning documents prepared at a more reasonable rate.  

While giving POA to someone can give them a lot of power over your finances, property, and medical decisions, there are some hard limits that apply to every type of power of attorney, in almost every state.

Power of attorney does not allow the agent to contract marriages (though a few states do allow this), they cannot make, amend, or revoke a will, and they cannot vote in proxy (although they can request a ballot on your parent's behalf). Additionally, power of attorney does not give the agent the ability to make housing decisions, so they cannot force a loved one to move into assisted living, for example.

Unfortunately, there are cases where agents use their power of attorney as a license to steal, and deal themselves money from the principal. One way to protect against this is requiring that the agent document all their actions with a third party, like an accountant or attorney. The best protection against this theft, however, is to choose someone trustworthy, even if that means passing over adult children or other close family members.

Risks of being power of attorney

Being a power of attorney agent for someone can be an intimidating prospect: it means someone is putting an immense amount of trust onto your shoulders and, potentially, a lot of work, some of which can be emotional. There are also some real risks to being POA for someone else. 

• Accidentally making yourself liable for decisions/transactions: In trying to manage your loved one’s healthcare or financial matters you might encounter demands from banks or other institutions, like the example in this piece where the bank demanded a daughter cosign her father’s loan before giving her access to the account. This is illegal and could have left her as cosigner on the mortgage indefinitely had she not pushed back.
• Mismanaging their financial affairs: Despite your best intentions, it's possible to make poor decisions on behalf of your loved one. Depending on the type of POA you’ve signed you might be capable of selling property at a loss, or mismanaging funds, and creating the impression of theft or embezzlement in the family business. Be sure that you fully understand the responsibilities laid out by the POA documents and if in doubt, ask for help. Financial and legal experts are worth the expense if they protect both you and your loved one from potential consequences.
• Unintentionally violating the terms of the POA: Even if you’re acting at the request of your loved one, you might unintentionally violate the terms of the POA. Make sure you’re both familiar with the rules and limitations of the POA, and take extra care that you understand them fully. Your loved one might ask you to take actions that you can’t perform, especially if they’re having memory issues or are otherwise cognitively impaired.

How to encourage elderly parents to create a POA

Sometimes older adults are resistant to the idea of handing control of medical affairs over to adult children. This trepidation is understandable, but it’s important to help them understand why having a power of attorney document is important.

If you’re parents are married, point out to them that POA documents only apply to individuals, not couples: if they were both incapacitated you would need a durable POA for each of them in order to act on their behalves. If your parent is single and does not have a POA in place, it’s possible that no one, including you, will have the ability to access the accounts that could help pay for medical bills, or manage their taxes.

Warn your parent that if they are ever incapacitated without a power of attorney document in place, you might have to go to court in an effort to be named a conservator or guardian. This process is costly and can take valuable time (it can also be more difficult to reverse).

Reassure your parent that you want them to choose the POA agent they will trust the most, and that you won’t be upset if that isn’t you. Also, consider joining your parent in setting up your own POA: this might help reassure them about the process. Finally, consult experienced professionals together in order to answer all their questions and show them that power of attorney documents can be customized to suit their needs and desires.