A Beginner’s Guide to Power of Attorney for Elderly Parents

Melissa Lee
By Melissa LeeJuly 29, 2021
Share this article:

As a parent or relative ages, it can become a struggle to balance respect for their autonomy and independence with protecting them from negative consequences of mental or physical health problems. A power of attorney (POA) is one way to ensure that no matter what happens down the road, your loved one’s wishes will be prioritized.

A power of attorney is one of the most important documents for elderly parents and grandparents, but it’s one that many families haven’t prepared. Fortunately, setting up a power of attorney is fairly simple, and it can save you from future complications. Executing a power of attorney is an important step to take sooner rather than later, even if your aging loved one is still physically and cognitively healthy.

Learn about types of power of attorney, common reasons why seniors need them, and how to have a power of attorney executed for your aging relative.

What is a power of attorney?

In short, the general definition of power of attorney is the written authorization to act on someone else’s behalf in all legal and financial matters. A competent adult, called “the principal,” signs a document that grants a trusted individual the authority to make decisions on their behalf if the principal is unable to. The person designated to act in the principal’s best interest is called “the agent.” It’s the agent’s job to make sure the principal — in this case their aging parent or loved one — is well cared for.

Most seniors may need multiple types of power of attorney. An elder law attorney can help your aging relative determine the right combinations for their needs.

What are the five types of power of attorney?

1. General power of attorney

A general power of attorney is comprehensive — it gives a senior’s agent power to act on their behalf financially and legally. General power of attorney can be used for healthy parents who want help with financial or personal matters.

A general POA, sometimes called a financial power of attorney, gives an agent power to:

  • Sign documents on the senior’s behalf
  • Open or close bank accounts and withdraw funds
  • Buy and sell property, real estate, and assets
  • Trade and sell stock
  • Pay bills and cash checks on the principal’s behalf
  • Enter contracts for utilities and services like housekeeping or home health

A general power of attorney is non-durable, meaning it is void if the principal becomes mentally incapacitated, so it’s not recommended for dementia patients or seniors at risk of dementia. Mental incapacity is defined as a person being unable to make informed decisions.

Additionally, mental incapacity can include persons incapable of communicating decisions, or persons with medical concerns relating to disease or injury (such as a coma or unconsciousness). It can also refer to a poor state of health where the person is mentally disabled or incapacitated. If this is a concern, then durable power of attorney becomes necessary.

2. Durable power of attorney

Unlike a general, or non-durable, power of attorney, a durable power of attorney allows the agent to make financial and medical decisions through all mental and physical circumstances, unless the principal chooses to revoke it. “Aging parents or parents with significant health issues should have a durable power of attorney,” recommends Somita Basu, an estate planning lawyer in Santa Clara, California.

The difference between a general power of attorney and a durable power of attorney is that even if the senior is in a coma, has experienced significant cognitive decline from dementia, or is otherwise deemed incapacitated, a durable power of attorney will remain in effect. Unlike a general or non-durable power of attorney, it allows the agent to make decisions on their behalf in the event of mental incapacitation.

3. Medical power of attorney

A medical power of attorney — also known as a health care proxy or health care agent — is someone who makes health care decisions for the principal if they’re incapacitated. It’s their job to ensure a senior’s wishes, as stated in their advanced directive or living will, are upheld in case of end-of-life care.

A medical POA only goes into effect when a senior is deemed incapacitated. The agent named is responsible for ensuring health providers follow instructions from the senior’s medical power of attorney documents. They also have authority over:

  • Medical treatment
  • Surgical procedures
  • Feeding tubes and artificial hydration
  • Organ donation
  • Selection of health care or senior living facilities
  • Release of medical records

Can a medical power of attorney override a spouse who wishes to make decisions for an incapacitated individual? Yes, a principal can choose almost any legal adult to act as their agent for a medical POA, and if the spouse is not the agent, their wishes are secondary to the agent’s instructions.

4. Limited (special) power of attorney

A limited power of attorney is exactly what it sounds like — a senior can give someone agency for a limited amount of time over specific matters, which are generally stipulated in the document. For instance, a limited power of attorney could go into effect for a specific business transaction, like a real estate sale.

5. Springing power of attorney

A springing power of attorney is executed in advance, but doesn’t go into effect until a senior receives a declaration of incapacity. Seniors who want to maintain autonomy as long as possible may prefer a springing power of attorney. However, this decision could lead to complications and delays down the road. Medical evaluations related to determining incompetence can be costly, time-consuming, and are subject to legal conflicts.

Common reasons why an aging adult may need a power of attorney

A POA grants a chosen relative or friend the ability to make decisions when a parent or grandparent is either unwilling or unable to do so. Here are a few reasons seniors may feel it’s time to set up a power of attorney:

Financial responsibilities

If your aging relative has a hard time staying on top of financial obligations, or is in danger of overspending their savings, it may be time to establish a financial power of attorney. Check for overdue bills, duplicate checks, and fraudulent requests for funds.

Alzheimer’s disease

It’s vital to set up durable power of attorney for an elderly parent who has dementia before they experience significant cognitive decline, since it can be complicated to execute legal documents once a senior is deemed mentally incapacitated.

Upcoming surgery

Invasive surgeries can lead to complications. A power of attorney ensures that a senior’s wishes will be respected in case of an emergency.

Planned travel

Sometimes, a POA is established out of convenience, rather than medical necessity. If seniors are traveling in retirement, they may want someone at home able to cash incoming checks and handle bills.

Medical diagnosis

A senior with a terminal diagnosis may want to establish a power of attorney to ensure their wishes are met when they become incapacitated or too sick to make health care decisions.

Unstable family relationships

It’s common for adult children to fight about a parent’s care, especially if they disagree about finances or end-of-life decisions. A power of attorney clearly designates who’s responsible for upholding the senior’s wishes, and can block ill-intentioned family members from intervening.

How to select a power of attorney for an elderly relative

Choosing an agent is often one of the most time-consuming parts of the process since it’s important for seniors to ensure their best interests, says Basu. Here are questions to consider when selecting an agent for a senior’s power of attorney:

Is a family member the best choice?

Many seniors tend to select a relative as POA by default. This can cause conflict and may not be the best choice if family relationships are strained. An advisor, close friend, or professional proxy can all be safe alternatives.

Is there a knowledgeable option?

Someone familiar with medical procedures and treatments may be able to make better decisions as medical power of attorney; someone with experience in accounting would be an ideal financial or general power of attorney.

Should power of attorney be split?

A senior can choose one agent for general power of attorney and another for medical power of attorney. Or, they can choose multiple agents for both. If there are multiple agents who disagree, decisions could be delayed, however.

Will the agent be able to carry out the senior’s wishes?

The top responsibility of a POA is to comply with the senior’s directives. Sometimes, this is emotionally difficult. For example, a spouse may struggle with making the decision to end life support, even if it’s what their partner wanted.

Who does the senior trust?

A power of attorney agent should always put the needs and well-being of the senior first, no matter their own circumstances. Trust is imperative when selecting an agent.

Sometimes, adult children can feel hurt or jealous knowing their parent has given a sibling POA. A family elder care planning meeting can be a forum to discuss choices and help people begin to accept them.

When is the right time to set up a power of attorney?

A senior’s wishes may not be known or respected without legal documentation, so it’s important to discuss a power of attorney with aging relatives.

Experts recommend establishing a power of attorney for an elderly parent before they need it — especially if they’ve received a concerning diagnosis. Patients diagnosed with early-stage dementia should set up a power of attorney before the disease progresses. If an aging relative is determined no longer competent to make their own decisions and doesn’t have a POA, family members face a complicated, expensive legal process to set up a conservatorship or guardianship. This is also when the difference between a general power of attorney and durable power of attorney becomes critical.

How do you set up a power of attorney?

While many do-it-yourself power of attorney forms are available, it’s a good idea to have a lawyer draft one tailored to your family’s needs. There are many issues to consider, and one size doesn’t fit all. Here are four common scenarios an elder law attorney can help address:

Springing power of attorney:

A springing power of attorney takes effect under specific circumstances, such as after a defined time, event or circumstance. This may vary according to your state’s laws. If the power of attorney is springing, it’s important that the method for determining incapacity is clearly spelled out in the document. Otherwise, the need to determine incapacity can cause delays and extra expense.

Appointing a guardian:

Usually, if guardianship proceedings become necessary, the court will appoint a guardian for a senior. However, if a lawyer has nominated a guardian in the durable power of attorney, the court will usually honor that nomination.

Executing the power of attorney:

Requirements for power of attorney differ between states. A local estate planning attorney or elder law attorney can ensure that the POA is executed properly.

Bank acceptance:

Due to potential legal consequences, some banks and other institutions are hesitant to accept a power of attorney, even if it’s executed correctly. Banks may have their own standard power of attorney forms to sign. An elder law attorney can ensure any documents signed with a bank match the original power of attorney.

The National Academy of Elder Law Attorney’s “Find a Lawyer” tool can help you find a local professional to assist with a power of attorney.

A Place for Mom Senior Living Advisor

Talk with a Senior Living Advisor

Our advisors help 300,000 families each year find the right senior care for their loved ones.

How to ease family tensions about power of attorney

Conversations around power of attorney decisions may be complicated by tense sibling relationships or by strained parent-child dynamics. Take these steps to make the process more peaceful and harmonious:

Actively listen with empathy

Take time to understand family members’ questions and concerns. Feeling heard promotes familial buy-in to the power of attorney process. Within reason, let everyone who wants to express their thoughts and feelings participate.

Realize that strong emotions related to the aging of a parent or grandparent may cloud a person’s ability to be reasonable. Try to understand a family member’s perspective and how that shapes their concerns with the POA. Refrain from criticizing or critiquing a family member during active listening.

Address concerns directly

Clear communication to address lingering questions about a power of attorney helps reassure family members and prevents future conflicts.

For example, a family member may ask: Can power of attorney change a will? Or, can power of attorney keep family away? If financial motivations exist, reassure family members that the agent cannot change the principal’s will. If visitation is a major concern, explain that access to an incapacitated parent or elderly family member will not likely be banned as part of the POA.

Most importantly, explain that the parent or elderly family member is always welcome to revoke the power of attorney and craft a new power of attorney with a different agent should something change.

Some families in high-conflict situations may want to consider using a mediator or other neutral third party to lead these discussions. Guided conversation may be more productive for these families’ needs as a third party may be able to more effectively explain all parties’ positions.

Speak about yourself, not at your family

If you are the principal on the POA, thank your family members for their feedback regardless of how it aligns with your chosen course of action. Allowing others to save face helps maintain positive relationships, which may prove favorable long-term. If you feel it is appropriate, state the facts for your family about your individual desires for the power of attorney. Remember, you do not have to disclose information regarding your power of attorney to anyone.

Use this guide to explain to your loved ones how the power of attorney will function. While this is an understandably emotional topic, do not engage in angry outbursts. Allow cooler heads to prevail, even if it takes some time. Remain resolute in your decisions because only you know what is right for yourself.

When does power of attorney end?

You may be wondering how long a power of attorney lasts. Typically, there are four situations that would render most powers of attorney null and void. A POA is no longer in force:

  • If you revoke it
  • If you become mentally incompetent
  • If there is an expiration date
  • If you pass away

However, remember, a durable power of attorney was created to allow the assigned power of attorney to remain in effect after the principal becomes mentally incompetent.

Additionally, in cases of divorce, a court may terminate a power of attorney. Your attorney may advise you to have specific language addressing divorce in your POA.

Revoking power of attorney

As time goes on, life circumstances may necessitate a change in the power of attorney. The principal has the power to revoke the power of attorney at any time for any reason, no explanation needed. The exception is a durable power of attorney when the principal has become mentally incapacitated.

Contact an elder law attorney or estate planning attorney for expert guidance on drafting a new power of attorney and revoking an old power of attorney. Typically, a new power of attorney states within it that any old powers of attorney are revoked. Remember to give copies of the new POA to any institutions that held copies of the prior power of attorney.

An attorney will likely instruct the principal to retrieve the old power of attorney from their previous agent as part of the revocation process. If this is not possible, an attorney may advise the principal to send a written, certified letter via the United States Postal Service stating that the old power of attorney has been revoked.

Who can override a power of attorney?

A principal can override a power of attorney by revoking the power of attorney. The interpretation and implementation of powers of attorney vary greatly between states. Less than 30 states have adopted The Uniform Power of Attorney Act since the latest version of the bill passed in 2006. State-specific questions are best handled by an elder law or estate planning attorney. They will provide state-specific guidance.

Top tips for the power of attorney process

Get answers to some of the most frequently asked questions about a POA by learning from these tips:

Tip #1: You must be legally competent to sign a power of attorney.

Someone cannot appoint a power of attorney (or sign any legal document) if they are incapacitated.

Contrary to popular belief, only a mentally competent individual can appoint a POA for themselves. Elder law expert,Stuart Furman, author of “The ElderCare Ready Book,” wrote about it in detail in his book. In Chapter 10, “Famous Last Words,” Furman writes:

“For some reason, people do not grasp the concept that one needs to be competent to execute legal documents. I understand that people generally look at what they need to get accomplished first; for example, accessing a bank account because dad is not able to anymore. However, at some point, they are told, informed or just believe that dad must have lost their legal capacity prior to the signing of a power of attorney or living trust. This is just backwards! Once Dad lacks legal capacity, then he can no longer sign any legal documents including a power of attorney or living trust, which was intended to be used if Dad became incompetent. The only recourse is then a conservatorship or guardianship proceeding through the court, which is a very costly and time-consuming process.”

Tip #2: Do not use power of attorney forms from the internet.

Power of attorney forms may be easily found online. However, it is heavily ill-advised to use those. While it may be tempting as a cost-saving measure, this is one project you do not want to do yourself.

A power of attorney should be created to appropriately represent the specifics of the unique circumstances and the decisions and care that need to be made on behalf of the person. “People should stay away from the internet and have a power of attorney custom drafted to your circumstances,” Furman advises.

Getting a power of attorney document from the internet means that you could be paying for a document that:

  • Does not cover the legal requirements of your state
  • Doesn’t represent the details that are appropriate to your situation
  • Is not current
  • Is too ambiguous
  • Lacks important authorities

“If a power of attorney is ambiguous, it is ripe for challenges and interjections,” Furman says. “The issue is that when problems with a power of attorney are discovered it is usually too late to do anything about it.”

Tip #3: Choose a trustworthy agent who will act in your best interest.

By law, the agent under a power of attorney has an overriding obligation, commonly known as a fiduciary obligation, to make financial decisions that are in the best interests of the principal (the person who named the agent under the power of attorney).

A power of attorney doesn’t grant full financial rights regarding assets. “Based on fiduciary obligations, just because it says you have the power doesn’t mean you have the right,” Furman explains. “The right to act is based on fiduciary circumstances. If the action is not in the best interests of the principal then, notwithstanding that you have the power to act, you do not have the right to act,” he says.

“It’s important that people understand that this fiduciary obligation is not stated in the power of attorney, and it doesn’t need to be because it is implied by law,” Furman says. “The fiduciary obligation is an aggressive restriction placed on the agent under a power of attorney” to protect the principal.

People hesitate towards getting a power of attorney because they are worried that the agent will mismanage their affairs and assets. Legally, your agent shouldn’t do something that is not in your best interests — that is their fiduciary obligation to you as your agent.

However, it can’t be emphasized enough that you must appoint someone you trust. Furman advises that you try to choose someone who is trustworthy and has integrity, especially if their power of attorney is going to extend after you are incapacitated.

Reviewed by Samantha L. Shepherd. 

Samantha L. Shepherd is a certified elder law attorney and former president of the Missouri chapter of the National Academy of Elder Law Attorneys (NAELA). She is the managing attorney of Shepherd Elder Law Group in Overland Park, Kansas, and Hutchinson, Kansas.

Melissa Lee
Author
Melissa Lee

Related Articles