A guide to power of attorney for elderly parents

A power of attorney (POA) is an important element of planning for your elderly parents' future. It allows another person to take action on your parents' behalf, ensuring bills get paid and medical decisions are made in the unfortunate circumstance that your elderly parent is unable to do those things on their own. Christina Jeter, Esq., of The Jeter Law Firm, PLLC, advises, "It always makes sense to have a power of attorney in place, regardless of any situation. It is better to be prepared than to have to scramble to think of what an elderly parent would really want."

As Caring.com explains, with a power of attorney in place, you can be confident that you're prepared and your parents' wishes will be respected when they need help.

What Is a Power of Attorney?

A power of attorney is a document that allows someone to act on another person's behalf. The person allowing someone to manage their affairs is known as the principal, while the person acting on their behalf is the agent. POAs are generally governed by state law, and there may be some differences between states. Generally, these differences are minor, but it's always a good idea to talk to an attorney who understands the laws specific to your state.

When considering a power of attorney, there are a few other important factors to keep in mind:

• If the principal signs a POA allowing someone to act on their behalf, they can still continue to manage their own affairs as long as they have not been deemed mentally incapacitated.
• If the principal is of sound mind and disagrees with the agent, the principal's decision takes precedence.
• Agents cannot create or change the principal's will, vote on their behalf in public elections, or transfer their POA power to another person without the principal's consent.  
• Agents must act as fiduciaries. This means that if you're the power of attorney for your parents, you must manage their affairs for their benefit, not your own.
• The Consumer Financial Protection Bureau has advice about the legal responsibilities that agents agree to when signing a POA.
• An agent's authority is limited to what the document and the state allow. 

What Are The Different Types of Power of Attorney?

Different types of POAs can also give the agent different powers, so it's important to research the type of POA you need. The different types are:

• General Power of Attorney: This type of POA gives the agent broad rights to manage affairs on the principal's behalf. You can choose to end it at any time and will automatically end if the agent is determined to be incapacitated. Learn more about general power of attorney.
• Durable Power of Attorney: A durable power of attorney lasts even if the agent becomes incapacitated. It comes into effect on the day it's signed unless otherwise specified. Learn more about durable power of attorney. 
• Springing Power of Attorney: A springing power of attorney is a type of POA that goes into effect based on a contingency, typically when the principal becomes incapacitated. This type of POA allows the principal to stay in control while they have the capacity, but it is ready to "spring" into action once they're incapacitated. Learn more about springing power of attorney. 
• Medical Power of Attorney: A medical power of attorney, also called health care proxy, gives an agent the right to make decisions about the principal's health care. This type of POA is needed for people who can't make decisions about their medical care and is common for later-life planning. Learn more about medical power of attorney. 
• Limited Power of Attorney: A limited power of attorney limits the agent to make decisions about specific tasks. It is often used to authorize someone to pay bills or sell a house, and the agent can only take action that's specified in the document. Learn more about limited power of attorney.

Why Do You Need a Power of Attorney for Elderly Parents? 

As your parents get older, it makes sense to be prepared for any challenging situations that may require your help. A POA allows children, or another agent, to step in when the need arises. Jeter states, "Any person with an elderly parent should have the conversation with their parent about getting a power of attorney in place if one does not already exist. In my practice, I advise people not to wait when it comes to getting a power of attorney because there are just too many things that can come up in life."

Common Reasons to Seek Power of Attorney for Elderly Parents

• Financial Difficulties: A financial POA allows you to pay the bills and manage the finances for parents who are having difficulty staying on top of their financial obligations.
• Chronic Illness: Parents with a chronic illness can arrange a POA that allows you to manage their affairs while they focus on their health. A POA can be used for terminal or non-terminal illnesses. For example, a limited POA can be set up to take effect when a person begins chemotherapy and then be revoked once the cancer is in remission.
• Memory Impairment: Children can manage the affairs of parents who are diagnosed with Alzheimer's disease or a similar type of dementia, as long as the POA is durable (so it continues once the parent becomes incapacitated) and the paperwork is signed while the parent still has their faculties.
• Upcoming Surgery: With a medical POA, you can make medical decisions for the principal while they're under anesthesia or recovering from surgery. A financial POA can also be used to ensure financial affairs are managed while they're in recovery.
• Regular Travel: Older adults who travel regularly or spend winters in warmer climates can use a limited financial POA to ensure financial obligations in their home state are managed for the specific period of time that they are absent.

Potential Downsides to Power of Attorney

There are many reasons why a POA is useful for older adults and their families, but they're not without downsides. Two common issues to keep in mind include:

• Elderly Exploitation: A POA gives someone control over your parents' affairs, which can leave them open to abuse or financial exploitation. If an agent acts in bad faith, it can be impossible to undo their actions. While your parents can revoke a POA at any time, as long as they are not incapacitated, you should always appoint someone your parents trust to act as their agent. 
• Family Disagreements: Appointing a power of attorney can cause problems within families. Disagreements may arise over who should be appointed as the agent and when there seems to be any misalignment between the agent's decisions and the POA document. To help avoid these problems, parents should talk to family members about their wishes and why they chose their power of attorney.

Who Can Be a Power of Attorney?

When considering individuals to act as a power of attorney, keep the following requirements and recommendations in mind: 

• Powers of attorneys must be at least 18 years old and of sound mind.
• Some states do not allow the agent for a medical POA to be your parent's doctor or another health care provider.  
• More than one person can be appointed as a power of attorney, if desired. 
• Many seniors choose an adult child, spouse, close friend or other family member to serve in this role.
• A power of attorney must be someone that can be trusted to honor the principal's wishes and make decisions based on their benefit – not their own
• Appointing someone outside of your parent's inner circle may avoid conflict and promote objectivity. 

How to Choose a Power of Attorney for an Elderly Parent

Choosing someone to act as a power of attorney is a critical decision. The agent can act on behalf of your parent, so it must be someone your parent trusts and is comfortable with. It should also be someone willing to discuss options and listen to your parent's wishes and desires. 

Things to Consider Before Choosing a POA for Elderly Parents

Consider Options Outside the Family

There is no reason why a power of attorney must be related to the principal. Instead of a family member, you may want to consider choosing one of the following individuals:

• A family friend or another trusted community member
• A professional accountant, lawyer, or other employee at a bank or trust company

In fact, a  non-relative may be a better choice for several reasons, including the following:

• An older adult's family may live far away or in another state. 
• Children may have trouble acting objectively when handling their parent's affairs.
• If children are too involved, POAs may be ruled invalid, leading to costly legal battles and attorneys' fees.
• Professionals may have relevant expertise that the family does not, such as an accountant named as the agent in a financial POA.

When making your decision, keep in mind that professionals are likely to charge fees, which can add up quickly. 

Understand the Full Scope of Your Parents' Needs 

Make sure you know what assistance your parent requires and that your parent's wishes are clearly stated in the POA.

• Understand how much work is currently required to meet your parents' needs and if that's expected to change in the future. 
• Keep in mind that some tasks are more time-consuming than others. Paying monthly bills typically takes less time than making decisions about nursing homes. 
• Ensure your parents' wishes are stated clearly in the POA document. 
• An unclear POA may leave room for interpretation and representatives may have difficulty knowing what would be the best decision. 

Understand the Financial Implications of Becoming a POA

A power of attorney does not become personally liable for any of the principal's debts or bills. However, you should take the following steps to avoid violating any POA clauses that can open you up to legal or financial liability:

• Keep your finances separate from the principal's finances.
• Always make decisions that benefit the principal.
• Before signing to be a power of attorney, consider reviewing the agreement with a lawyer to make sure you fully understand each clause.
• Keep good records and be prepared to explain how your decisions abide by the principal's wishes.

Setting Up a Power of Attorney For an Elderly Parent 

It's important to understand the basics of a power of attorney before you set one up. Many states have elder law specialists that can give free or low-cost advice to seniors. These lawyers have experience arranging power of attorney documents and understand local laws. Contact your local Area Agency on Aging for assistance finding a nearby specialist.

When you're ready to set up the POA, follow these steps:

• Talk to Your Parents: Discuss what they need in a POA and what their wishes are when it comes to their finances and health care. Ensure your parents fully understand the agreement and what it means for their lives. You must also confirm their consent and make sure they agree with everything discussed. 
• Talk to a Lawyer: Everyone who gets a POA has different needs and the laws are different in each state. It's important to get legal advice so that your parents' wishes are taken into consideration and the document is legal.
• Create the Necessary Documentation: Write down all the clauses you need that detail how the agent can act on the principal's behalf. This ensures your parents' wishes are known and will be respected. Although you can find POA templates on the internet, they are generic forms that may not stand up to legal scrutiny and probably won't have all the clauses you require.
• Execute the Agreement: Sign and notarize the document. Requirements for notarization and witnesses differ between states, but it's always a good idea to notarize the document to ensure its validity throughout the country.

Who Can Revoke or Override a Power of Attorney?

There are a variety of reasons why someone might want to revoke or override a power of attorney, but only the following entities have the ability to do so:

• Principal: As long as they have sufficient mental capacity to make this decision, the principal has the ability to revoke or override a power of attorney at any time. Typically, this change must be documented through writing or a revocation of POA form. The agent and anyone the agent has been doing business with on the principal's behalf should be given a copy of this document.
• Court: If the agent or principal is not of sound mind, then a court can step in to revoke a power or attorney if the judge has evidence that the agent is unfit to carry out their POA duties.
• Concerned Family and Friends: While the court has the ultimate authority to remove an agent, concerned family and friends can begin the process by submitting a request to the court seeking to terminate the POA.
• Guardian or Conservator: The court may appoint a concerned party as a temporary guardian or conservator for the principal. In this case, this individual can request to revoke a POA's privileges.

When Does a Power of Attorney End?

Depending on the type of power of attorney, there are a variety of circumstances that warrant an ending to the agent's authority. The most common situations are typically when:

• The principal passes away
• The POA is not durable and the principal becomes incapacitated 
• The agent passes away, becomes incapacitated, or resigns
• The principal revokes the POA
• The POA sets an expiration date and that date has passed
• The POA's pre-determined purpose is complete (for example, signing documents for a specific transaction)

Power of Attorney Laws by State

Each state has durable power of attorney laws that outline how individuals can control their health care decisions in the event of their incapacitation through legally appointing another trusted individual to act on their behalf. View your state on this map of durable power of attorney laws.

Frequently Asked Questions 

Q: How do I get power of attorney over my elderly parent?

The first step to getting power of attorney over elderly parents is to research the different types available and their scope of available powers. Then find out how these work in your state. Talk to your parents so they understand why you want to take this step and the benefits and drawbacks of the action. Consult a lawyer who can help you draw up a document that details your parents' rights and the agent's responsibilities, whether that's you or another person. Finally, execute the document by getting all parties to sign it and have it witnessed and/or notarized as required by the laws in your state.

Q: What are the four types of power of attorney?

The four types of power of attorney are limited, general, durable and springing durable. Limited and general POAs end when the principal becomes incapacitated, so they're not often used by older adults when planning for the end of life. A durable POA lasts even after a person becomes incapacitated, so is more commonly used by seniors. A springing durable POA is a type of durable POA that only comes into effect when certain criteria are met, usually when the principal becomes incapacitated.

Q: Can I get a power of attorney if my parent has dementia?

Yes, you can get power of attorney if your parent has dementia if it is mild dementia and a doctor confirms they have the mental capacity required to make the decision about a POA. However, it's a good idea to set up a power of attorney early, before cognitive impairment occurs during the mid-to late-stages of the disease. 

Q: What are the disadvantages of a power of attorney?

The biggest drawback to a power of attorney is that an agent may act in a way that the principal would disapprove of. This may be unintentional if they are ignorant of the principal's wishes, or it may be intentional because they're acting in bad faith. As POAs don't have court oversight, they can be susceptible to abuse or exploitation.

POA agreements may also not be honored, largely due to the lack of court oversight. Banks, for example, may refuse to accept a POA for various reasons. Lastly, the principal must be competent to execute a POA, which can be a disadvantage if it's not set up before they become incapacitated.

Q: Is power of attorney responsible for nursing home bills?

As your parents' power of attorney, you're responsible for ensuring their nursing home bills are paid for through their assets and income. However, you aren't responsible for paying those bills from your assets or income. Federal regulations signed in 2016 prohibit nursing homes from requiring that a third party (such as a family member) guarantees nursing home payments, but you should still ensure that you haven't signed as a guarantor. If you're signing an agreement on the principal's behalf, note that you're acting as their POA and sign every document accordingly. 

If, in your role as POA, you're planning on disposing of any of your parents' assets, make sure you understand your state's Medicaid asset requirements. If you sell certain assets at below market price, it could make your parent ineligible for Medicaid benefits. These benefits could help cover the costs of their nursing home care.