Couple seeking power of attorney advice

Financial Considerations for Senior Caregivers

Bethesda Health | October 8, 2020

A financial power of attorney is a powerful legal document that enables a trusted individual to be designated as an agent to manage the affairs of a family member who may have a serious progressive illness.

Selecting the agent and drawing up the document should happen long before illness or disability strike. If the senior becomes incapacitated or unable to understand the document or what is happening, the power of attorney cannot be created.

Options

The power of attorney documents can be set up in many different ways. These include specific powers of attorney, which designate the agent to only handle specific tasks, or a general power of attorney, which gives the agent broad authority to handle a wide range of legal and financial affairs.

What Are the Duties of the Agent?

Appointing a durable power of attorney (DPOA) agent is recommended because this agent continues in his or her duties after the senior has lost the capacity to make decisions.

Some power of attorney documents can begin immediately, and some can begin on an appointed date.

Depending upon how the power of attorney document is drawn up, the agent’s role could include dealing with any of the following:

The most common task for an agent is writing checks and paying bills from the senior’s bank account.

If you are designated as an agent, it is important to find, organize, and store all your senior’s financial documents.

Who Should Set Up the Power of Attorney?

Though you can find forms online to set up a power of attorney, it is strongly recommended that you seek professional legal assistance in creating a power of attorney document. This is to ensure that wishes of the senior and duties of the agent are clearly set out.

There are some complexities to deal with. For example, different groups may want the document to be in a form they have approved. A bank or other financial institution may have its requested form, the IRS may request another, and a hospital yet another. Requirements also vary from state to state.

Even something as simple as adding the agent’s name to the parent’s bank account can be confusing, resulting in giving the agent full use of the account for his or her own benefit, or only using it on behalf of the senior.

Prepare Early and Update Frequently

Before you notice stacks of unpaid bills at Mom and Dad’s house, overhear calls from bill collectors, and find bank statements and checkbooks revealing serious errors and omissions, the discussion about creating a financial power of attorney should take place. In fact, it is recommended than even young adults have the document in place.  As finances, health, and plans change, the document can be amended.

It is also wise to begin helping your parents find and retain financial, legal, and business documents months or years ahead of time, when Mom or Dad’s memory is clearer. Even if you do not believe you will be named as the agent, you can save your parents and the person who becomes their agent a lot of frustration and, possibly, money.

For more helpful tips for senior caregivers, visit our blog.

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