Empower Your Loved Ones with a Power of Attorney for Dementia

Few things are more difficult than watching illness progress in a parent or other loved one who has been diagnosed with dementia or Alzheimer’s. It’s important, however, to take care of legal and financial planning while your loved one is still able to engage in the process. A good place to start is looking at the different types of Power of Attorney documents, which allow a designated person to make certain decisions should a loved one become incapacitated and unable to make decisions themselves. Here we discuss the details of making a Power of Attorney for someone with dementia.

Is it legal to make a Power of Attorney for someone with dementia or Alzheimer’s?

The answer to this question depends on mental competency. A person is required to be mentally competent to execute a Power of Attorney, which means they have to be able to understand what they are signing and the effects of doing so in order to legally enter into such an arrangement. In some cases, a physician may be able to sign off on declaring a person mentally competent to sign. Alternatively, a person may execute a combined Mental Health Declaration and Power of Attorney in order to decide beforehand that a Power of Attorney would go into effect when certain conditions are met. 

Another option is a Durable Power of Attorney. A Durable Power of Attorney goes into effect immediately upon signing it and terminates only upon death. Your loved one may decide instead to create a Springing Power of Attorney, a variation of the Durable Power of Attorney, which goes into effect only when they can no longer demonstrate the ability to make important decisions on their own behalf. The person to whom they grant authority to make these decisions can do so only when the grantor’s own abilities come into question.

What happens if a Power of Attorney is not made?

If you do not have a Medical Power of Attorney, hospitals or physicians may have to make medical decisions on your behalf in an emergency. When it comes to finances, issues may arise if no one is authorized to make key decisions, such as those surrounding modifying a loan or accessing funds in a bank account to pay bills. Without a Power of Attorney, no one other than a court can decide to appoint someone to manage your loved one’s affairs. You would not be able to step in to help your loved one without a court interfering, and the court could appoint someone your loved one would never have personally chosen. This would mean that a hospital or physician may have to make medical decisions on their behalf in an emergency without any input from a trusted party. Similarly, when it comes to finances, issues may arise if no one is authorized to make key decisions, such as those surrounding modifying a loan or accessing funds in a bank account to pay bills.

What happens if my loved one cannot sign the Power of Attorney?

If your loved one is not deemed mentally competent to sign a Power of Attorney, you may have to seek conservatorship through a court to obtain the same type of authority to make decisions on their behalf. A conservatorship usually entails a costly and time-consuming judicial process. Typically, the court appoints your loved one’s next of kin to oversee medical and financial decisions. Keep in mind that although the court is likely to appoint a close family member, it may not be the person most up to the task, which could create friction among adult siblings.

How can I discuss making a Power of Attorney with a parent or loved one?

If your parent or other loved one discloses a diagnosis that may impact their decision-making ability, it may be best to initiate a conversation regarding a Power of Attorney as soon as possible. A Durable Power of Attorney for medical and financial issues can provide peace of mind in case their condition progresses quickly. Alternatively, you can set up a Springing Power of Attorney to take effect only when they can no longer make decisions on their own behalf. This decision can be part of a larger estate planning conversation, where an Advance Directive or Living Will may also be considered to ensure you understand their wishes for medical care.

Overall, it’s important to emphasize to your loved one that Powers of Attorney are the best way for them to ensure their wishes are carried out if they become incapacitated. Many people find comfort or security knowing that these decisions are in good hands. 

Most states require that a Power of Attorney be written, witnessed, and notarized. For this reason, it is often convenient to grant a Power of Attorney while finalizing a comprehensive estate plan. You can also reassure them that they can change the person named in the Power of Attorney (the “agent”) at any time as long as they are mentally competent when they do so. 

If you have any questions regarding how to get started creating a Power of Attorney or which type might be best for your loved one, contact a Oakland Prime Mobile Notary today for direction and guidance to affordable service. 

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Power of Attorney: What You Need to Know

General and Special Powers of Attorney

A General Power of Attorney is a document under which you authorize another person to act on your behalf in a variety of situations. In contrast, a Special Power of Attorney is a document under which you authorize another person to act on your behalf in specific situations only.

A General Power of Attorney is very broad and provides extensive powers. A general statement is included which gives the Agent “full power and authority” to act on your behalf. The document then lists certain powers to make it clear that you intended to grant such broad powers. For a list, see General Powers, below.

A Special Power of Attorney document provides the Agent with only those powers that are listed in the document. For a list, see Special Powers, below.

General Powers

Broad powers granted in a General Power of Attorney can include authority to act with respect to the following subjects:

  • Real Property.
  • Tangible Personal Property.
  • Stocks and bonds.
  • Commodities and options.
  • Banks and other financial institutions.
  • Operation of entity or business.
  • Estates, trusts, and other beneficial interests.
  • Claims and litigation.
  • Personal and family maintenance.
  • Benefits from governmental programs or civil or military service.
  • Retirement plans.
  • Taxes.

In addition, optional powers include powers to:

  • Maintain and operate business interests.
  • Employ professional assistance.
  • Make gifts.
  • Make transfers to revocable (“living”) trusts.
  • “Disclaim interests” (this power can be an important estate planning tool that helps avoid estate taxes).

If providing broad powers is not desirable, a Special Power of Attorney, which can be limited in scope, may be more appropriate.

Special Powers

A Special Power of Attorney document provides the Agent with only those powers that are listed in the document, which may include the following special powers:

  • Create, amend, revoke, or terminate an inter vivos trust.
  • Make a gift.
  • Create or change rights of survivorship.
  • Create or change a beneficiary designation.
  • Authorize another person to exercise the authority granted under this power of attorney.
  • Waive the principal’s right to be a beneficiary of a joint and survivor annuity.
  • Access the content of electronic communications.
  • Exercise the fiduciary powers that the principal has authority to delegate.
  • Disclaim or refuse an interest in property, including a power of appointment.

If limiting the Agent’s power to this list is not desirable, a General Power of Attorney, which is broader in scope, may be more appropriate.

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4 Questions to Ask Your Parents About Retirement and Estate Planning

Sooner or later, it will be time for adult children to have a conversation with their parents about their retirement, will and other financial concerns. If you are at the point where your parents are getting older, it may be time to bring up their finances and how you can be more involved. While talking about money is tough, especially when you must bring it up to your parents and their future, it is important.

Here are some tips on how to get the conversation started and key questions to ask:

Ease into the conversation

Many families hold off on having such a conversation until something happens, such as a parent’s declining health or a death. At that point, it might be too late or the conversation too difficult. By having this conversation early, everyone has a better chance of being on the same page with a clear understanding of the parent’s wishes, which can mitigate stress later on.

Start the conversation by approaching what you want to talk about directly, but with kindness and respect. Let your parents know that you simply want to understand their wishes when it comes to their finances and would like to be more involved if something happens. Do not approach the conversation in a way that may come off condescending or that you know better, as this may cause your parents to be defensive.

Ask about retirement and their financial plan

If your parents have yet to retire, learning more about their retirement goals can help gain insight into their finances and wishes for their future. Asking questions about their plans after retirement, such as if they have a financial plan in place, how they want to spend their retirement or where to live is a great place to start. If they have yet to think about it, mention how speaking to a financial advisor might be helpful.

Learning about your parents’ retirement goals early also may affect your current financial plan for you and your family, especially if your parents might lean on you for financial help in the future.

Inquire whether they have a list of their accounts

If your parents have multiple accounts—like a savings account, IRA, investments, etc.—having information about them all in a safe location can simplify the process if an emergency occurs. With this in mind, it is a good idea to ask your parents if they would be okay with providing you with a list of their financial assets and the beneficiaries attached to the accounts. However, if they don’t want to share this with you now, ask if they could provide you with where they keep this type of information, the contact information of their financial advisor (if they have one) or if they could put their account information in a sealed envelope only to be opened in an emergency as a compromise.

Do they have a will and is it up to date?

Asking your parents about whether they have a will in place and who is the executor is another important piece of information to learn about when speaking to your parents about their finances. Knowing this information can better prepare you and the rest of the family if something happens. Wills also outline specific requests for the executor, such as celebrations or burial preferences, so knowing about these early can help you prepare for the specific requests if need be.

While not everyone has a will, they are a valuable document that will help ease the process once a family member passes. If your parents don’t have one now, ask them if they would be willing to meet with an estate attorney to begin the process.

Start planning early by having the hard conversations

Speaking about finances with anyone, no matter the relationship is difficult. But by starting the conversation early you may avoid confusion and headaches later. Bringing up finances, retirement goals and planning and wills earlier, can help keep you aware of your parents’ situation now and in the future.

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