Caring for aging parents and loved ones is so much more than caring for their physical health. Maybe you’ve noticed that your dad is having trouble with his memory, and you’re concerned that he can’t make financial decisions anymore. Or perhaps your fiercely independent mom needs a little convincing to get her affairs in order. Do you have the tools in place to make decisions on their behalf? Have they signed a power of attorney?
The role of a caregiver is a complex one. It can be emotionally, mentally, and even physically draining on a good day (hello, compassion fatigue!). But staying organized can help minimize the daily stresses that come with caring for a loved one. To that end, Scary Mommy asked Lawrence Davidow — senior and managing partner at elder law, special needs, and estate planning firm Davidow, Davidow, Siegel & Stern, LLP — to explain how power of attorney works and its implications for caregivers.
What does power of attorney mean, and how does it work?
Power of attorney (POA) is a document where you give someone authority to make decisions for you. It’s something everyone does when getting their legal affairs in order. It can go into effect from the moment Mom signs it, or it can “spring” to life at another time when Mom is disabled or cannot act for herself. It can be limited to a specific timeline or purpose or broad — Mom can even protect her loyal pup in the document.
States have different names and concepts for certain purposes. Sometimes it’s called a medical POA and a financial POA. In New York, for example, the POA is strictly financial and the separate medical document is called a healthcare proxy.
“Everyone should have a POA as one of the four core documents,” Davidow told us. “A will, a POA, a healthcare proxy, and a living will let the world know what you’d want to happen should you enter into a terminal medical condition. With COVID-19, you want to be specific to exactly what you want your family to be able to do or not do in an emergency.”
What is a durable power of attorney?
If Mom (the principal) becomes incapacitated due to illness or injury and is unable to communicate her wishes, a durable POA allows the person appointed (the agent) to act on her behalf. The fact that it operates while Mom cannot consent or object is what makes it “durable.”
“I’d say 99.9 percent of the POA I’ve ever done are durable,” added Davidow.
It’s so important to make sure mom gives that power to someone she completely trusts. The choice is entirely hers, whether you agree with it or not.That could include:
Your flaky sister
Your annoying cousin
Your mom’s neighbor (whom you’ve never met)
Your mom’s best friend
Bank trust department
What if Mom wants both my sister and me to be her power of attorney?
Maybe your sister lives closer to Mom, but you’re more financially savvy. There are a few ways to work it out depending on the dynamics of your family.
Mom can pick you as the primary and your sister as the backup (the secondary).
Mom can pick both of you, where you both have to sign everything jointly. In other words, two signatures on everything.
Mom can pick both of you, where either one of you can act — one signature to rule them all.
What can a financial agent decide?
As long as the POA says so, it can give full authority to do everything financial, including:
Invest the money
Sell the house
Apply for public benefits such as Medicaid and veterans benefits
What can a medical agent decide?
As long as the POA says so, it can give authority to decide everything medical, including:
Medical care such as hospital care, surgery, home health care, and psychiatric treatment
Choose care providers
Decide on assisted living arrangements
The principal must be able to afford the arrangements, and the financial POA still needs to approve the costs.
What is the urgency to sign a power of attorney?
Mom and Dad cannot sign a POA when they are no longer competent. It’s too late. At that point, you have to go to court, hire a lawyer, and spend thousands of dollars — money you could be putting toward your kid’s college education budget — to get a guardianship. You can avoid that by signing a durable POA right now.
Davidow encourages people to start planning way before retirement age. “Mostly what people do is they sign one now, put it away in a drawer or folder, and when they become disabled, kids might open the drawer, take it out or go to the attorney to get the document so they can start acting for Mom and Dad,” he explained.
How competent does Mom have to be to sign a power of attorney?
Mom has been diagnosed with early stages of Alzheimer’s. Poor short term memory and constantly repeating herself. Is it too late for POA?
The answer to this question isn’t black and white.
Does Mom know who you are?
If you gave her three quarters, two dimes, and a nickel, could she add it up to a dollar?
Clarified Davidow, “You don’t have to know the president or day of the week. As people retire, it’s easy to forget the day of the week. But you have to basically have enough sense to understand your actions. ‘Yeah, I forget things, but I understand what assets I have, who my family is, and the concept that I want my daughter to make my financial decisions because I recognize that I’m not what I used to be.’ … Even if Mom thinks Nixon is the president.”
Can I download a power of attorney form online?
You can go out and get a cookie-cutter power of attorney, but Davidow doesn’t recommend it: “I can almost guarantee you won’t have all the language you may need someday.”
For example — #PROTIP alert — Davidow adds language that allows the agent to make gifts on behalf of the principal.
“Let’s say, a daughter can make gifts of Mom’s money using the POA,” he said. “In case Mom needed tax planning or Medicaid planning done, or if Mom had to go to a nursing home and we’re about to lose her house and all of her money, there are ways to save that money at the last minute by getting money out of Mom’s name and trying to protect it.”
You want the POA to work for any situation that might come up. So, it’s best to work through the process with an expert.
When does power of attorney end?
The POA ends when:
The principal passes away
You create another one, revoking the old one
By its own terms (A note that says it ends on a specific date)
Once you take on caregiving for Mom or Dad, you want the right tools to do the job well. Power of attorney is one of those tools. It will help you protect your parents’ finances and decision making.