Durable Power of Attorney

Power of attorney distinctions are more sensitive topics many caregivers are forced to confront; however, the alternative can lead to some extremely difficult situations with outcomes that oppose your loved one's wishes.

Estate planning includes decisions that go beyond a simple will. In fact, it is prudent to include enacting a durable power of attorney when updating or reworking estate plans with an attorney. A durable power of attorney is an important designation, and the agent has the ability to make serious financial and healthcare decisions on behalf of the person. For seniors, naming an agent and completing a durable power of attorney document is especially important. Here is what you need to know about this crucial part of estate planning.

What is a durable power of attorney?

There are multiple types of power of attorney designations. However, the most powerful and arguably the most prudent decision, is naming a durable power of attorney. This document names an agent that can make financial and/or healthcare decisions on behalf of the principal, or person naming the agent.

The durable power of attorney begins when the document is signed and continues until the principal is deceased. After death, the power of attorney is no longer valid. All financial decisions then switch to the executor of the will or to named beneficiaries for insurance purposes.

Who should have a durable power of attorney?

Durable power of attorney documents are a wise to have for people of any age. However, as seniors grow older, it can become even more important to have the documents in place, and to have the conversations with the agents named in the legal paperwork. For example, seniors who have a diagnosis of dementia will eventually become unable to pay their bills or make good decisions regarding money. A durable power of attorney will be able to access checking accounts and make those payments on the senior’s behalf. It is similar with health care decisions; someone who has had a stroke may be cognitively unable to determine if they would benefit from a risky medication. The durable power of attorney would know the wishes of the principal and be able to make decisions based on that.

Who should be named as the agent?

Choosing an agent for durable power of attorney responsibilities is an extremely personal choice. The principal may choose a spouse or adult child, or other trusted friend. According to the AARP, it is smart for the principal to also choose a second person in case the first choice for agent is unable to do it when the time comes.

The agent should be someone who is responsible and who meets state requirements. An easy way to determine if the person chosen meets state requirements is to have the person meet with the estate planning attorney. Before naming the agent and making it legal, it is wise to have the principal talk to the agent about the designation and responsibility. The agent should realize the gravity of this role and be able to ask questions about financial and health care wishes.

It is important to note that the durable power of attorney designation can be revoked by the principal at any time, as long as the principal is cognitively capable of making the decision. Power of attorney papers can be destroyed, and the agent would no longer be bound to that role.

What if my loved one can still make their own decisions?

A durable power of attorney designation does not mean that your loved one stops making their own financial or health care decisions. They continue to make those for themselves until they are unable to do so. Then, the agent steps into the role of durable power of attorney.

What is the difference between financial and health care power of attorney?

A durable power of attorney offers the option to choose agents for financial decisions and for health care decisions. A financial agent steps in for financial decisions; this is the person who will have access to pay bills out of the principal’s checking account and to manage other monetary situations. In contracts, a health care agent makes decisions about medical situations; this is the person who will determine if the principal needs to move into a memory care community or if the doctors should insert a feeding tube in the hospital.

Both agents are important, and both should have had extensive talks with the principal about their choices and wishes. While many seniors choose to have one agent for financial and one for health care, you can also choose to have the same agent for both capacities. Benefits to naming two agents to fill the two roles is a division of labor and stress. However, having one person to manage both categories of decisions can be the best choice if there are limited people in the family.

What happens if there is not a durable power of attorney in place?

If there is not a durable power of attorney in place when the principal is no longer able to make decisions, things get tricky. Without an agent named on a legal power of attorney document, the court steps in. A judge is bound to follow state laws, and often names a legal guardian to make decisions for the principal. While a legal guardian is court appointed and trustworthy, the entire process can be time consuming and expensive.

Legal guardians often charge for their services, and this money comes out of the principal’s estate. The legal guardian also does not know the principal or their wishes. This fact can be especially frustrating to loving family members or trusted friends who may disagree with choices the legal guardian makes for the principal.

What do you need to know about your parent’s power of attorney?

If you have aging parents, it is smart to ask them about their durable power of attorney situation. Encourage them to name a durable power of attorney agent (or two), and talk candidly about what could happen if they do not have one. For some seniors, naming a power of attorney can seem scary, or they may resist doing it as to not hurt anyone’s feelings. Combat these feelings by talking about the facts of durable power of attorney designations, and assure them they are able to make their own decisions for as long as possible.

If your loved one has a power of attorney, it is smart to encourage them to meet with their agent or agents a few times per year to talk about wishes. This meeting can be informal and over a cup of coffee, but is a great time to review financial or health care updates or changes.

Designating a durable power of attorney is especially important if your loved one was recently diagnosed with dementia or other serious medical condition. While your family is reeling with this new change, it is imperative that your loved one names a power of attorney so there are not complications or court appointments at a later date.

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