As your loved one ages, a power of attorney is an important part of making sure you have a plan in place for long-term care. While this is a vital consideration, it can also be a confusing one. You may have questions about what a power of attorney is, when it may be needed, and how it works. Because this legal documentation is so important to securing your mom or dad’s future, we’ve put together the key facts you need to know as well as some common misconceptions you’ll want to understand.
What Is a Power of Attorney?
A power of attorney gives someone the authority to act on behalf of another person in legal or financial matters. Seniors often designate a power of attorney when they reach retirement age so that they can decide who will handle their affairs if they face an illness and become unable to act on their own behalf. There are several different kinds of power of attorney, but these are among the most common:
General Power of Attorney—General power of attorney gives a broad range of responsibility to the individual acting as the agent. These responsibilities may include handling finances, selling property, settling claims, and filing tax returns.
Limited Power of Attorney—Limited power of attorney grants the agent the authority to perform designated actions in specific circumstances, such as handling bank transactions on behalf of a person who has become mentally unable to do so.
Durable Power of Attorney—A durable power of attorney remains in effect for the remainder of the individual’s lifetime unless intentionally cancelled, even if health circumstances change.
5 Misconceptions About Power of Attorney
Designating someone as your power of attorney is not without risk. It’s important to choose someone your mom or dad trusts implicitly so they know their wishes will be carried out. It’s also important that the agent understands the responsibility and has agreed to it.
If you are the caregiver for an elderly loved one, talk with them about the power of attorney and make sure you both understand the process. Let’s take a look at five common misconceptions about power of attorney.
Fact: A will is NOT the same as a power of attorney, and they do not accomplish the same goals. A will takes effect after a person’s death, while a power of attorney gives someone the authority to make decisions and act on your behalf while you are still living, but unable to act for yourself.
Misconception: The time to get a power of attorney is when your loved one becomes legally incapacitated.
Fact: Unfortunately, once your mom or dad is legally unable to make decisions on their own, it is too late to have them designate a power of attorney. A power of attorney is a legal document requiring your loved one’s signature, and that signature must be obtained while they have the mental capability to make a legally binding decision.
Misconception: Creating a power of attorney document on your own is a good way to save money.
Fact: While it’s true that you can download a form and fill it out yourself, this is risky for several reasons. The power of attorney document needs to cover all the specifics unique to your situation, and it must meet all the legal requirements for your state. If something is left out, the power of attorney may not be binding or it may not grant the authorities you need. It is always wise to consult an attorney who can draft the document for you.
Misconception: If your senior loved one signs a power of attorney, they will lose the ability to make their own decisions.
Fact: The power of attorney can be written so that it only takes effect when your mom or dad has lost the ability to act for themselves. It can even include a stipulation that a physician must declare your family member physically or mentally unable to make decisions.
Misconception: A durable power of attorney extends after death.
Fact: All power of attorney authority ends at time of death. At that time, the individual’s will takes effect and designates someone to oversee any necessary actions regarding the estate.
How to Use Power of Attorney to Protect Your Loved One
A power of attorney can and should be a layer of protection for your senior family member, not a loss of independence. It ensures that even if your mom or dad loses the ability to make decisions or handle financial responsibilities, someone they trust will act for them in their best interests. The keys to using a power of attorney effectively are:
- Set it up with your loved one while they are still in good health.
- Make sure it expands or limits authority according to your mom or dad’s wishes and needs.
- Consult an attorney about how to create the document so that it meets all requirements in the state of Ohio while also clearly designating responsibility.
Power of attorney is an important step to make sure you have the authority to make financial decisions about paying for your senior family member’s long term care needs. It’s one of the best ways to ensure that your mom or dad receives the care they need no matter what happens with their health.
If you’re interested in learning more about the financial options available to manage the cost of home care, download our free Ways to Pay for Home Care guide.