When to Get Power of Attorney for a Loved One

What Is Power of Attorney?

Power of attorney gives you the legal authority to handle things like selling property, paying bills or making medical decisions for a loved one. The person granting the power of attorney is the principal. The person being granted power of attorney is the agent, fiduciary or attorney-in-fact.

Power of attorney can be limited in scope; it might grant you the right to conduct a specific real estate transaction on behalf of the principal, for instance. It can also be general and allow you to manage a wide range of financial and legal affairs. You might be able to make purchases for the principal, manage their business, collect on their debts, buy insurance or file insurance claims, make investment decisions or file a lawsuit on their behalf.

A general power of attorney sometimes covers medical decisions. However, principals can also create a durable health care power of attorney to handle their medical affairs. There's also a military power of attorney, used when an active-duty service member is deployed and needs someone to manage their affairs at home.

When a power of attorney takes effect and how long it lasts depends on whether it is conventional, durable or springing.

• A conventional power of attorney grants broad powers to an agent when it is signed, and ends when the principal becomes incapacitated and unable to make their own decisions.
• A durable power of attorney begins when it is signed and continues even after the principal is incapacitated.
• A springing power of attorney "springs" into effect only when a specific event occurs, such as when the principal becomes incapacitated. People may not agree on when someone is incapacitated, so a springing power of attorney should be carefully written to define what is considered incapacitated and who (such as a specific doctor) makes that determination.

All powers of attorney end when the principal dies or withdraws authorization.

Having power of attorney doesn't mean you have to use it. For example, your mother might grant you a durable financial power of attorney and continue managing her own affairs. But if she's hospitalized and can't pay her bills, you can take over.

How Do You Get Power of Attorney for a Loved One?

Laws regarding power of attorney vary from state to state, so it's important to follow your state laws. However, the following rules typically apply.

• The agent must be at least 18 years old and mentally sound.
• The principal must be of sound mind.
• The document must be signed and notarized with witnesses present.

Agents are usually relatives of the principal, but they don't have to be, and there can be more than one (known as co-agents). The agents may be authorized to act separately or may have to agree on decisions first. The principal can also name alternate agents in case you're unable to serve when needed.

You can find templates online and write your own power of attorney documents. However, because these documents can be complex, it's best to work with an attorney or at least have an attorney review any document you create.

When Is It Appropriate to Get Power of Attorney for a Loved One?

It's never too early for someone to include a power of attorney document as part of their estate plan. Some common reasons to get power of attorney for a loved one are:

• They are aging.
• They are leaving the country for an extended time (such as a semester abroad in college or an overseas work assignment).
• They are in the military and deploying out of state or out of the country.

Adult children often get power of attorney for their aging parents. However, many delay the process until it's too late. A person must be well enough to understand and sign a power of attorney document in order for it to be legally enforceable. If your parent has had a stroke and can't speak, you can't get a power of attorney. This can leave you without the means to help a parent at the very time it's needed most.

What Are Alternatives to Power of Attorney?

Some people may be uncomfortable granting power of attorney because they don't want to give up control of their financial decisions. Talk with your loved ones about their options. Instead of assigning someone a conventional power of attorney, they may sign a power of attorney document that only becomes effective in certain circumstances, such as if they become incapacitated. A limited or "specific" power of attorney may assign someone the ability to make decisions only for a certain period of time, or in certain areas of someone's life, such as their business-related finances.

If your loved ones are reluctant, see if they'll let you help them with their finances first. Perhaps they're willing to make you a co-owner of their bank accounts so you can help pay their bills. Even one late payment can hurt their credit, so consider setting up automatic payments.

Seniors are a common target of identity theft, so you might help your loved one request a copy of their credit report to check for anything amiss, or get alerts on their accounts to watch for any suspicious transactions. You could also consider getting identity theft protection or putting a credit freeze or credit lock on their credit report to better protect them from fraudulent accounts being opened in their name.

If the person in question is already incapacitated, they may have left instructions for what to do in their living will. Otherwise, you must go to court and ask for conservatorship or guardianship. Both can give you the right to make certain decisions on someone else's behalf.

If your loved one receives Social Security or veterans benefits and can't manage their own benefits, the Social Security Administration or Veterans Administration can appoint someone (typically a family member or friend) to do so without using a power of attorney.