A frequent question at our office, particularly when a parent has dementia or Alzheimer’s, is along the lines of: I have power of attorney for my mother, but she keeps writing checks and making poor financial decisions when I’m not around. What do I do?
While Durable Powers of Attorney are an important part of a well-rounded estate planning, they do have one major shortcoming: A Durable Power of Attorney appoints an Agent to act on behalf of the Principal (e.g., mom or dad), but it does NOT stop the Principal from still conducting business on his or her own.
Set Up a Trust
If the Durable Power of Attorney authorizes you to do so, you may consider establishing a trust on your parent's behalf and nominate yourself as trustee. As power of attorney, you would transfer your parent’s assets into the trust and then manage the trust as trustee. Only a trustee can conduct business on behalf of a trust, therefore, your parent would not be able to write checks or conduct financial transactions for any assets that are in the trust.
We strongly recommend that you consult with an attorney regarding this option and whether you’re legally authorized to establish a trust on your parent’s behalf.
The next step may be to consider an adult guardianship proceeding. A guardianship proceeding will include an incompetency hearing. If the court finds your parent to be incompetent, the clerk of court will issue an order of such finding and will appoint a guardian to manage your parent’s affairs. You can then give copies of the court order to all banks and financial institutions where your parent holds accounts to notify the bank or financial institution that your parent has been declared incompetent by the court and no longer has legal authority to conduct transactions on his or her own behalf.
Are You Caring for an Aging Parent or Family Member?
As a caregiver, you know better than anyone that good help and clear guidance is hard to find.
You may be struggling to find and pay for long-term care services, hitting roadblocks and waitlists in trying to get your loved one placed in an appropriate facility, or constantly fighting with doctors, hospitals (or even other family members) because you don’t have the necessary legal or financial authority to oversee your loved one’s affairs and/or care.
Solid legal and financial planning is your answer and can help you put an end to all of the confusion and overwhelm that you currently face.