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If you can’t make financial decisions, who should make them for you? That’s the simple premise behind creating a Power of Attorney. But that simplicity hides a very important question: when should that person be able to make decisions? The options are now, or later, when something specific happens. Something “specific” usually means being declared incompetent. The process of finding someone incompetent, either through the courts or two independent physicians is typically a high threshold to meet.
Risk of Abuse
With an aging population that is more mobile and more connected than ever, the possibilities of elder abuse skyrocket. All too often, the people who are supposed to be looking out for their parents or elderly relatives are the ones who abuse the relationship. This concern over the risk of abuse leads some attorneys to recommend a springing power of attorney.
Assistance When You Need It
The other concern is the twilight of ability. When sight and mental quickness decline with age, a parent can certainly appreciate, or require the assistance of someone they trust. This is where a springing power comes up short. If an aging parent isn’t at a point where a doctor will say the parent is incapacitated, the trusted child won’t have any ability to assist. That is why I recommend that my client’s pick an financial decision maker that they trust, and choose to have a power of attorney take effect immediately.
Limits of the Power of Attorney
This drama played out in a recent Chicago Tribune article that addressed a reader’s question: what could a son do when his father is giving extravagant gifts to the father’s new girlfriend? The answer was that really he could do nothing without showing that his father was incompetent. The reality of that situation was simply that it would be very difficult for an outsider to determine who was right – is the son concerned for his father’s financial well-being, or his own inheritance? While his son might be right to be concerned, the courts are going to err on the side of finding a competent adult making his or her own informed decisions.
Either way you choose, the important thing for any adult is to have a backup financial and medical decision maker in the event that they can’t make those important decisions for themselves. And, as time goes on, that you review your choice of agents – maybe it’s time to appoint someone else.