Any form of impairment can affect financial judgment — but doesn’t necessarily mean the ability to carry out financial decisions. However, more serious forms of cognitive impairment could completely erase the ability to handle financial affairs, meaning you will need someone to take over financial decisions. Elders are at risk of finance abuse especially as they age - since caregivers could take advantage of their impairment. Therefore, it’s important to make certain decisions now such as power of attorney.
As part of Finance Literacy Month, we have provided information about starting to secure your legacy, outlining the roles and responsibilities of being an estate executor, and sharing insights into trusts and wills. To conclude our series, we will share details about important decisions such as power of attorney, guardianship and conservatorship.
Here are some frequently asked questions about these topics:
A power of attorney allows a designated person of your choice to make financial, personal, and/or medical decisions for you in the event that you are no longer able to. This would include daily/monthly bill paying, estate and investment and money management, sign consents and/or releases with hospitals or doctors and end of life decisions.
Durable power of attorney for health care (definition found in the book The Art of Dying Well: A Practical Guide to a Good End of Life pp 28): appoints a medical advocate or decision maker (proxy, medical power of attorney) to speak for an individual when unable to make decisions about their health or care
Financial Power of Attorney is a document that authorizes your agent (a person you choose) to manage your financial affairs if you become unable (or unwilling) to manage them yourself.
Limited power of attorney is a legal form that confers a person's authority (or “power”) regarding real estate and personal property to an agent for a specific period of time and/or event. The powers granted involve the sale, purchase, and/or maintenance of real or personal property.
Medical power of attorney is a legal form that authorizes your agent to make health care decisions for you if you become incapable of making those decisions yourself.
Depending on Where you live, medical POAs might also be called:
Almost anyone you trust over the age of 18, this can be:
-Friends or family
-Attorney or licensed professional fiduciary
-Primary physician (medical POA)
-Financial professional (financial POA)
Anyone considering having a Power of Attorney drafted should seek the guidance of a legal professional to make sure the documents are prepared in accordance with their local laws.
Guardianship means obtaining the legal authority to make decisions for another person. A “guardian” is the person appointed by the court to make decisions on behalf of someone else. The person over whom the guardianship is granted (the child or the adult) is referred to as the “protected person."
A guardianship may be needed over a child if there is no parent available to care for a child. A guardian over the child's estate may be needed if the child inherited assets (for instance, life insurance or cash accounts). This protects the assets until the child is an adult.
A guardianship may be needed over an adult if the adult is incapacitated, meaning the person is unable to take care of himself or herself due to mental illness, mental deficiency, disease, or mental incapacity.
Adults can also be under Guardianship of they are unable to take care of himself or herself due to incapacity. In some states, Adult Guardianship is called Conservatorship.
A lawyer can help with power of attorney administration in several ways, including: