Do I Need a Power of Attorney for My Parents? – Here’s What You Should Know

As our parents age, we are often faced with unexpected new responsibilities we hadn’t planned for. This often includes making pivotal decisions about health care, living arrangements, and financial management for our elderly parents.

If you add this to our already overwhelming current responsibilities, especially if you have kids of your own to take care of, you’ll want to plan ahead for this inevitable responsibility!

One crucial step in this caregiving journey is establishing a Power of Attorney (POA).

What is a Power of Attorney?  

A POA is a legal document granting authority to make decisions on behalf of someone if they’re unable to do so themselves. This can include managing bank accounts, overseeing investments, or handling property matters.

But please understand that this power is active while they are alive and it STOPS the moment they pass away. I warn you of this because as a financial advisor, I’ve had children that act as power of attorneys call me and request a distribution from the parent’s brokerage account to pay for funeral costs – and unfortunately, I’ve had to say “I’m sorry, I can’t do that because the POA is no longer valid”. This is why it’s so important to pre-plan for health issues and death.

Kids with grandparents

Initiating the conversation

Discussing financial matters can be an uncomfortable issue, but it’s a necessary conversation because if not done proactively, you’ll be doing it reactively.

Approach it with respect, highlighting the importance of being prepared so their wishes are followed, their legacy is protected, and there is no confusion amongst siblings. This is simply a back-up plan in case they cannot handle decisions or transactions themselves.

Drafting the POA

Work with a legal professional to ensure the POA respects your parents’ wishes and follows state laws. There are also online legal services that offer a cheaper option but you have to make sure the company is reputable and you fully understand what’s being decided on your power of attorney paperwork.

You can also ask your financial advisor for help. I have many clients come to me and ask my opinion or for clarification on some of the questions asked in the paperwork.

The Legal Steps

Once a POA is drafted, ensure it’s legally recognized by having it notarized. Store it securely and inform key family members of its location and the responsibilities it entails.

Remember, a POA does not replace a will or estate planning; it’s part of a broader plan to care for our parents. Estate planning is also crucial and should be discussed with your parents, a financial advisor and attorney.

Be proud – you’re thinking ahead. 

Stepping into the role of a financial caretaker with a POA is a significant act of love and financial responsibility. It allows us to protect our parents even when “life” happens!

Disclaimer: Legal services are not offered by Money Mindset Wealth Management, LPL Financial or affiliated advisors. We suggest that you discuss your specific situation with a qualified legal advisor.

* The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision. Investing includes risks, including fluctuating prices and loss of principal. No strategy assures success or protects against loss.

show less

Leave a Reply