As our parents age, it is natural to worry about their well-being and financial security. In some cases, it may even be crucial. A study from the National Institute of Justice (NIJ) found older adults are more likely to be targets or victims of financial fraud. It also notes that many older adults can become vulnerable to these acts due to cognitive decline, lack of financial literacy or social isolation.
Given these risks and vulnerabilities, it is important to consider legal tools that can help protect your elderly parents. One such tool is a Durable Power of Attorney (DPOA).
What is a DPOA?
A Durable Power of Attorney (DPOA) allows an agent to act on behalf of your parent in financial and legal matters, even if they become incapacitated. This helps protect their assets when they’re most vulnerable.
The scope of a DPOA can be broad or limited, depending on your parent’s wishes. It may include powers to:
- Manage bank accounts and investments
- Pay bills and taxes
- Buy, sell or manage real estate
- Make gifts
- Enter into contracts
However, there are limitations. An agent cannot change or create a will for the principal or vote on behalf of the principal. They also cannot change beneficiary designations on life insurance or retirement accounts unless specifically authorized in the DPOA. Moreover, the agent cannot make health care decisions unless allowed by a separate health care power of attorney.
Signs it may be time to consider a DPOA
Raising the idea of a DPOA for your elderly parents can be a delicate matter. You want to ensure their well-being while also respecting their autonomy. Parents, however, may feel anxious about such discussions, viewing them as a potential threat to their self-reliance. However, certain signs show that a DPOA may benefit everyone involved. Here are key indicators to watch for:
- Frequently forgetting important dates or repeating questions
- Having progressive illnesses such as Alzheimer’s or Parkinson’s, frequent hospitalizations or difficulty with daily tasks
- Isolating, showing personality shifts or becoming increasingly anxious about finances.
If you notice one or more of these signs, it might be time to discuss a DPOA with your parents and consult with a legal professional.
Early action is key
Starting conversations about DPOAs can be challenging, but it can also encourage your parents to make critical decisions on their own terms. An attorney can help guide your family through this sensitive process.
