We see recurring confusion about what it means to be appointed with authority over money in a Durable Power of Attorney (DPOA) for aging parents.
A durable power of attorney is frequently signed by aging parents. However, sometimes the elderly can misunderstand exactly what that entails, especially when it comes to the authority of the person given decision-making powers.
The person appointed (called the agent or attorney-in-fact) is also typically an adult child. Nevertheless, he or she may be unaware of the appointment or does not grasp what is permitted and when it is permitted. It can be very confusing.
Forbes's recent article entitled “Let's Get Clear: What Does It Mean To Be Appointed Aging Parents' Power Of Attorney?” provides the answers to three frequently asked questions of many heard from families.
Question: Can my father, who's in charge of our family finances but now has dementia, revoke his DPOA that he signed years ago and name a child to take over managing his money when he needs help?
Answer: Perhaps. If Dad has dementia, he needs to be evaluated by a doctor to see if he still has the capacity to make financial decisions. This is a legal determination with help from doctors and particularly psychologists, who can perform the evaluation and give standardized test results. If the parent is found to have financial capacity, he is permitted to revoke the durable power of attorney at any time. However, if he doesn't have mental capacity, he's no longer legally capable of revoking the document.
Question: What if my mother is found to be incapacitated for financial decisions? If I'm the appointed agent on the DPOA, when can I use this authority?
Answer: Provided you've met any requirements detailed in the DPOA document itself, you can immediately take over financial authority. Some durable power of attorney documents require that a doctor or even two doctors must say the parent no longer has capacity before you can act. Some durable powers of attorney say the document is effective immediately. The agent's authority is contained in the document.
Question: Am I allowed to keep my father from recklessly giving away money or making imprudent decisions with his wealth, if I'm the appointed agent on his DPOA?
Answer: Yes. Usually, the durable power of attorney gives the agent full authority over all financial matters.
Reference: Forbes (June 22, 2021) “Let's Get Clear: What Does It Mean To Be Appointed Aging Parents' Power Of Attorney?”