AARP Hearing Center
I got an email from a reader that set me thinking about durable powers of attorney. They’re essential to your future financial security but don’t always work the way you and your family hoped.
A durable power of attorney (POA) protects your future self. It names an agent to handle your financial affairs, such as bill paying and investment management, if an accident, illness or simple fatigue leaves you unable (or unwilling) to cope. When the agent needs to take charge, however, walls might go up.
Take the reader who emailed me. She held her mother’s durable POA. When dementia descended, the mother, in her confusion, refused to allow her daughter to act. Financial institutions won’t always accept a POA if the person who granted the power objects. Result: The daughter had to ask a court to name her “conservator” of her mother’s financial assets. In these proceedings, a judge takes evidence from the disabled person’s doctor and perhaps others, such as a social worker. The agent can act only if the judge concludes that the incapacity is real.
Similarly, you might hold a health care proxy for someone with advanced Alzheimer’s disease who won’t enter a facility. You’d have to ask a judge to name you guardian, freeing you to make medical decisions that the proxy put into your hands. Setting up a trust won’t help. Even trustees have to go to court if their assistance is refused. As you can imagine, all of this costs big money.
Ideally, the person who grants the POA will give you the reins before total dementia sets in, says attorney Hyman Darling of the law firm Bacon Wilson in Springfield, Mass. If you meet with resistance, you might propose taking over the big things, like investments or large CDs, while the grantor maintains control of a modest checking account.
