Elder Law and Your Parent’s Finances
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- Posted on Feb. 24th, 2009
A power of attorney (POA) for finance allows your parent to appoint a trusted person as his agent to make financial decisions. Financial POAs are often created as part of an estate planning package by an elder law attorney. If your parent has not signed a POA for finance, the document may be prepared separately. If you cannot afford elder law attorney fees, check with the local senior center for free or low cost legal resources.
Many people ask why a POA for finance needed. Can’t my parents just add me to their bank accounts? Adding your name to your parent’s account makes you a part owner of the account. Your debts could put your parent’s assets at risk.
When your parent dies, ownership of the account goes directly to you, bypassing the intentions of their will or trust. To sell property or investments for your parent, you must be their agent.
A POA for finance is a proactive elder care tool. Your parent is voluntarily appointing you to manage his financial affairs. Elder care law mandates that your parent understand the meaning of the POA. If your parent becomes ill and lacks the mental capacity to sign, you will need to get a conservatorship or guardianship through the courts with the help of an elder law attorney.
Elder law regulations spell out how you are to handle your parent’s money. Your obligation as your parent’s agent is to serve their financial interests with integrity and transparency. Using your parent’s money for your own benefit violates elder care law and is considered financial elder abuse.
Maintain separate accounts for your parent’s money and keep accurate records of how the money is spent for parent care expenses.
One of my client’s was able to grow her mother’s nest egg to pay for three years of in home care when managing her mother’s day-to-day finances. Fulfilling her role under elder law regulations to protect her mother’s financial interests, she stopped her perpetually broke brother from “borrowing” money from their mother.
In the hands of a loving and responsible family member, a power of attorney for finance is a powerful tool for delivering parent care.
Are you serving as your parent’s agent for financial issues? What have been your biggest challenges?
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