Perhaps your widowed mother is beginning to have some trouble keeping her finances up to date and her bills paid on time.
She is asking for your help, and you believe the time has come to create a power of attorney (POA) for finances. However, there are two types. Which one is best for your mother?
A financial POA allows an agent, usually a trusted friend or family member, to step in and make financial decisions on behalf of the principal. Often this kind of assistance commences when the principal is no longer capable of managing the financial aspects of life. On the other hand, a POA is useful for an older person who is still mentally competent but who needs a little help with day-to-day tasks, such as balancing a checkbook or paying bills.
The durable POA
A durable POA becomes active as soon as the principal signs the document. In your mother’s case, this means that the agent she appoints can step in immediately to make decisions related to the document. The agent maintains this ability whether your mother ever becomes incapacitated.
The springing POA
The agent named in a springing POA can only assume decision-making authority when the principal becomes incapacitated. With this kind of POA, your mother would have to specify the type of event that would activate her agent’s legal powers.
Keep in mind that as the principal, your mother must be mentally capable of creating a financial power of attorney and appointing an agent. Since dementia is a possibility as a person ages your mother should not delay in establishing either a durable or springing POA for finances.