If you are able, take the time before your parents need help and while they are still functioning comfortably to ask about the "big" things. Solicit their preferences for managing financial matters or real property. Find out what treatment efforts, such as resuscitation and life support, they want and expect in the event they become incapacitated.
After you understand the issues and the options that are available, formulate a plan based on those preferences. Then consult an attorney and commit everything to writing in the following three documents:
Types of durable powers of attorney
Many people assume that, if they are only temporarily incapacitated, a spouse or an adult child can automatically make financial and/or medical decisions for them, but this is not necessarily true. A power of attorney is the formal way for your parent (principal) to give someone (agent) the authority to make decisions to act on his or her behalf. Your parent will decide how much or how little power that person will be given. Durable powers of attorney can be quite broad, giving the agent the authority over many aspects of one’s affairs, including financial, property and health care decisions, or quite narrow and specific regarding powers granted. It is not uncommon for individuals to have two or more types of powers of attorney.
A durable power of attorney goes into effect immediately when signed, and is "durable" in that it specifically directs that the agent’s power stay in place even after the principal is incapacitated. Some people choose to have a springing power of attorney. This type of power only "springs" into effect when certain conditions are met, such as the principal becoming incapacitated.
In many cases, people have separate powers of attorney, one specifically for financial and other property matters and another specifically for health care matters. In designating the agent for the financial power of attorney, the person need not be an attorney, but must be chosen very carefully. He or she will be responsible for safeguarding your parent’s property and should be expected to hold to strict standards of honesty, loyalty and candor on all matters. That person will have the authority to handle financial transactions, sell property, enter into contracts or pursue legal or insurance claims.
It’s important to understand that executing a power of attorney does not mean your parent will have to stop making his or her own decisions. It simply means another person is empowered to represent him and can make decisions, too. That person must follow your parent’s direction, as long as your parent is capable of giving directions.
In designating the agent for health care power of attorney, keep in mind this person will make decisions regarding medical treatment in the event your parent should become incapacitated. Health care powers of attorney are also known as a type of advance directive.
Types of advance directive
Healthcare-related decisions are expressed through a document that contains specific preferences for care and treatment should an individual no longer be able to speak for himself. This document can take different forms and, although every state now recognizes the advance directive, laws governing their use vary from state to state. A durable power of attorney for health care and a living will are two different types of advance directive.
Regardless of financial status, a will is essential. This document is used by the courts to transfer an individual’s property and assets after death. If your parent dies without a will (intestate), the court will decide how those assets and property are distributed based on state law, which may conflict with your parent’s wishes.
Your parent must name an executor, the person who will carry out the instructions contained within the will. Most people choose a spouse, adult child or an attorney for this task: someone who is organized, can handle the financial matters related to the estate and is trustworthy. An executor’s responsibilities include paying creditors, paying taxes, notifying Social Security and other agencies and companies of the death, canceling credit cards, closing bank accounts and the like. Your parent should talk to this person ahead of time and make certain he or she is willing to assume the responsibility.
The laws governing the preparation and execution of powers of attorney, advance directives and wills vary from state to state. Please consult with a legal professional to make certain that any document you prepare is properly executed and meets the requirements of the state your parent lives in.