The Denver based National Endowment for Financial Education reports that nearly every family in the United States has dealt with mental aging issues. Americans now live longer than ever before. However, "with aging comes a high probability that mental decline can occur." Nevertheless, many American families have avoided having a discussion about what will happen in the event that an elderly family member becomes afflicted with mental incapacity. A survey by the NEFE found that seven out of 10 adults have difficulty opening a dialogue about who will make financial decisions on behalf of an aging family member who becomes mentally incapacitated.
Since no one has any assurance of being immune to a loss of mental acuity as they grow older, adult children are rightly concerned with whether their aging parents have an estate plan in place to protect their assets. One of the basic estate planning tools is a financial power of attorney. The Wall Street Journal has referred to a power of attorney as being "a time-tested method to protect assets." A financial POA can help safeguard both the financial well-being of senior citizens and the legacy which they may wish to leave to their heirs.
As explained by the Colorado Bar Association, a financial POA gives an agent the power to manage a person's finances and property. In the event of incapacity, the agent steps in to make financial decisions on behalf of the incapacitated person without the necessity of having to go to court to obtain a guardianship or conservatorship. A person who executes a POA in advance of incapacity keeps control over the decision of who they desire to make financial decisions on their behalf.
While it is only reasonable that adult children would wish to make sure that their aging parents' affairs are in order before incapacity strikes, great care should be taken in broaching the subject of estate planning with one's parents. As noted by the NEFE, senior citizens often value their privacy and may be highly reluctant to discuss their finances. Children need to approach a discussion about estate planning with great respect and a sincere desire to help ensure that their parents' financial and estate planning wishes are carried out.
Selecting a POA
Careful consideration should be given as to who should hold one's financial power of attorney. Many people tend to choose a spouse, partner, friend or relative to act as their agent under a POA. AARP advises that whoever is selected needs to be honest and trustworthy. Importantly, the person selected should have the proper skill set for managing money. It is best to avoid selecting someone who is in bad health or who is inexperienced in handling financial matters.
Caring.com suggests that if a person's finances are complex, or he or she owns a business, the agent chosen should be someone who is financially sophisticated. Finally, it is wise to select as an agent someone who is likely to remain committed to performing the tasks of a POA in the event that the incapacity lasts for a considerable length of time.
Seeking legal advice
If you have elderly parents who have not yet put in place an estate plan, you should encourage them to contact a Colorado attorney experienced in estate planning as soon as possible. An attorney can help devise an estate plan which will protect your parents' financial interests and ensure that their estate planning objectives are carried out.