Caring for a parent? Get a power of attorney

Believe it or not, there was once a time where you could walk into a local bank branch or doctor’s office and talk to someone that maybe you knew or had a good working relationship to help you out. 

Unfortunately, that is no longer the case. 

In a world full of anonymous avatars, online scams, and deepfakes, companies and financial institutions must take pains to validate who you are and your legal capacity to speak on behalf of your parents and take action. The easiest passcard to open doors and empower yourself to make decisions on behalf of our loved ones is the power of attorney document. 

What is power of attorney?

A power of attorney (POA) is a legal document that grants one person, several persons, or a legal entity the authority to make financial decisions or health-related decisions on behalf of another person. The POA document becomes relevant when a person is unable to make decisions due to cognitive decline or other health-related issues.

A POA gives caregivers the authorization to pay bills, manage investments, facilitate property sales, open/cancel accounts, and handle banking tasks, ensuring financial responsibilities are handled seamlessly. It also allows caregivers to make health-care decisions. 

We are often told the most important legal document we should get prepared is our will, and it is an important document… when we enter the Great Beyond. As long as we are still breathing—and, more specifically, when we lose our ability to think for ourselves and function independently—the POA is like a pass for people we trust to take actions on our behalf that we trust will be in our best interests financially and health-wise.

The POA doesn’t get enough love. When I went many years ago with my parents to get our wills prepared, the lawyer gave us another couple of documents that he recommended we all sign, which I’d never heard of at the time. It was the POA documents. We thought nothing of it and we signed them, never thinking how profound an impact those documents would have on my life and ultimately my father’s life. I sometimes stop and wonder how I would have been able to do what I have been able to do managing my father’s finances and his health-care needs without them. 

While there are procedures that can enable you to represent your parents without a POA, the reality is they are immensely time-consuming, require an abundance of documentation to validate, and involve numerous, onerous back-and-forths with companies that each have their own specific procedures for vetting. 

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How power of attorney works

You can designate a single person, multiple persons or an entity to be your POA. If you wish to designate more than one person (for example your siblings), the POA should specify that your representatives be named joint or severally. This means that any decisions made on your behalf must be made as a group and everyone must sign off on the decision collectively (joint) or any person among the group can make the decision on their own (severally).

This is important from a logistical perspective; if the people you designate POA live in different locations or away from you, having a severally provision in the POA gives them more flexibility in authorizing actions in a more timely manner. In other situations, family dynamics may warrant decisions be made as a group. In my case my father declared myself and my mother as POAs joint and severally, so I was able to make quick decisions independently. My mother’s health was not the greatest, plus I was living in Toronto and my parents were living in Ottawa. 

There are several POA documents that can be prepared. The most common are power of attorney for personal property and power of attorney for personal care. 

The POA for personal property gives the attorney (person/people you want to represent you) authority to handle financial transactions and make business decisions on your behalf. In the case of my father, I recently sold his home in Ottawa as his POA for personal property and facilitated all the decisions and actions on his behalf, which included listing the property, signing off on all agreements, and cancelling his accounts for home insurance, utilities, cable, and home phone. 

Complicating things, the closing date was delayed and I had already cancelled all of these accounts, most significantly his home insurance. I had to call back the insurance company and request for the policy to be extended. Because I was added to my father’s account as a POA and provided the POA document, the agent was able to extend the policy on the spot. If I didn’t have that document, the policy would have been cancelled. If something were to have happened to the house, my father would have been on the hook for the costs.  

Varieties of POA

There is also a POA for personal care document, which gives the attorney authority to make medical and care decisions should the elderly party become incapacitated. These could include possible end-of-life decisions and Do Not Resuscitate (DNR) decisions. If you enter a cardiac arrest while in the hospital, for example, the DNR means you authorize the doctors and staff to stop trying to save you and essentially let you die. As cruel as that sounds, it can be a decision that eases the person’s suffering and lets them pass away in peace.

As my father’s cognitive abilities steadily declined, I had to make decisions ranging from approving medical tests to making appointments and making decisions on selecting long-term care homes. In the case of my mother, she suffered a stroke and reached a stage where she was incapacitated. As she designated me as her POA for personal care, I had authorization to make decisions with respect to her health on her behalf, which included a decision to authorize the doctors to intubate her. 

A lawyer can create a POA document for you, which you sign off and are provided a copy. In our internet age, there are cheaper online templates that you can be purchase and generate. Still, care should be exercised in ensuring all elements within the document remain legally valid.

Once signed off, the original signed version stays in the hands of the lawyer. If a situation arises where your parent’s POA needs to be exercised, you should request that their lawyer provide a notarized copy of the POA or get a notary to authorize the authenticity of the POA, as some companies will want a notarized copy. Ask the lawyer to provide 10 to 15 hard copies as there will likely be a laundry list of companies and institutions you will need to interact with. 

Your responsibilities as POA

When you are acting as a power of attorney, you will need to keep and maintain detailed records of all transactions and decisions taken. It is very easy to get overwhelmed tracking everything; however, now that most transactions are undertaken online, any receipts, statements, and confirmations can be kept digitally. A good electronic filing system setup on a cloud platform is worth considering. In my case, I kept any e-documents in Dropbox and it has come in very handy when you need to suddenly produce documents when engaging with hospitals or banks. 

The POA document remains valid as long as the person is living, or if the person changes or revokes it or if a court invalidates the document (usually because the representatives designated can no longer carry out the responsibilities and there is no successor specified). 

Based on my experience supporting my father and, later, my mother, I strongly feel that having a power of attorney document set up for your parents and yourself is a default requirement to ensure both their and your financial and health-related needs are met. Just as importantly, it helps better manage the burden that your caregivers are already facing. 

Read more about retirement finance:

• What’s more important: your wealth or your legacy?
• From RRSP to RRIF—managing your investments in retirement
• Having a financial plan more than doubles your retirement confidence
• What is the Canada Pension Plan death benefit?

About Aman Raina, MBA

Aman Raina is an Investment Coach at Sage Investors and the founder of Aging Parent Finances. He teaches and guides people how to make more successful investment decisions so that they can achieve financial freedom with confidence.

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