Planning for the future is crucial when a loved one is diagnosed with dementia.
As dementia progresses, the person will eventually lose the ability to manage their own affairs about finances, healthcare, and other important matters.
Establishing a POA early provides reassurance. It ensures a trusted individual has the legal authority to act on the person’s behalf when that time comes.
In the United States, a power of attorney (POA) is a legal document that allows someone (called an agent or attorney-in-fact) to act on behalf of someone else (the principal).
This article explains how a person with dementia and their family can use a POA to plan for future care and financial matters, and what happens if legal plans are not in place.
In other words, a power of attorney document lets you appoint someone you trust to act on your behalf if you become unable to manage your affairs.
The person granting the power is called the principal, and the person named in the power of attorney as the agent can be a trusted family member or friend.
For example, an older adult might choose an adult child or other trusted relative as their attorney to make decisions if needed.
In effect, this document gives the attorney the power to make decisions on the principal’s behalf when the principal cannot.
POA can be broad or limited in scope.
Some POA documents give someone the power to make all personal and financial matters for you.
Others are limited to specific tasks or time frames.
Crucially, a durable power of attorney remains in effect if the principal becomes mentally incapacitated.
Most older adults use a durable POA for broad financial authority. There are also specialized types, like a health care POA, which focuses on medical choices.
Note: In some countries (such as the UK), a similar tool is called a lasting power of attorney. In the U.S., the term durable POA is used for documents that stay valid even if the person can no longer make decisions.
Why Is Power of Attorney Important for Dementia?
Dementia (including Alzheimer’s disease and other types) causes a decline in mental capacity over time.
Early on, the individual can still handle their affairs with support. However, as dementia progresses, memory loss and confusion (symptoms of dementia) worsen. Eventually, the condition will incapacitate the person’s ability to manage their own finances or medical needs.
They may no longer be able to manage money, healthcare, or daily life.
Having a POA in place means someone is legally ready to make important decisions on the person’s behalf when needed.
Without a POA, families may face legal hurdles. No one automatically has the right to manage an adult’s affairs, not even a spouse or child.
For example, if a parent with dementia has not signed a POA and later loses legal capacity, their loved ones cannot access accounts or consent to medical treatment on their behalf.
Instead, the family might have to go to court to seek guardianship – a process that can be costly and time-consuming.
By acting early to set up a POA, families ensure the person’s wishes are honored and avoid unnecessary legal battles. (Acting early is crucial – obtaining power of attorney when the disease is already advanced is far more difficult.)
It also gives that person a voice in choosing who will help them, ensuring decisions will be in their best interest.
Benefits for the Family and Individual
- Planning ahead: Establishing POA soon after a dementia diagnosis lets the principal participate while they are still able to understand their choices. This early planning is part of good long-term planning for aging.
- Avoiding crisis: A POA prevents delays in care. If an emergency happens and the person is no longer responsive, the agent can step in immediately to help.
- Trusted decision-maker: The principal can choose a trusted relative or friend as agent. Often this is a close family member. Knowing a trusted person will manage things provides reassurance that decisions will be what’s best for your loved one.
- Comprehensive support: You can set up separate agents for different roles. For instance, one person might handle financial matters while another handles health care. This ensures that both medical and financial decisions are covered by knowledgeable helpers.
Types of Power of Attorney for Dementia Care
There are different types of POA documents to cover various needs.
For someone living with dementia, the two most relevant types are (1) a financial POA and (2) a health care POA.
It is often wise to set up both, to cover financial matters as well as medical care.
Financial Power of Attorney (Managing Finances)
A financial POA gives an agent authority to handle the principal’s financial affairs.
This can include paying bills, managing bank accounts, investing money, and handling property or other financial issues.
A durable POA for finances remains effective even if the person is cognitively impaired.
For example, an elderly parent might appoint an adult child to manage their bills once they cannot do it on their own.
The agent has a duty to use the principal’s funds for the principal’s benefit and must act in their best interest.
The POA gives someone the legal authority to act, but until that point, the principal can still manage their own money.
Financial Decisions Covered: A financial POA typically allows the agent to handle financial affairs such as:
- Paying ongoing expenses (mortgage, rent, utilities, medical bills)
- Managing bank and investment accounts
- Filing taxes and dealing with the IRS
- Managing real estate (buying, selling, or maintaining property)
- Handling insurance and benefits paperwork
These powers can be broad or limited, depending on how the document is written. It is important to discuss which powers are granted when drafting the POA.
Health Care Power of Attorney (Making Medical Decisions)
A health care power of attorney (also called a health care proxy or medical POA) allows an agent to make medical decisions about your care if you are unable to make those decisions yourself.
This type of legal document is also called an advance directive and focuses on healthcare preferences.
The agent (health care attorney-in-fact) will work with doctors to ensure you get the treatment you would want.
For example, the agent can consent to or refuse medical procedures, choose doctors or care facilities, and make decisions about your day-to-day healthcare needs.
Having a health care POA ensures that someone the person trusts will make decisions on their behalf, guided by the person’s values and previously expressed wishes.
Without it, family members might disagree or doctors might not know who should decide critical issues (for instance, choices about surgery or life support).
When and How to Set Up a Power of Attorney
It is vital to set up a POA before the individual with dementia loses mental capacity. Once the person is no longer able to understand or sign legal forms, it’s too late to sign a POA.
That’s why experts recommend creating these legal documents in the early stages, soon after the diagnosis of dementia.
A person with mild dementia can still sign a POA as long as they are competent to sign – meaning they are able to understand what the document is and what authority it gives.
Steps to Set Up a POA:
- Discuss wishes and roles: Have a conversation with your loved one about their wishes and who they trust to handle decisions. The person with dementia should choose their agent if possible. This is often a close family member who is responsible and understands the person’s values.
- Consult an attorney: It’s wise to get legal advice from an attorney who specializes in elder law or estate planning. They can ensure the documents meet state laws and cover all necessary powers. An estate planning or elder law attorney will know what language to include so the POA is valid and effective.
- Draft the documents: Work with the lawyer (or use state-provided forms) to write the POA paperwork. Clearly state whether the POA is durable and what powers the agent will have. In some cases, you might have separate documents for financial and healthcare POAs.
- Sign the documents properly: The principal must sign the POA while they are mentally competent. Most states require either notarization or witnesses for a POA to be official. The American Bar Association suggests having witnesses present to confirm the person was of sound mind when signing. Make sure to follow your state’s requirements (some require both a notary and witnesses).
- Distribute and store copies: Once signed, give copies of the POA to key parties. The agent should have an original or certified copy. Doctors, financial institutions, and any relevant family members should also know that the POA exists. For a health care POA, the attorney and health care professionals involved in care should have copies. Store the original in a safe but accessible place.
By following these steps, you can ensure it is set up correctly and legally.
It’s important to do this before the person loses capacity.
If you wait too long and the person no longer understands the paperwork, you will need to consider other options like guardianship.
How to Get Power of Attorney for a Parent or Loved One
Many adult children wonder about getting POA for an aging parent.
You cannot simply take over this authority; your parent must agree to name someone as their agent by signing the POA document.
Begin the discussion as early as possible, preferably right after the diagnosis.
Emphasize that having a POA will ensure their wishes are followed when they can’t make decisions for themselves.
If your parent is still competent, accompany them to a lawyer to draw up the paperwork. This conversation might be difficult, but it’s in their best interest to plan ahead.
If your parent is already in mid- to late-stage dementia and cannot understand what a POA is, then it’s too late for them to sign one.
In that case, you would have to pursue guardianship through the courts instead of a POA.
Getting a POA early will avoid the need for court intervention and give your family more control over the situation.
Guardianship (Court-Appointed Authority)
If a person with dementia becomes unable to manage their affairs without a POA, family members may need to seek guardianship or conservatorship to gain legal authority to manage the person’s affairs. (The specifics vary by state – some states use “guardianship” to cover both roles.)
Obtaining a guardianship is much more involved than preparing a POA.
It can require filing petitions, doctor evaluations of the person’s mental capacity, court hearings, and ongoing reporting to the court about how decisions are being made.
The person with dementia loses more autonomy under guardianship because the court-appointed guardian or conservator can make decisions that the person cannot overrule.
This is why having a POA in place is usually preferable – it avoids the need for courts and lets the individual choose who will help them.
Comparison of POA and Guardianship:
| Aspect | Power of Attorney | Guardianship |
|---|---|---|
| Who initiates? | The individual (principal) while competent. | Family or another party via a court petition. |
| Who selects the decision-maker? | The principal chooses and appoints someone (agent) in the POA. | A judge appoints a guardian if needed. |
| When it takes effect | Can take effect immediately, or only upon the person’s incapacity (if specified in the POA). | Only after the court process, once the person is legally declared unable to manage their affairs. |
| Scope of authority | Defined by the POA (can be broad or limited; often separate for finances and health care). | Determined by court order (may cover all personal and financial areas of life, or specific areas). |
| Oversight and control | No court oversight; the agent must follow the principal’s wishes and can be changed by the principal while competent. | Court oversight is required. The ward cannot easily change the guardian without court approval. |
| Effort and cost | Simple paperwork (often with an attorney’s help); minimal ongoing cost or bureaucracy. | Formal legal proceedings; court fees, attorney fees, and ongoing reporting make it more costly and time-consuming. |
| Best used when | Planning is done before incapacity (e.g., early in a dementia illness) for seamless transition. | Last resort if no valid POA exists and the person is already incapacitated. |
As shown above, a POA is easier and more flexible, while a court guardianship is a backup if no POA was set up in time.
If you must pursue guardianship, consider consulting an elder care attorney to navigate the process. The appointed guardian must always act in the ward’s best interests.
Frequently Asked Questions
Q: Can someone with dementia still sign a POA?
A: Yes. In the early stages, a person with dementia can still sign a POA, provided they have the capacity to understand what it means.
In other words, early on dementia can still allow a person to legally authorize an agent, as long as they comprehend the document.
This is why it’s critical to arrange the POA soon after a dementia diagnosis. If the person is already too impaired to make a decision or to understand the paperwork, they are not considered competent to sign, and a POA would not be legally valid.
Q: What if we didn’t get a POA set up in time?
A: If the person is already unable to make decisions, the only option is to petition the court to appoint a guardian.
A judge may then appoint a trusted relative or friend as guardian to act on the person’s behalf.
Keep in mind that guardianship is more restrictive than a POA and involves ongoing court oversight.
Q: Does a POA cover both finances and health care?
A: Not automatically. Generally, you need to set up separate POA documents for financial matters and for health care, or use an all-in-one form if your state offers one.
Financial POA and health care POA complement each other. Together, they ensure someone can handle the person’s health care and finances.
Some states allow a combined medical/financial POA, but often they are done separately.
Q: How is a POA different from a living will?
A: A POA appoints an agent to make decisions when you cannot. A living will is a document where you state your wishes for end-of-life care (such as life support or DNR preferences).
With a health care POA, the agent uses the living will as a guide when making health decisions.
Both are important: the POA names who will decide, and the living will states what should be decided about critical treatments.
Q: Can a POA be changed or revoked?
A: As long as the principal is still mentally competent, they can change or cancel (revoke) a POA.
It’s best to put any revocation in writing and notify all involved parties (agents, banks, doctors).
If you want to change agents or update the POA, you would create and sign a new POA document.
The old one should be destroyed to avoid confusion. If the principal has already lost capacity, they cannot revoke the POA; however, a court can revoke or replace an agent who is misusing their authority.
Conclusion
Setting up a POA allows a trusted person to step in and make decisions about your care, your finances, and other needs when you are no longer able to do so.
It gives someone you trust the power to act on your behalf, ensuring your wishes are respected.
For families, having these legal and financial plans in place provides peace of mind.
It is far better to sign a power of attorney while competent than to leave matters until a crisis when a court-appointed guardian might be needed.
In summary, act early. If you or a loved one has been diagnosed with dementia, consult an elder law attorney to establish power of attorney and other advance directives.
This proactive step can ensure the best outcome for the person with dementia and their family, and it provides confidence that future decisions will be handled according to their wishes.
