Understanding Powers of Attorney to Protect Seniors

By Sam Kunjukunju

November, known for Veterans Day, elections and Thanksgiving, is also National Family Caregivers Month. Caregivers represent a sizable proportion of America. The Centers for Disease Control and Prevention reports that one in five adults is a caregiver. They are often unpaid individuals, typically close relatives, friends or neighbors who may assist others with household tasks, financial matters, activities of daily living and medical care. About 40 percent provide care for a parent, and 30 percent of all caregivers provide care for at least 20 hours a week.

As former first lady Rosalynn Carter aptly noted: “There are only four kinds of people in the world: those who have been caregivers, those who are currently caregivers, those who will be caregivers and those who will need caregivers.” Her words ring true now more than ever. With the baby boomers aging into retirement, coupled with increased longevity, the need for caregivers will only continue to grow.

As people advance in age, they are more likely to experience one or more chronic conditions. They may also be more prone to suffer from mild cognitive impairment or dementia. These factors increase the disability risk for elderly people and their need to rely on others for help. Often, however, families are not prepared to provide the support that older adults require as they may lack the information or authority to meet their relatives’ needs. This is especially true when it comes to financial matters.

Americans do not like to talk about money. A Lexington Law poll found that we are more likely to talk about any other subject—including romance, politics and religion—than money. But frequently, a serious and sudden health event takes place, and no one knows how to access a parent’s finances to do simple things like pay household bills. However, there are steps that families can take beforehand that can help caregivers save time and energy when stressful events arise.

Authorizing powers of attorney is a critical step to help families prepare for potential caregiving needs. A power of attorney is a document that provides an individual, known as the agent or attorney-in-fact, with the legal authority to act on another person’s behalf, i.e. the principal. Powers of attorney fall into two broad categories: Principals can grant agents authority to handle financial and legal matters or authorize agents to make healthcare decisions regarding medical and end-of-life treatment. While both can be developed at the same time, principals need to grant the authority separately.

When considering an agent, principals should choose someone they can implicitly trust to act in their best interest and with their well-being in mind. The agent must be able to confidently make difficult decisions and also be able to effectively communicate with both family and professionals. Having an agent who intimidates you or choosing someone with financial or legal problems would be poor choices.

Fortunately, families are not alone, and banks are stepping up to help them prepare for their long-term needs. Bank of America, for instance, instituted a dedicated resource on “elder financial care” to help older customers and their caregivers access information, plan for their future, and prevent elder financial abuse. Others, such as Sumner Bank and Trust in Gallatin, Tennessee, have partnered with local housing agencies to host workshops with older adults and their families to share about advance planning to prepare for financial disasters and potential loss of financial decision-making capabilities.

Sam Kunjukunju is director of banker community engagement at the ABA Foundation.