If you serve as a caregiver for a loved one, you likely have several responsibilities — nurse, cook and housekeeper, to name a few. But your loved one might also need assistance in managing their finances.
If you find yourself in this position, your loved one may want to consider granting you “power of attorney” (POA). In order to grant POA, a signed legal document is required in which one person (the “principal”) gives another person (the “agent” or the “attorney-in-fact”) specified decision-making authority.
A POA can take effect immediately or it can take effect only upon the disability of the principal (called a “Durable Power of Attorney”). It lasts for a limited or unlimited period. An attorney-in-fact must act in the principal’s best interest at all times. Sometimes, more than one person can be named as attorney-in-fact, with either joint or individual responsibility.
The principal must be able to understand and agree to the authority they are granting at the time the POA is granted. If your loved one is incapacitated, a POA cannot be used, and a court would have to appoint a guardian.
A POA is a powerful, legally binding document – you and your loved one should seek qualified professional advice when considering its use.
Understanding Your Role
A POA can permit an attorney-in-fact to perform many different tasks on behalf of the principal, depending on the specific authority granted in the POA. Examples include paying bills, overseeing bank accounts, reviewing financial statements, maintaining insurances and collecting any income. You might want to get tax, financial and legal advice to assist you when performing these tasks.
Let the Records Speak for You
If you are designated as an attorney-in-fact, it’s vital to keep detailed and accurate records of any financial transactions that you make. Be sure to record any checks written or deposited along with relevant details. Keep all receipts with notes describing the purchases, and avoid paying with cash.
And most importantly, avoid any financial conflict by keeping your own money separate from that of your loved one, even a close relative.