Over the Holidays, most people spend a great deal of time with their families. For families with elderly relatives, this time together may be eye-opening. While everyone may have thought that Grandma was doing just fine, she may have recently gotten to the point where it is obvious she can no longer care for herself.
Our series this week will focus on what you can do legally to help Grandma (or another relative) in just such a situation where she can no longer care for herself. There are several options open to families, and today we’ll look at the least restrictive options for dealing with financial issues.
#1 – Power of Attorney
If an elderly relative is no longer able to properly their finances, a power of attorney can be a good solution to the problem. This document allows the individual to name a responsible person they trust (typically a trustworthy relative) to be able to transact business on their behalf. Thus, that person is able to write checks on their behalf, deposit and withdraw money from bank accounts on their behalf, and sign their name on legal documents such as contracts. A power of attorney document can be very useful and effective because of these broad powers. On the flip side, since the person who holds a power of attorney has so much power to transact business on behalf of the elderly individual, this should only be done with extreme care. Elderly individuals will want to make sure the person they choose is extremely trustworthy before signing this type of document.
The Power of Attorney must have been signed when the elderly individual had mental capacity to sign it, so you typically can’t use this solution after the individual has ceased to have full capacity. However, if the document was signed before total incapacity set in, this tool can be a great alternative to a more restrictive option (such as having the elderly individual declared incapacitated by a court, which we will cover later in this series).
#2 – Trusts
Most people simply have a Will as their basic Estate Planning Document, but having a Living Trust can actually be much better for many elderly individuals. By putting their property into the Trust, the individual can still manage their property fully and use it for their own benefit until they die. However, one of the great benefits of a Trust is that, if the individual becomes incapacitated, a successor trustee can take the reins and manage the property for the original trust creator’s benefit.
For example, if an elderly father sets up a Trust that is for his benefit during his lifetime (and gives his property equally to his kids after his death), he can use that property for his own benefit during his life. But, should he become incapacitated, the successor trustee that he named in the Trust document can easily step in to manage his money and property on his behalf.
Both of these types of documents can be very helpful if an elderly individual should become incapacitated. But, the caveat is that these are only effective if the elderly individual signed these documents before they became fully incapacitated. When the individual has not taken these planning steps, a more restrictive alternative (such as Guardianship) may be required.
Tomorrow we’ll look at a few more “least restrictive alternatives” to help families make medical decisions. Then, we’ll finish our series with the most restrictive alternative, Guardianship.
Note: If you have any questions about helping an elderly parent or relative, give our Probate Lawyers a call at 214-236-2712 or click here for more information. We would be happy to sit down with you and your family and develop a strategy for effectively taking care of your elderly relative.