Dementia is a cruel disease. It’s terrible to watch your aging parents deteriorate before your eyes. They may not be capable of making rational decisions about managing either their day-to-day or their long-term affairs. This can put the legacy your parents built into serious jeopardy.
It’s important to have a plan in place if your parents become mentally incapacitated. If you are in the position of caring for a parent with dementia, you might need to make financial decisions on their behalf. Here are some important things to consider if you are in a position to manage the finances of people with dementia.
Using a Financial Power of Attorney, If you Have One
A financial power of attorney is a powerful document. This document allows the principal to appoint an agent to make financial decisions on their behalf. The agent has the ability to manage the principal’s money matters, including:
- Open and close bank accounts in the principal’s name
- Use and pay credit card bills
- Pay the mortgage
- Sell the principal’s house
- Handle all other financial affairs, including financial planning
Powers of attorney are part of planning that someone might put together as part of an estate plan. The agent has the right to make decisions on another person’s behalf. It’s a good idea to give a copy of the financial power of attorney document to each bank, credit card company, and financial institution the principal uses. This way, the agent can cut through some of the red tape and manage the principal’s accounts more easily.
The agent also has the legal responsibility to act in the principal’s best interest. An agent must keep the principal’s funds separate from their funds. Agents also may not give themselves gifts or payments from the principal’s bank accounts, unless the power of attorney document specifically allows this. Abusing your power of attorney rights can lead to severe consequences, including monetary fines and even jail time.
Signing a durable power of attorney doesn’t take long, but it needs to be signed before memory loss sets in. In California, the principal must have the capacity to contract at the time they sign this document. If someone is diagnosed with dementia, even if they’re in the early stage of the disease, it’s too late to sign this document.
Remember that the financial agent does not have the power to make health care decisions for the principal or decisions about their long-term care. To make these decisions, the principal would also need to appoint a health care power of attorney.
Establishing a Conservatorship after a Dementia Diagnosis
After someone’s been diagnosed with dementia, they won’t have the legal capacity to make decisions on their behalf, including signing a power of attorney. At this stage, if you want to be responsible for managing their money, you’ll need to petition the California courts to set up a conservatorship.
Conservatorships can take several weeks to set up and involve having doctors assess your parents’ mental condition and making a report.
The process ends with the judge appointing a conservator to care for your parents, who become the conservatee. This conservator may or may not be one of your family members – judges have the right to appoint anyone, even a stranger, as conservator for your parents.
Once a conservatorship is in place, the conservator has the right to manage all your financial affairs. They may set up a special conservator bank account to let them do this. Conservators cannot treat this money as if it’s their own. Instead, they have a fiduciary duty to act with the conservatee’s best interests in mind.
Having a stranger make decisions on behalf of your parents can be better than allowing someone with dementia to flounder on their own. However, they come with court oversight and restrictions. It’s much better to have a power of attorney set up before it’s too late.
Having Experienced Elder Law Attorneys on your Side
Managing affairs for aging parents or parents with dementia is an important part of caring for them as they get older. At The Legacy Lawyers, we can help you each step of the way. In addition to preparing a durable power of attorney documents, we can help with the conservatorship process. Having experienced attorneys on your side can make the process go more smoothly, letting you focus your energy on caring for your parents.
In addition to helping our clients get started with their power of attorney or conservatorship on the right foot, our attorneys can help you ensure that your parents remain safe and cared for. We can monitor conservatorships for signs of elder abuse and intervene if necessary.
When you’re focusing your energy on managing your elderly parents’ finances, the last thing you want to worry about is the legal permission you’ll need. Let our estate planning attorneys help you.