Why Having a Power of Attorney Is Not Enough for Incapacity Planning: A Story To Remember

Jane Walker was part of the sandwich generation, juggling the demands of her career, her teenage children, and her aging parents. Life had become a delicate balancing act, but she was managing it with determination and love. One evening, as she settled down with a cup of tea after a long day, her phone rang. It was the nursing home where her mother, Elizabeth, resided.

“Mrs. Walker, we need to discuss your mother’s recent behavior,” the nurse began, her tone serious. Jane’s heart sank. Elizabeth had been diagnosed with dementia a few years back, and her condition had gradually worsened. Jane had done everything by the book: she had a durable power of attorney (POA) set up, thinking it would be enough to handle any issues that arose.

As the nurse explained Elizabeth’s actions over the past few weeks, Jane felt a knot tighten in her stomach. Her mother had been withdrawing large sums of money from her bank account and giving it to strangers she met online. Elizabeth had always been prudent with her finances, but now, in her altered state, she was making reckless decisions. Despite having a POA, Jane found herself powerless.

The POA allowed Jane to act on her mother’s behalf, but it didn’t remove Elizabeth’s authority over her own decisions. Elizabeth was still legally able to make her own financial choices, even ones that were clearly detrimental. Jane knew her mother would never have done these things before her illness, but now, she was vulnerable and unaware of the risks.

Jane rushed to the nursing home the next morning, determined to find a solution. Sitting across from her mother’s nurse, Jane felt overwhelmed. “I thought the power of attorney would protect her from making these kinds of decisions,” Jane said, her voice filled with frustration.

The nurse nodded sympathetically. “A power of attorney is important, but it doesn’t strip the principal of their decision-making rights. Unless they are declared legally incompetent, they can still make their own choices, no matter how unwise they may seem.”

The reality of the situation hit Jane like a wave. Having a POA was not enough. Her mother’s cognitive decline meant she could no longer make sound decisions, but until a court declared her incompetent, she retained her legal rights. Jane needed to take additional steps to protect her mother.

Determined to safeguard Elizabeth’s well-being, Jane sought the advice of an elder law and estate planning attorney. The attorney explained that while a POA is essential, it should be part of a broader incapacity plan. “If your mother had established a living trust, many of these issues could have been avoided,” the attorney said.

A living trust is a legal document that places assets into a trust for the benefit of the principal during their lifetime and designates beneficiaries to receive the trust’s assets upon the principal’s death. The critical advantage of a living trust, the attorney explained, is that it appoints a trustee to manage the trust’s assets if the principal becomes incapacitated. Unlike a POA, a living trust removes the principal’s access to those assets, placing control entirely in the trustee’s hands.

Jane listened intently, realizing that if her mother had created a living trust, the trustee would have had the legal authority to manage her assets without Elizabeth’s unintentional interference. Elizabeth’s money would have been safeguarded, and her care needs would have been met according to the terms she established when she was of sound mind.

Jane felt a mix of relief and regret. She had been unaware of this option and wished she had known sooner. She asked the attorney if she could now set up a living trust for her mother to protect her assets going forward. The attorney shook his head. “Unfortunately, since your mother is already incapacitated, and your power of attorney does not grant you the authority to create a living trust, the only option left is to seek conservatorship through the court.”

The thought of pursuing conservatorship was daunting. Jane feared it would feel like stripping her mother of her autonomy, but she knew it was the only way to protect her from further harm. The attorney guided her through the process, explaining that a court hearing would be required to assess Elizabeth’s mental capacity. A Medical professional provide evidence of her inability to manage her affairs, and a separate attorney would likely be appointed for her mother.

The day of the hearing was emotionally taxing. Elizabeth, confused and distressed, didn’t understand why this was happening. Jane’s heart broke as she listened. Her mother had always been fiercely independent, and now she was losing her freedom. But Jane knew it was necessary. The judge, after reviewing the evidence, granted Jane conservatorship, giving her the authority to make decisions in her mother’s best interest.

With conservatorship in place, Jane could now manage her mother’s finances and health care without Elizabeth’s unintentional interference. She stopped the unnecessary withdrawals, secured her mother’s assets, and ensured her medical needs were met. It was a bittersweet victory, providing relief but also a deep sense of sorrow for what had been lost. But, it was an expensive and intrusive experience that could have been avoided if her mother had done the proper planning.

Jane’s journey taught her two valuable lessons about incapacity planning. First, just because you have a document doesn’t mean you have proper planning. A power of attorney, while important, may not cover all necessary aspects, particularly when the principal can still make harmful decisions. Second, a properly designed living trust can help avoid unnecessary court involvement during a person’s lifetime, ensuring their assets are managed responsibly without the need for conservatorship. But again, just because you have a document doesn’t mean it is drafted in a way that will solve the problem you are setting out to avoid. That is where an attorney’s advice and assistance when designing the trust becomes so important.

Jane shared her story with friends and family. Many of her friends and family in the sandwich generation were like her, juggling multiple responsibilities and caring for aging parents. Some were running into the same problem. She urged them to think beyond the power of attorney, to consider setting up living trusts as part of a thorough incapacity plan. That way their kids weren’t dealing with the same mistakes.

Through her experience, Jane became a voice for proactive planning, advocating for a broader understanding of what it means to protect our loved ones. Her mother’s struggle was a painful reminder that planning for incapacity is not just about legal documents; it’s about ensuring that those we care for are truly safeguarded, even when they can no longer protect themselves.