How to Avoid Problems Due to Aging Incapacity: The (Better) Durable General Power of Attorney

One of the most common concerns I hear from people is “My older parent’s behavior is concerning me and I’m worried about her mental abilities.”

As I explained in a previous post: it’s not always dementia but often it is. And unless an older person has done a good job planning ahead, it can be very hard and messy for others to intervene as needed.

But hopefully, that’s not yet your situation.

In which case, you might be wondering: Given that it’s so common for aging adults to eventually start slipping mentally, what kind of planning should older adults and families do to avoid this kind of situation?

I’ve done some research on this question, and here’s what I found out.

One of the simplest — and often less expensive — smart planning approaches is for a senior to complete a general durable power of attorney (POA) document.

Especially if the powers granted are broad — which they often are — a POA can enable the designated person (known as the “agent”) to step in and assist with finances, housing, safety, and anything else covered by the POA .

A durable POA allows an agent to take action once the older person is “incapacitated.” In California, such POAs can be used to move a person with dementia to a different living arrangement.

Now, the durable power of attorney approach isn’t perfect. In fact, I’ve occasionally encountered situations in which different doctors had different opinions on whether an older person was incapacitated. This troubles me, because agents should really only be stepping in and overriding older adults if we’re all sure they’ve lost capacity and are making decisions that don’t serve their overall goals, or are hazardous to others.

Still, a general durable POA is an excellent approach to consider. But I would recommend you pay special attention to the language used, in order to avoid pitfalls related to determining incapacity.

In this post, I will share:

• What I’ve learned about general durable power of attorney documents
• Why determining incapacitation is often problematic in the real world
• Tips on avoiding a common POA weakness
• Useful resources I’ve found online for more information

Note that POAs are governed by state laws, so the details can vary from state to state. But the general principles are likely to be similar throughout the country. In this post, I’ll focus on California, since this is where I live and practice. If you — or your older relative — don’t live in California, you’ll need to look for specifics for your own state.

The Basics on General Durable Powers of Attorney 

A power of attorney document essentially allows a person (known as “the principal”) to give someone else (“the agent”, also known as “attorney-in-fact”) the ability to act on the person’s behalf. The principal needs to be of “sound mind” when signing the form.

A power of attorney generally specifies:

• What kinds of activities and decisions the agent can take on behalf of the principal,
• Whether the agent’s power is effective immediately, or only once the principal is incapacitated,
• Whether the agent’s powers remain effective even if the principal becomes disabled or incapacitated.

A durable power of attorney remains in effect even if the principal is incapacitated, so older adults should always use durable POAs when planning ahead for the future. (Remember: hope for the best, plan for the likely & quite possible.)

In California and in many other states, there are POA forms specific to healthcare, and medical decisions are excluded from the general durable POAs. This means you can designate one person to be your agent for health decisions, and another for financial or legal decisions.

Now, experts often advise older adults to complete both a durable financial POA and a healthcare POA. However, when I looked into this further, I discovered that in California, financial powers are usually included within a general durable power of attorney form.

Here is one commonly used version of the California General Durable Power of Attorney form. A person using this form can give the agent all the powers listed, or can just specify a few of them.

But it’s important to realize that as long as the form complies with the relevant California probate code, the general DPOA form can be written to include more specifics about the agent having the power to move the principal to a new residence and to make personal care decisions.

How are older adults deemed incapacitated?

A durable power of attorney document allows the agent to make decisions either right away, or when the principal is “incapacitated.” In the documents I’ve reviewed, the principal usually has to specify whether the agent has authority immediately, or whether the authority should “spring” into action upon incapacity.

But who determines incapacity, and how? Obviously, this should be a crucial issue for those “springing” POA documents that only allow the agent to take over if the older person is incapacitated.

But even for a POA that gives immediate authority to the agent, the question of defining incapacity can be important. That’s because if the principal and agent ever disagree, the principal gets to override the agent — unless the principal is incapacitated.

So it seems clear to me that defining incapacity is important. However, this seems to be a serious weak point in many POA documents. Having reviewed several of them in the course of my years practicing geriatrics, here’s what I’ve seen regarding the criteria for determining that the principal is incapacitated:

• Some POA forms say nothing about how to determine the principal is incapacitated.

• Some POA forms say something like this: “[incapacity] may be evidenced by a written statement of my regularly attending physician or two other qualified physicians or by court order.”
• One POA form said: “I shall be determined to be incapacitated, as determined solely by my attending physician and in writing delivered to my Agent.”

(Learn more about how capacity should be evaluated in this article: Incompetence & Losing Capacity: Answers to 7 FAQs.)

The Pitfalls of Incapacity Determination

A few years ago, I consulted on an older woman who had been diagnosed with “severe dementia” based on a neuropsychological evaluation conducted during a hospital stay. Based on this, the agent took over and moved the older woman to a facility.

The problem was that when I met the older person three months later, her mental state actually seemed quite good. Now, she did make several errors on the MOCA test I administered, and likely would struggle to manage finances correctly.

But she certainly was much better than described. Which is not surprising actually, because we know that many aging adults get mentally much worse in the hospital, due to delirium. And we know that it can take months for delirium to resolve; I once had a patient slowly get better over a whole year.

Sadly, this older lady was pretty unhappy about having been moved to a facility. But since she’d been determined to be “incapacitated,” her agent was now the one making the decisions.

(Now, technically if an older person recovers mental capacity and then disagrees with her agent, the agent cannot overrule her. But in practical terms, once a person has been labeled as “lacking capacity,” it can be hard for her to challenge her agent’s authority without pursuing a court process.)

An added problem: prior to hospitalization, she hadn’t had a regular primary care doctor, and she didn’t have any close family. So there was very little information on how her mental state had been prior to hospitalization. Which meant it was harder to determine whether she had dementia, or how advanced it really was.

I share this story because I think it illustrates the pitfalls of incapacity determination and POA forms. These are:

• Capacity can be temporarily impaired or permanently impaired. POA forms usually don’t address this. It would be unfortunate for a person to permanently lose their rights, if later their capacity might improve.

• Most doctors are not trained to evaluate long-term capacity in older adults. But POA forms usually don’t specify what qualifications the attesting doctors should have. Nor do POA forms specify what documentation or evidence a doctor should provide; I have seen many brief statements saying “Ms. So-and-so no longer has capacity to manage her affairs.”

• Some people don’t have a primary care doctor. And an “attending physician” basically means a doctor who has completed residency; it could even be the hospital attending who just met the older person in the hospital. POA forms seem to assume the principal has a doctor who knows him or her well, but that’s a faulty assumption.

In summary, many POA forms are flawed in that the criteria for determining incapacity are either unspecified, hard to apply, or could result in an older adult permanently losing rights prematurely.

Why It’s Essential to Have a General Durable POA

Given the pitfalls of general durable POA forms, some people might conclude they are better off not giving anyone power of attorney, for fear that they’ll lose their rights inappropriately.

But this would be a mistake. Despite the potential for a POA to be misused, things almost always go worse for aging adults when no POA has been appointed. That because in the absence of a POA, a family may need to go to court for conservatorship in order to take over the affairs of an older loved one who has developed Alzheimer’s, or another form of incapacity. That is a time-consuming and expensive process, plus it usually means that whoever becomes conservator will have to provide regular reports to the court.

So provided an older person still has capacity to complete legal paperwork and make major decisions, it’s better to complete paperwork to allow someone else to take over affairs without a complex court proceeding. A general durable POA can enable this.

For a Better General Durable Power of Attorney

Reminder: I am not an attorney. But given the problems I’ve seen people encounter with their POA documents, I would really recommend that any general durable POA document you — or your family member — completes include language specifying how incapacity is determined.

My feeling is that the specifications should exclude delirium, and should provide for the possibility that the incapacity might get better. Alternatively, the language needs to do a better job of making physicians state that the principal has permanent and irreversible changes to the thinking abilities, as demonstrated by the problems not improving over at least 3 months, or some such.

I haven’t yet seen an actual POA that contains such language, but I did find an online legal article titled “Elder Law Incapacity Planning” and it suggested this language, which is better than most:

” [Trustee] shall be considered incapacitated if the Trustee becomes unable to manage his or her business affairs due to illness or for any other cause, and that incapacity is likely to continue.” (pg 7 of PDF)

(By the way, the sample health care directive addendum on page 5 of the PDF is impressive in its specificity and clarity about what someone might want in the event of advanced dependency; would recommend people take a look.)

To complete a better general durable power of attorney, it’s best to work with a lawyer experienced in elder law in your state. Qualified attorneys can help you decide on many important details, such as how many agents to appoint and making provisions for a successor agent. (Some people appoint two people as agents, which means they can collaborate and also potentially keep an eye on each other.)

Summary & Useful Resources

In summary:

• A general durable power of attorney can give the agent pretty broad powers to manage an older person’s money, assets, support services, and even living situation, once the principal (meaning, the older adult) has been “incapacitated.” This means a general durable POA is a good way to plan for the possibility that an aging adult could become mentally impaired.

• Many power of attorney documents don’t do a good job of defining what exactly constitutes “incapacitated,” or who determines “incapacity” and what evidence they should review in doing so.

• Older adults can reduce the chance of being inappropriately deemed “incapacitated” by making sure their general durable power of attorney includes language specifying how incapacity is to be determined. I would recommend language that helps the agent distinguish between temporary and permanent incapacity. I also believe attesting physicians should have to provide some evidence for their conclusion that a senior is permanently incapacitated.

• Older adults should avoid having no general or financial durable power of attorney. Despite the possibility that a person may inappropriately be deemed incapacitated — or that the agent may not make appropriate choices — it is probably riskier overall to have no mechanism allowing others to step in.

Resources:

Unfortunately, I didn’t come across any truly terrific resources that address the issues above, and are written for the public. Most of what is online is pretty superficial. But here are a few links that I found especially useful.

• “The Durable Power of Attorney: Health Care and Finances” from Nolo.com
• “Elder Law Incapacity Planning” by Cynthia L. Barrett, Marquette Elder’s Advisor
• “Questions & Answers on Powers of Attorneys” from Columbia Legal Services & Senior Services (WA state)
• “Frequently Asked Questions About Powers of Attorney” from CTLawHelp.org
• “Guardianship or Power of Attorney: Which One Do YOU Need?” from Wake Forest University Elder Law Clinic
• “7 Decisions to Make for Your Durable Power of Attorney” from Margolis & Bloom, LLP

Now, can you recommend any resources to help aging adults create better durable powers of attorney? Please share below!

You can also learn more about capacity should be evaluated in this article: Incompetence & Losing Capacity: Answers to 7 FAQs. You can also hear elderlaw attorney Harry Margolis talk with me about powers of attorney in this podcast episode.