In order to sign a power of attorney, the principal (the individual who is issuing the contract) must be an adult of sound mind. While the definition of a “sound mind” is fluid, it generally means that the principal must understand what a power of attorney agreement does, who the attorney-in-fact (the agent) will be, what decisions the agent can make on their behalf, and when the agent can take control of their affairs.
As such, someone with dementia may or may not have a “sound mind” depending on the extent of their disease. The best way to gauge if they have sufficient mental capacity to sign a power of attorney is to ask them a few questions to determine their understanding:
- What is a power of attorney?
- Why do you need a power of attorney?
- Who does the power of attorney authorize to be your agent or caretaker?
- What will the agent or caretaker be able to do for you?
- When does the power of attorney take effect?
This isn’t law school, so their answers don’t need to be lengthy or detailed. As long as they have a basic understanding, that’s okay. It’s not a timed test, either, so it’s perfectly acceptable if it takes them a minute to think about their answers. Assuming they can answer these questions correctly, it’s safe to assume they have a sound mind and sufficient mental capacity to sign a power of attorney.
What is a power of attorney?
A durable power of attorney is a legal contract where the principal voluntarily authorizes an agent to act and speak on their behalf. A power of attorney can be limited to certain activities (e.g. access to bank accounts or the authority to collect the principal’s income), or it can generally authorize any and all necessary access to the principal’s affairs. Many power of attorney agreements don’t take effect until the principal is certified as incapacitated by a medical professional, but it’s also common to see agreements that immediately confer authority to the attorney-in-fact.
There are two types of power of attorney agreements—a financial power of attorney, and a healthcare power of attorney. While a financial power of attorney authorizes an agent to manage your assets, a healthcare power of attorney designates a healthcare proxy. Your healthcare proxy has the right to consult with your doctors, access private medical records, and make important medical decisions on your behalf. Some states allow you to draft a general power of attorney that grants financial and healthcare authority to your attorney-in-fact, though it’s usually more common to see separate contracts.
How to create a power of attorney
A power of attorney agreement is surprisingly easy to create. You’ll start with a quick consult with your attorney, who will determine what key provisions need to be included in the agreement. The attorney will draft the document (often in less than an hour), and the principal will need to sign in the presence of a notary public to have the document notarized.
Can you revoke or amend a power of attorney?
As a power of attorney is voluntarily created, it can also be voluntarily rescinded by the principal. If at any time your situation changes and you need to amend the agreement or switch the attorney-in-fact, you can easily revoke the original document and sign a new agreement.
Alternatives to a power of attorney – guardianship and conservatorship
When an adult needs a caretaker but is mentally unfit to sign a power of attorney, the caretaker will need to petition the court for guardianship and/or conservatorship. Unfortunately, the process of initiating a court-approved guardianship or conservatorship is much longer, complex, and more expensive than a power of attorney. It will also require considerably more ongoing accountability from the court-appointed caretaker.
While the terms guardianship and conservatorship are often used synonymously, there is an important distinction between the two in Arizona. A guardian is granted authority over the incapacitated adult’s healthcare and living situation (daily care, transportation, food, living arrangements, etc.), and a conservator has authority over an incapacitated adult’s financial affairs. In a guardianship, the subject is referred to as a ward, and in a conservatorship the subject is known as the protected person.
In both cases, guardianships and conservatorships can be general or limited. In a general agreement, the guardian or conservator has sweeping authority to handle all of the ward’s or protected person’s affairs within the bounds of their stewardship. In a limited agreement, the court may dictate certain activities or specific aspects of the estate that the arrangement applies to. For example, a limited guardianship may give someone the authority to arrange for care in an assisted living facility, while a limited conservatorship may give the protected person’s spouse the authority to sell a single asset (such as a car or house) that’s in the protected person’s name.
Adults who are fully incapacitated are often granted a guardianship and conservatorship to handle all of their affairs, with the guardian and conservator often the same individual or entity. Adults who are partially incapacitated may receive a guardian or conservator based on the extent of their incapacitation and their individual needs.
Once a guardian or conservator has been appointed by the court, he or she is required to submit an annual accounting to the court to report on their activities. If the court determines that the guardian or conservator is remiss in their duty of care to the ward or protected person, the court can dismiss them and appoint a new guardian or conservator.
Since guardianship and conservatorship proceedings typically take several months to complete, the courts provide a temporary alternative for emergency situations. If the patient with dementia suddenly becomes incapacitated to the point that they need immediate assistance—perhaps due to a medical emergency or an accident—you can petition the court for emergency guardianship. The court typically requires that the prospective ward receive at least 24 hours’ notice of the request for emergency guardianship in order to preserve their right to due process, but that requirement can be waived in certain situations (e.g. if the prospective ward is in a coma).
An emergency guardianship typically lasts for up to six days. If the ward’s condition has not improved by the end of the emergency guardianship, the guardian can petition for temporary guardianship to continue until a permanent guardian is appointed through standard guardianship proceedings.