When a person comes down with any of various forms of dementia, it means he or
she requires additional amounts of care. It also means eventually taking away the
checkbook and access to credit cards, to prevent the person with diminishing
capacity from responding to Nigerian email pitches or late night infomercials.
For these situations, the instrument of choice is the power of attorney—a legal
document that allows people who recognize that they’re declining mentally to
appoint a trusted agent to make financial decisions on their behalf. This trusted
person is expected to place the person with dementia’s interests ahead of his/her
There are several types of document to consider:
The general power of attorney allows the agent to perform almost any act that the
Alzheimer’s patient would be doing, such as opening financial accounts and
managing personal finances.
A durable power of attorney designates a person to act on the patient’s behalf
while the patient is well and functioning, and maintains that power after the patient
A limited power of attorney gives the agent specific powers limited to a certain
area—such as the authority to sell a home.
Most financial planners believe that everyone should have a power of attorney
document drawn up long before any sign of dementia crops up, so that the
document is in place when needed. And then you hope it never will be
needed—just like you hope to prolong as long as possible being able to collect
your life insurance or disability insurance proceeds.