While it may not be easy for an aging parent to admit they may need help managing their affairs, it is best to have the conversation before that parent’s capacity is diminished. By having the conversation about incapacity planning before it becomes an issue there is still time to execute financial power of attorney and health care power of attorney thereby avoiding the need for a separate legal proceeding.
Options Are Different Depending on Capacity
The specific option you may take to assist a parent with his or her finances depends on their level of competency and understanding of his or her own financial matters. If your parent does not have memory or competency issues, and want to maintain some level of financial independence, then options such as a power of attorney or signatory authority on accounts may make sense. However, if you are concerned that a parent may be showing signs of dementia or has significant memory problems, then you may need to seek appointment as his or her conservator through a court process.
Conservatorships in Montana
If your parent or parents already have significant memory or capacity problems, but do not already have a power of attorney in place, then you (or another trusted family member) would need to seek appointment as that parent’s conservator through a court order. A conservator is an individual appointed by a court with a duty to make financial decisions and manage finances for an incapacitated individual.
The appointment of conservator in Montana requires the filing of a petition with district court. This includes a general statement of property owned by the alleged incapacitated person. A hearing in district court is required to determine the issue of incapacity, as well as to determine the appropriate individual to act as conservator. Notice of the hearing and petition must be served on all interested parties, which includes spouses, children and other family members.
The process of seeking appointment as a conservator through the court system, can be time consuming and expensive. The process also can be confusing and overwhelming for an incapacitated individual, so it is not often a first choice. However, if a parent already has significant memory or capacity problems and has not planned appropriately with a financial power of attorney, then a conservatorship is likely your only option for assisting a parent with his or her finances.
Financial Power of Attorney
If your parent has previously executed a financial power of attorney appointing you or another family member as an agent in fact for financial matters, then you may be able to avoid the conservatorship process. Similarly, if your parent has sufficient capacity to appoint an agent to make financial decisions for him or her through a power of attorney, your family may avoid the need for a conservatorship.
A power of attorney is a document whereby you appoint another individual (called an “agent”) to make financial or heath care decisions for you or transact business on your behalf in the event you are unable to do so for yourself. A power of attorney can be an immediate grant of authority or only used in the event of incapacity or disability. Unless the powers are specifically limited in any way, an agent appointed under a general financial power of attorney can make all types of financial decisions and transact all business on your behalf. These general powers include authority for check writing and banking, real and personal property, taxes, stocks and bonds, business transactions, insurance, legal claims and all other general financial matters.
A power of attorney can be a useful tool for financial management and simplify the process for assisting a parent with his or her finances. They also let a parent choose the individual that they want to assist with their finances without the need for a public court process.
Duties of an Agent
If you are appointed to act on behalf of one of your parents, whether through a power of attorney or conservatorship, you have a fiduciary duty to act in the best interest of that parent. This means that you have a legal duty to act solely in the best interests of your parent. You must manage and protect his or her property in an impartial manner. If you fail properly manage and account for your parent’s assets you may be subject to liability.
Organization is Essential
The best way to assist an aging parent with his or her finances, while protecting your parent’s best interests is through organization. Start by creating an inventory of your parent’s financial assets, accounts and ongoing expenses. Use the inventory to create a monthly budget. Once you have a clear idea of the budget and ongoing expenses then utilize options such as automatic payments for utilities and other regular expenses. Once you have determined a budget and set up payment systems, keep updated records of these payments.
Discuss with Your Siblings and Other Family Members
Discussing a parent’s financial matters may cause disagreements between siblings, but it is important that you keep your family involved from the beginning. It is critical that you discuss these issues together before you take any specific action on behalf of a parent . This allows you to address any potential objections and make sure everyone is on the same page. If you don’t inform or involve your family from the start you may be prone to potential challenges, or even legal action at a later date.
Seek Advice
Before you begin to assist an aging parent with his or her financial matters seek legal advice to make sure you are proceeding properly. If you have any question about your parent’s capacity to make decisions make sure you involve your family, health care providers and legal counsel in the process. By seeking the proper advice and involving key advisers and family members from the beginning you may be able to avoid disputes and will be assured that you are taking the right steps to protect your parent.
With questions about assisting your parents with their financial matters, Montana powers of attorney, conservatorships in Montana, or general estate planning questions contact Kelly O’Brien at Measure, Sampsel, Sullivan & O’Brien, P.C. at (406) 752-6373/ www.measurelaw.com