Caring for an aging parent, spouse or loved one is one of life’s most meaningful responsibilities – but it can also be one of the most complex, raising financial and legal questions many families aren’t prepared for.
An important aspect of financial planning for aging parents involves having the conversations that will help you get ahead of these questions and put the right documents in place before a crisis forces the issue.
Too often, these questions surface only after a health crisis or a diagnosis of dementia or cognitive decline. By then, options may be more limited, key documents may not be in place and families can find themselves making difficult decisions under emotional strain.
Planning ahead can make an enormous difference – helping ensure your loved one’s wishes are respected and making financial matters easier to manage during an already challenging time.
We recently hosted a webinar on Dementia, Diminished Capacity and Family Planning featuring Genus Portfolio Manager Darryl Brown in conversation with Zachary Murphy-Rogers, Partner in Wills, Trusts, Estates and Adult Guardianship at Clark Wilson LLP.
Together, they explored the legal and financial considerations that arise when someone experiences cognitive decline or loses the capacity to make decisions. Here are some of the key takeaways. You can also watch the full webinar recording for more detail.
Caregiving often starts before you realize it
Most caregivers don’t begin by managing someone’s finances or making major decisions on their behalf. It usually starts small: driving a loved one to appointments, helping organize paperwork, assisting with banking or simply noticing changes in memory. Over time, these responsibilities can expand into managing healthcare, finances and day-to-day life.
Because of that gradual shift, it’s worth having conversations about wishes before decisions become urgent around housing, healthcare, end-of-life preferences, who should be involved and how care will be funded.
Incapacity planning: capacity exists on a spectrum
One of the most important points Murphy-Rogers made is that incapacity isn’t all-or-nothing – a distinction that sits at the heart of good estate planning for dementia or any other progressive condition. “In common law, every person is presumed to be capable, unless demonstrated that they are incapable,” Murphy-Rogers said.
Someone may be unable to make one type of decision while still being fully capable of making another, which is part of what makes this area of planning so nuanced for families to navigate.
Just as important: a diagnosis of dementia or cognitive impairment doesn’t automatically strip someone of the ability to sign legal documents. Capacity, Murphy-Rogers said, can be temporary or permanent, and is assessed differently depending on the decision at hand.
Elder care legal documents: enduring power of attorney and representation agreements
Murphy-Rogers emphasized that having appropriate legal documents in place before they’re needed can help families avoid unnecessary complications. Once someone loses capacity, creating or updating these documents may become difficult – sometimes impossible.
- An Enduring Power of Attorney lets your loved one appoint someone they trust to manage financial and legal affairs – paying bills, managing investments or handling real estate – if they’re no longer able to do so themselves. A standard power of attorney “is only valid while the person who gave it is alive and capable,” Murphy-Rogers said. The moment that person loses capacity, its authority ceases. That’s why the enduring version, which is drafted specifically to survive incapacity, is the document that actually matters for a plan like this.
- A Representation Agreement – In British Columbia, a Representation Agreement allows someone you choose to make healthcare and personal care decisions if you’re unable to communicate your wishes. Other provinces use different legal documents for similar purposes.
Without these documents in place, families may have to rely on provincial default rules – typically spouse first, then children, then other next of kin – or apply to the courts for authority to act, a process that can be costly and slow.
If the documents already exist, it’s worth reviewing them every three to five years, or whenever life changes significantly. A marriage, divorce, move, shift in family relationships or change in health are all good reasons to revisit them – including who you’ve named, since people’s circumstances can change the suitability of an appointed attorney over time.
Power of attorney for an elderly parent: understand your responsibilities
Being named someone’s Enduring Power of Attorney means taking on more than a position of trust – it’s a legal responsibility to act in that person’s best interests and manage their affairs with care and transparency.
“Under a power of attorney, you have duties to use the person’s money for their benefit and only their benefit,” Murphy-Rogers said. “You cannot gift money to yourself or other family members, except in limited circumstances.”
Murphy-Rogers outlined the core pillars he advises clients to follow when acting in this role:
- Participation – involve your loved one in decisions wherever possible, even when you have the legal authority to act without them.
- Transparency – keep both your loved one and other family members informed, since a lack of information is often what fuels disputes.
- Fiduciary responsibility – their money must be used for their benefit only, never gifted to yourself or others outside narrow exceptions.
- Record keeping – document decisions and expenses as you go, so nothing has to be justified after the fact.
- Anticipate friction – both from the person you’re helping, who may feel a loss of autonomy, and from other family members who may question your decisions.
Caregiver financial checklist: staying organized
The more organized financial affairs are, the easier it is for a caregiver to step in when needed. A few practical steps to get organized:
- Keep important legal and financial documents together – and note that many financial institutions require original or properly certified documents, not scans or photocopies.
- Let trusted family members know where the originals are stored – Some people choose to store original documents with their lawyer, while others use secure home storage or other appropriate options. A safety deposit box can be surprisingly hard for an attorney to access during incapacity.
- Maintain an up-to-date list of financial accounts and use a secure password manager rather than a written list. “I would much rather a client give a single secure password that unlocks all the others, as opposed to a complete comprehensive list of various passwords and login information,” Murphy-Rogers said, noting that handwritten password lists tend to go out of date as fast as they’re written.
- Review beneficiary designations regularly, and keep your will and estate planning documents current.
- Document any loans, gifts or informal financial arrangements with family members in writing, to help prevent disputes down the road.
Remember to protect your own financial wellbeing, too
Caregiving is an act of generosity, but it’s important not to overlook its impact on your own financial life. Supporting an aging loved one may mean taking time away from work, covering additional expenses or adjusting your own plans to provide care.
If you’ve been named Power of Attorney or a representative, your responsibility is to act in their best interests – not to put your own financial security at risk. Their assets should be used for their needs, while your own retirement savings, income and financial goals should continue to be protected.
It helps to have early conversations about the practical costs of caregiving – home care, medical expenses, housing decisions, travel and other support – so you understand what resources are available and what you may be taking on, without creating unnecessary financial strain of your own.
Planning ahead, as with any major life transition, can make a meaningful difference. By considering both your loved one’s needs and your own financial wellbeing, you can build a sustainable approach to caregiving – one that supports your family while protecting your future, too.
If you’d like to explore how incapacity planning fits into your broader financial plan, check out our wealth management services.
Frequently asked questions
What financial documents do I need for an aging parent? The two essential documents are an Enduring Power of Attorney, which lets a trusted person manage financial and legal affairs if your parent becomes unable to, and a Representation Agreement, which covers healthcare and personal care decisions. Without these, families typically must rely on provincial default rules or apply to the courts for authority to act.
Does a dementia diagnosis mean my parent can no longer sign legal documents? Not necessarily. Capacity is assessed on a spectrum and depends on the specific decision being made. A diagnosis is a relevant factor, but it doesn’t automatically prevent someone from making or updating documents like a will or power of attorney – that determination depends on the individual and the type of decision involved.
What’s the difference between a standard and an enduring power of attorney? A standard power of attorney becomes void the moment the person who granted it loses capacity. An enduring power of attorney is drafted specifically to survive incapacity, which is why it’s the version that actually matters for long-term planning.
How often should Power of Attorney and estate documents be reviewed? Every three to five years, or sooner if there’s a major life change – a marriage, divorce, move, shift in family relationships or change in health. It’s also worth revisiting who you’ve named, since an attorney’s circumstances can change over time.
Can a family member refuse to act as Power of Attorney? Yes. Being named doesn’t obligate someone to take on the role – they can decline or step back when the time comes, which is why it’s worth confirming in advance that the people you’ve named are willing and able to serve.
Ce document est fourni à titre d'information générale uniquement et ne remplace pas les conseils d'un professionnel. Il ne constitue pas un conseil ou une recommandation en matière d'investissement, de droit, de comptabilité, de fiscalité ou autre, et ne doit pas servir de base à une quelconque décision. Les lecteurs doivent demander des conseils professionnels spécifiques avant de prendre des décisions financières ou d'investissement. Certaines informations sont basées sur des sources tierces jugées fiables, mais leur exactitude et leur exhaustivité ne sont pas garanties. Les performances passées ne garantissent pas les résultats futurs.
