At some point in life, family roles get reversed. When we were children, our parents' love and support nurtured and protected us. As they get older, we hope to do the same for them.

Setting up a power of attorney for an elderly parent is one way to return that love and support. A power of attorney can ensure that your loved one's affairs are properly managed, especially if they're no longer able to do so.

The Benefits of a Power of Attorney

A power of attorney is a legal document that gives one person the authority to make legal, financial and health decisions on behalf of another if that person were to become incapacitated and unable to make these decisions on their own. Many people choose their spouse or a family member to act on their behalf.

Power of attorney is an important legal document because it clearly outlines your loved one's wishes and ensures that their agent is making decisions in their best interests. It also gives your parent (or parents) the autonomy to decide who will make these decisions. Cases where there isn't a power of attorney are usually bounced to the courts — and that can be a time-consuming and emotionally fraught process.

It can be difficult to talk to an aging parent about estate planning and health care decisions — especially when they're healthy. However, setting up a power of attorney for an elderly parent isn't something to put off; it's best to do it when your loved one is still healthy and has full presence of mind.

How to Establish a Power of Attorney

Before creating a power of attorney, decide with your loved one how to structure it. There are several options.

A general, or financial, power of attorney typically grants the authority to sign documents, buy or sell real estate, open and close bank accounts, withdraw money, pay bills and cash checks on your loved one's behalf. A medical power of attorney lets you act as a health care proxy and make medical decisions for your loved one. You'll decide what kind of medical treatment they'll receive, what lifesaving measures doctors can enact in a health emergency and what long-term care facility is best for your loved one, among other decisions.

A durable power of attorney combines the responsibilities of a financial power of attorney and a medical power of attorney, and it grants decision-making authority should your loved one become mentally or physically incapacitated. You can't make those decisions with a non-durable power of attorney. People typically create time- and instance-specific non-durable powers of attorney; for example, if your father lives abroad half the year, he could designate you as a non-durable power of attorney to sign documents while he's out of the country.

To draft a power of attorney document, enlist the help of an attorney who specializes in elder law. The document should include such details as who the agent or decision-maker is, the scope of their responsibilities, whether the power of attorney is durable or non-durable, and what happens in the event of the agent's death or inability to make decisions for themselves.

Once all terms are agreed upon, your parent, or both parents, will need to sign the form. Each state has its own rules for what passes as a valid signature, so check with your attorney before your loved one signs. Afterward, make multiple copies, and keep these documents in a safe place.

Making decisions is hard enough; when you have to make them for someone you love, it's even more difficult. A durable power of attorney can ease some of this stress by giving you a road map for how to handle financial and medical decisions for an aging parent. Though these discussions are difficult, engaging in them now can help you protect your loved one and ensure that their wishes are executed.