How Do I Stop Mom or Dad From Writing Checks or Making Poor Financial Decisions?

A frequent question at our office, particularly when a parent has dementia or Alzheimer’s, is along the lines of: I have power of attorney for my mother, but she keeps writing checks and making poor financial decisions when I’m not around. What do I do?

While Durable Powers of Attorney are an important part of . Twell-rounded estate planning, they do have one major shortcoming: A Durable Power of Attorney appoints an Agent to act on behalf of the Principal (e.g., mom or dad), but it does NOT stop the Principal from still conducting business on his or her own.

Set Up a Trust

If the Durable Power of Attorney authorizes you to do so, you may consider establishing a trust on your parent's behalf and nominate yourself as trustee. As power of attorney, you would transfer your parent’s assets into the trust and then manage the trust as trustee. Only a trustee can conduct business on behalf of a trust. Therefore, your parent would not be able to write checks or conduct financial transactions for any assets that are in the trust.

We strongly recommend that you consult with an attorney regarding this option and whether you’re legally authorized to establish a trust on your parent’s behalf.

Adult Guardianship

The next step may be to consider an adult guardianship proceeding. A guardianship proceeding will include an incompetency hearing. If the court finds your parent to be incompetent, the clerk of court will issue an order of such finding and will appoint a guardian to manage your parent’s affairs. You can then give copies of the court order to all banks and financial institutions where your parent holds accounts to notify the bank or financial institution that your parent has been declared incompetent by the court and no longer has the legal authority to conduct transactions on his or her own behalf.