How is incompetency determined and how is it made a legal point?

A fellow caregiver asked...

My grandfather and his wife are moving into a retirement home. Her family is saying that my grandfather is incompetent to handle any financial decisions. She has power of attorney and my father has power of attorney if she were to pass first. They said a doctor said my grandfather is incompetent. We knew nothing of this doctor's visit. I am wondering what is considered incompetent and should there be papers or something legal stating he is incompetent? He is in the early stages of Alzheimer's. When we are talking to him he just can't remember the names of certain items while talking. He knows everyone. I am just concerned they are leaving him out of major financial decisions.

Expert Answer

Barbara Repa, a senior editor, is an attorney, a journalist specializing in aging issues, and the author of Your Rights in the Workplace (Nolo), now in its 10th edition.

It sounds as if your bottom line concern is whether there is a legally valid power of attorney for finances in place—and when it might take effect.

There are two types of durable power of attorney for finances—and that is what determines when they take effect. You should be able to tell which type your grandfather has by looking closely at the language that specifies when it takes effect.

The first type, which is more rare, takes effect immediately when it is signed. It is usually used when a person needs some help with mechanics of finances, such as balancing a checkbook or paying the bills on time. Many people with various forms of dementia, for example, are able to handle many aspects of their finances, but may need some help with more complicated tasks, such as computing state and federal taxes.

The second type takes effect only after a person is considered legally incapacitated, which requires that one or two doctors declare in writing that a person is mentally incompetent to handle his or her own finances—signaling that its time for the agent named earlier in the document to step in and help out.

If the second type of power of attorney for finances exists here, it would not be sufficient for a doctor to state that your grandfather is incompetent; he or she would have to commit that opinion to writing.

If you remain concerned that your grandfather is being shut out of decisions he can make, consider contacting the family ombudsperson or counselor at the retirement home. Most facilities have such people on staff, who are well-versed in the intricacies of legal documents—and the family dynamics that sometimes get in the way of having them work properly.