When someone has dementia, decisions about their money, medical care, and daily life are made by one of three people: an agent they named in a power of attorney while they were still mentally competent, a close family member designated by state law as a default healthcare surrogate, or a guardian or conservator appointed by a court. Which path applies to any given family depends almost entirely on whether paperwork was signed before capacity slipped. Advance planning is the cheapest and least contentious route. Court guardianship is the fallback when nothing was done in time.
The Agent Named in a Power of Attorney
The clearest answer to who decides is: whoever the person chose, in writing, while they still could. A durable power of attorney for finances names an agent to handle money matters, and the word “durable” is what makes the document useful here. Durability means the authority survives after the signer loses mental capacity. A standard, non-durable power of attorney dies at the exact moment it is needed most.
A durable financial power of attorney can be written broadly, covering bill-paying, tax filings, investment management, and real estate sales, or it can be narrowed to specific transactions. The agent steps in as soon as the document is effective and acts in the signer’s place with banks, brokerages, the IRS, and anyone else handling the person’s finances.
A healthcare power of attorney is a separate document. It names an agent to make medical decisions: consenting to or refusing treatments, choosing doctors and facilities, and accessing medical records. The signer controls how much authority the agent gets. Some people grant full authority including end-of-life decisions like withdrawing life support. Others restrict the agent to decisions about comfort care and pain management.
A living will works alongside the healthcare power of attorney. It records specific treatment preferences in writing, such as a refusal of mechanical ventilation or artificial feeding under certain conditions. The healthcare agent uses it as a guide and handles anything it does not address. Having both documents is stronger than having either on its own.
When the Power of Attorney Starts Working
Most durable powers of attorney take effect the moment they are signed. The agent can act immediately, even while the signer is still fully competent. That feels backwards to a lot of families, but it is the arrangement most states and financial institutions prefer, because it avoids arguments about whether and when the person actually lost capacity.
A “springing” power of attorney is the alternative. It activates only when a specific trigger occurs, usually a doctor’s certification that the signer lacks capacity. In theory this is safer. In practice, banks and brokerages often refuse to honor springing documents without multiple physician letters or even a court order. Florida no longer allows new springing powers of attorney after a certain date. Most other states still recognize them, but the delays are a real problem when bills come due right after a medical crisis.
For either kind, the signer must be mentally competent at the time of execution, must understand what the document does, and must choose the agent voluntarily. Witness and notary requirements vary by state. Naming a backup agent is worth doing, because the primary agent may eventually be unable or unwilling to serve.
POLST Forms for Emergencies
For someone already diagnosed with dementia, a POLST form (called MOLST in some states) fills a gap that advance directives cannot. A POLST is a medical order signed by a healthcare provider, not just a personal document. Paramedics are required to follow POLST orders at the scene. They generally cannot honor a healthcare power of attorney or living will during an emergency call. Without a POLST, EMTs must stabilize and transport the patient regardless of what the advance directive says. Every state now has some version of the form, though recognition and availability vary.
Default Family Surrogates When No POA Exists
If no healthcare power of attorney was ever signed, the family does not always have to go to court. Forty-six states have default surrogate consent laws that automatically designate a family member to make healthcare decisions for an incapacitated person. The typical priority is spouse first, then adult children, then parents, then siblings. Some states extend the list further, to grandchildren, nieces, nephews, and close friends. The exact order varies by state.
This authority covers healthcare decisions only. It does not reach bank accounts, real estate, or tax filings. Families routinely get stuck here: a daughter can consent to her mother’s surgery under the surrogate statute but has no legal way to pay the hospital bill from her mother’s checking account. For financial matters without a durable power of attorney, a separate court proceeding is almost always needed.
Court-Appointed Guardians and Conservators
When no advance planning exists and the situation goes beyond what default surrogate laws cover, someone must petition a court to appoint a legal decision-maker. Terminology varies. “Guardian” usually refers to the person managing personal and healthcare decisions, and “conservator” to the person managing finances. Some states use “conservator” for both. The same person often serves in both capacities.
How the Petition Works
A family member or other interested party files a petition in probate court stating that the person lacks capacity to manage their own affairs. The petition must include medical evidence, usually a physician’s evaluation or neuropsychological assessment.
The court generally appoints a guardian ad litem or court investigator to look into the situation independently. That person interviews the individual with dementia, reviews the medical evidence, and reports back with a recommendation. The guardian ad litem is a factfinder for the court, focused on the person’s best interests rather than any family member’s position. A hearing follows, and the judge decides whether to appoint a guardian and who it will be.
Limited Versus Full Guardianship
Courts increasingly prefer limited guardianships that restrict the guardian’s authority to only the areas where the person genuinely cannot function. Someone in early-stage dementia may manage routines and social activities well but struggle with complex financial decisions. A limited guardianship targets the gap without stripping away all autonomy. Full (plenary) guardianship removes essentially all legal decision-making rights and is reserved for people who cannot manage any aspect of their own affairs.
What Guardianship Costs
Guardianship is expensive, which is the strongest practical argument for signing powers of attorney in advance. Court filing fees alone typically run several hundred dollars. Attorney fees for an uncontested guardianship often reach $4,000 or more. Contested cases where family members disagree can push costs well above $10,000. The person with dementia may also need their own attorney, and the guardian ad litem’s fees are often paid from the incapacitated person’s estate. When a professional guardian is appointed instead of a family member, ongoing management fees commonly run $100 to $200 per hour.
Once appointed, guardians of the person must file periodic reports with the court on the individual’s well-being, usually annually. Conservators must file an initial inventory and later financial accountings detailing income, expenses, and remaining assets.1U.S. Department of Justice. Guardianship: Key Concepts and Resources
The Social Security Exception
Here is the detail that catches almost every family off guard: a durable power of attorney does not give anyone authority over Social Security or SSI benefits. The Treasury Department does not recognize powers of attorney for negotiating federal benefit payments.2Social Security Administration. Frequently Asked Questions for Representative Payees Even with a valid durable power of attorney and a joint bank account, you cannot legally manage someone’s Social Security checks until the Social Security Administration formally appoints you as their representative payee.
Appointment requires an application on Form SSA-11. The SSA evaluates the applicant’s suitability, including criminal history and prior performance as a payee for anyone else.3Social Security Administration. POMS GN 00502.107 – The Representative Payee Application Once appointed, the payee must use benefits for the person’s current needs (housing, food, medical care, personal items) and file an annual accounting showing how the money was spent. This system runs entirely separately from any state-level power of attorney or guardianship.
Capacity Is Not All or Nothing
A dementia diagnosis does not automatically mean someone cannot make any decisions. Capacity is task-specific. A person might choose their meals and daily activities perfectly well while being unable to evaluate a complex financial contract. Capacity also fluctuates, especially in earlier stages. Many people with dementia are clearer in the morning and more confused by evening.
Every adult is legally presumed to have capacity until proven otherwise. The burden is on whoever challenges that capacity, not on the person with dementia to prove they can still think clearly. Clinical assessments look at whether the person can understand relevant information, appreciate how it applies to their situation, reason through options, and communicate a choice.
Even when capacity is significantly diminished, the person’s past wishes and current preferences still matter. Decision-makers are expected to choose the least restrictive option that serves the person’s best interests, and prior expressions about care, living arrangements, and end-of-life treatment should guide decisions wherever possible.
Supported Decision-Making
A growing number of states now recognize supported decision-making agreements as a formal alternative to guardianship. Instead of transferring authority to someone else, the person keeps their legal rights while receiving help from trusted supporters who explain options, help weigh consequences, and assist with communicating choices. It works best in early and moderate stages of dementia, when the person can still engage meaningfully with the right assistance. It is not a replacement for guardianship once someone has advanced too far to participate, but it preserves autonomy longer than many families expect.
What the Decision-Maker Owes the Person
Anyone managing another person’s affairs, whether under a power of attorney or a court appointment, is a fiduciary. The person’s interests come first. The agent cannot use the person’s money for personal benefit, cannot favor themselves in decisions, and cannot mix the person’s funds with their own. The core duties are loyalty, care, and transparency.
Record-keeping is where agents most often get into trouble. Every financial transaction on behalf of the person should be documented with receipts, bill-pay records, and account statements. Courts have disallowed expenses and found agents in breach of duty specifically because records were missing. Cash transactions are especially risky. Paying a caregiver in cash without a receipt invites later scrutiny.
A breach of fiduciary duty can lead to removal, court-ordered repayment, and in serious cases criminal prosecution for embezzlement, fraud, or larceny. Family members who suspect mismanagement can petition the court for an accounting and seek removal if warranted.
Changing or Ending the Authority
A person with dementia who still has sufficient capacity can revoke a power of attorney at any time, provided they understand what the document does and the consequences of revoking it. If a family member believes an agent is abusing authority, they can petition the court to review the arrangement. The court can remove the agent, appoint a replacement, or establish a guardianship instead.
Ending a court-ordered guardianship is more involved. A petition can be filed by the guardian, a family member, or the person under guardianship. Grounds typically include restoration of capacity backed by medical evidence, the person’s death, or a showing that the guardianship is no longer necessary. A guardian who wants to resign generally has to identify a suitable replacement first and file a final report with all property and records turned over. Courts can also remove a guardian for cause: mismanagement, conflicts of interest, fraud, or failure to file required reports.
Every power of attorney terminates automatically when the person dies. The agent’s authority ends immediately, even if bills are unpaid. Legal control then passes to the executor named in the will, or if there is no will, to an administrator appointed by the probate court. Families who have run a loved one’s affairs under a power of attorney for years are sometimes caught off guard by this transition, which is why pairing powers of attorney with a will or trust prevents a gap where no one has legal authority to act.