When naming their agent they should also pick someone who is capable. I would recommend picking someone who has managed their own financial affairs well. Typically spouse's name each other as agents in their POA document plus successor agents. Having successor agents is important because an aging spouse might be unable to serve as an agent due to their own incapacity or death. Aging parents should also prepare a summary of financial accounts and place it with their other important documents and let their agent know where these documents are kept. An agent who knows where everything is will be ahead of the game if they are ever called into action.

Another critical document for an aging parent is the health care proxy/advanced medical directive. This document operates similarly to a durable power of attorney but focuses on health related decisions. Having this document grants a person's healthcare agent the right to make medical decisions on their behalf, access their medical records, and convey what if any end of life medical treatments they want. For an aging parent doing this document while they have the mental wherewithal can avoid unwanted medical intervention later in life.

Finally, adult children need to be keenly aware this is a sensitive subject and they should approach their parents with the love and respect they deserve. Likewise, aging parents need to be aware of the fact their children are also dealing with their own lives i.e. careers, children, and possibly health issues. A respectful dialogue is the key to making preparations now in case the aging parent is ever afflicted with capacity issues.

Hopefully the aging parent never develops cognitive issues but better to plan for the worst and hope for the best.

Michael Maye is the founder and president of MJM Financial Advisors (www.mjmfinadv.com), a registered investment advisory firm in Berkeley Heights, N.J. He is a member of the National Association of Personal Financial Advisors (NAPFA) and has been a speaker covering tax topics at NAPFA's national and regional conferences. Maye has also been a frequent contributor to the Star Ledger of New Jersey's "Biz Brain" and "Get With the Plan" articles. In addition to NAPFA, he is a member of Financial Planning Association, American Institute of Certified Public Accountants, New Jersey State Society of CPAs and the Estate Planning Council of Northern New Jersey.

Follow TheStreet on Twitter and become a fan on Facebook.

If you liked this article you might like

2 Obamacare Taxes Hitting High-Income Earners

Donating Car to Charity May Not Warm IRS Heart

168 Hours a Week of Retirement? Better Get a Job

Average Investor 20 Year Return Astoundingly Awful

Simplest Estate Reduction Strategy Is Generosity