If you want to make sure that your or your family member’s assets can be protected from a potential future need for long-term nursing care, you or your loved one must sign a “Medicaid Planning Compliant” General Power of Attorney document (“MCPOA”). The MCPOA will serve to allow you to appoint an Agent who has the necessary authority to enter into proper Medicaid asset protection planning should you become incapacitated or otherwise unable to act for yourself.
As an estate planning and elder law attorney with twenty-six (26) years of experience, I have had the opportunity to meet with many clients who bring previously signed planning documents for me to review. This gives me a unique perspective to see what kind of planning is being done for the masses. So, I know from personal experience that there are many people who think all power of attorney (“POA”) documents are created equally. New clients are often shocked when I explain all the ways that their previously drafted POA documents fall short of their needs. This article will examine the impact of a deficient POA document and how a new MCPOA must be drafted to make sure that a client’s goals may be carried out by their Agent.
In order for your Agent to have the authority to take action on your behalf, they must be given the express power to handle specific responsibilities. It is not sufficient to simply have a document that recites some general authorities and a reference to your state POA statute. Everything you want and might need your Agent to do for you MUST be spelled out in detail under the MCPOA. Because we are both experienced estate planning AND elder law attorneys here at UTBF, we know all of the powers that have to be in your MCPOA in order for your Agent to do your asset protection planning should the need arise.
If you fall ill, are in an accident or otherwise become unable to act on your own behalf and you do not have a MCPOA, it is significantly more likely that your Agent will not be able to enter into the appropriate Medicaid asset protection planning on your behalf and your assets will have to be spent down at the rate of $12,000 to $15,000 per month until they are completely expended. Only after all of your assets are gone will you qualify for Medicaid. It does not matter that you have a basic POA document in place, your Agent will need to be given all of the important powers necessary to activate a comprehensive Medicaid asset protection plan.
Although I cannot list all of the necessary Medicaid planning powers in this article, I will detail a couple of the most important ones that I see are missing under more basic POA documents. They are as follows:
- The Unlimited Gifting Power: The number one most important power that I see omitted from basic POA documents is the unlimited gifting power. Failure to provide your Agent with the power to make unlimited gifts is the omission that is most likely to prevent the protection of your assets. Gifting is the number one weapon that we will utilize during the Medicaid asset protection planning process. If you cannot do the planning because of your mental or physical condition, your AGENT must be given the express power to make unlimited gifts on your behalf.
- The Power To Change Account Beneficiaries: Many of your most valuable assets are transferred at death according to beneficiary designations you have signed into effect for specific accounts. It is common for you to have named your spouse as the primary beneficiary on IRA, 401k, annuity and life insurance assets. However, what if you become incapacitated and your spouse is in a care facility? If that is the case, you might not want your spouse to inherit accounts via direct beneficiary designation. If your Agent under a POA is not given the power to change beneficiaries on accounts and you pass away before your institutionalized spouse, these valuable accounts will transfer to your spouse and will be spent down on your spouse’s nursing care. Make sure that your Agent has broad discretion to remove your spouse and name other beneficiaries should the need arise.
As you can tell by reading through this article, not all POA documents are created equal. If we have already prepared your POA documents, you likely have the necessary Medicaid planning compliant provisions in place. However, if you have not yet had our attorneys draft your POA documents or those of a loved one, please get those documents out and review them in detail. We would also be happy to review your POA documents with you, help to revise them and potentially put a more comprehensive asset protection plan in place. Please call our office at 610 933 8069 to schedule a comprehensive review and planning appointment.
In advance of your next meeting to review the POA documents and discuss Medicaid asset protection planning, please watch our recent elder law webinar in which we discuss the most commonly used nursing home asset protection tool, the Medicaid Asset Protection Trust (MAPT), how it works and its various benefits. CLICK HERE TO ACCESS THE PROGRAM.
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