“I can just download one off the internet,” is a phrase every eldercare and estate planning attorney has heard at one time or another. It is often said in reference to a Power of Attorney form.
As an attorney, you have two possible responses: extreme defensiveness followed by some pouting and head shaking, or educating the client and shedding light on a nuanced, but powerful document which, if completed incorrectly, can hinder Medicaid planning.
A flawed Power of Attorney can be spotted a mile away. Usually, something is missing. A proper New York State Power of Attorney should run north of eight pages. Less than eight pages, I become concerned: Either the POA is more than two decades old or it is missing sections.
What could be missing?
Clauses allowing an agent to change beneficiaries, add or remove joint account holders and transfer amounts of money greater than a few thousand dollars are vitally important. Alternate agent appointments are often missed. If an agent for a Power of Attorney shares the same generation as the creator, there is a possibility that both agent and creator are infirm at the same time. Choosing alternate agents may avoid that issue.
Powers of Attorney should contain a provision allowing an agent to create and manage all types of trusts for the benefit of the creator. If this language is missing, Medicaid planning becomes exponentially more difficult.
Unlike Medicare, which is a basic senior health care entitlement, Medicaid has financial eligibility criteria that is restrictive and, in some circumstances, potentially punitive. Navigating the Medicaid system requires tremendous financial flexibility. Asset transfers, trust creation and estate planning figure in a majority of Medicaid cases that we oversee.
Without a fully formed Power of Attorney, accomplishing fundamental Medicaid planning tasks becomes almost impossible. For example, “trust creation” can mean drafting an Irrevocable Trust to hold assets or joining a Supplemental Needs Pooled Trust to hold excess income for Community Medicaid Home Care applicants. In each instance, a trust is protecting a disabled person’s financial resources.
If the Power of Attorney is missing that “trust” section and the Medicaid applicant lacks capacity to sign or make a new POA, then the family would have to seek an Article 81 Guardianship, which is a costly, time consuming and intricate court proceeding.
We are a form-downloading society. From bounce house waivers to school health forms, PDFs proliferate.
I am always in favor of a good downloading. However, I must draw the line at Powers of Attorney. The scope and reach of these documents require precision and experience. An incomplete Power of Attorney may lead to very costly outcomes. Having the right Power of Attorney allows a family to execute each Medicaid planning task quickly and effectively.
Alan D. Feller, Esq., is managing partner of The Feller Group, located at 625 Route 6, Mahopac. He can be reached at email@example.com.