Just do a quick search, and run-of-the-mill power of attorney documents blanket the pages of the internet. But when you have a loved one and need real protection, you need something stronger. Look no further than an Elder Law Power of Attorney. I cannot tell you how many times adult children all my office asking me to review the Power of Attorney they got online. These documents are NOT worth the paper they are written on. They provide FALSE assurance to you and your family. A Power of Attorney is USELESS if it cannot do what your family needs to do such as plan for your incapacity or apply for Medicaid.
What is an Elder Law Power of Attorney?
The Elder Law Power of Attorney is stronger than a normal POA that you can likely pull from the internet with a quick Google search. It is robust and comprehensive. It actually gives your family and loved ones useful powers that will help you. The Elder Law POA grants unlimited gifting powers. Why is this important? Well, as an elderly person with a fixed income, you may be worried about how nursing home costs will eat into your assets. With an Elder Law POA, you can protect yourself or a loved one. Our chances of ending up in a nursing home are high – 25% of the elderly will need nursing home care at one point or another. The Elder Law POA will allow you or your loved one to protect your assets from nursing home costs if you apply for Medicaid while in a nursing home.
If you are using the gift and loan strategy, which is possible with the Elder Law POA, you can transfer half of your nest egg to your beneficiary as a gift. The other half can be loaned to the beneficiary with a supporting promissory note and rate of interest. You will be able to qualify for Medicaid this way, and not have to break the bank to do so.
These gifts are not necessarily “free,” however. You will be subject to a penalty period five years after the gifting. You or a loved one, whoever has made the gift transfer, will need to pay the nursing home directly for a period of time. Each month during this penalty period, the beneficiary who received the gift and loan, will pay your nursing home costs. At the end of the penalty period, you can qualify for Medicaid to pay for your care for the rest of your life, and your child will receive the intended gift.
All Powers of Attorney are Not Equal!
A standard power of attorney is not going to provide you with all of this protection. If your power of attorney does not have unlimited gifting powers, you’re limited to gifting only $500 per year. The Elder Law POA also grants powers to the agent to create, modify and revoke trusts. The agent can also change beneficiaries.
The best route to go down is creating a Medicare Asset Protection Trust five years or more before ever needing one (hint: if you are 55 years old or older, look into this now!) If you create a Medicare Asset Protection Trust, you do not need to fork over a dime of your assets to the nursing home.
What do I do if my POA is not Acceptable?
You might think you are saving a few bucks now by going online and printing out a standard power of attorney form and appointing a loved one as your power of attorney. A Power of Attorney is a private appointment of an agent that does not require court intervention. However, many simply POAs are short and inadequate as legal documents. The power of attorney can be revoked whenever, without any need for court intervention and can be limited to narrow areas or transactions.
When your POA is too sparse, you may end up with a court-ordered Guardianship. Guardianships require court approval and involve extensive review by a judge. A finding of incapacity is required before a guardian will be appointed. Guardianships can be limited, but the limitations are generally within the judge’s discretion. Overall, guardianships can be a nightmare and easily prevented. Guardianships take a long time to undergo a judicial process, there may be fights over who should be the guardian, the judge can change the guardian and a complete stranger has total control over the process. This could have been avoided with a strong power of attorney, or better yet, an Elder Law power of attorney.
Once you are incapacitated, you no longer have a say in what happens to your asset and health care planning. A solid elder law POA will prevent your loved ones from having to guess what your wishes were when you are no longer able to make your own decisions. If you have questions about the elder law POA, give us a call
Lori Vella is an Estate Planning and Business Attorney. She works virtually throughout Florida and New York, but has her home office in Tampa, Florida. She is mom to a little boy which ignited the passion for helping other families. She and her son enjoy car rides, playgrounds and taking mini-adventures. They also have an organic garden that surprisingly yields vegetables. Lori considers herself well-versed in Seinfeld and welcomes any trivia!
Disclaimer: The Law Office of Lori Vella’s website contains general information directed to Florida residents. This firm does not intend to give legal advice through its pages and/or blog. If you need legal advice, we encourage you to find an attorney licensed in your state. This language on this website does not create an attorney-client relationship between you and this firm.