Power of Attorney: Whom to Name and What Powers to Give

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It's important to have a Durable Power of Attorney (POA) to assist with Medicaid planning and, even though it may seem easier or less expensive, there are definitely reasons to avoid buying a POA form online. However, even if you hire an attorney to prepare a POA form for you, there are still important decisions to be made and issues to be informed about.

Whom to Name

One of the most critical POA decisions is whom should you name as the person to give the powers to (i.e. the "Agent")?

Since this individual will have ability to sign your name on checks, open and close bank accounts, make gifts of your assets, and possibly decide where you should live, you must have complete trust in their honesty as well as their ability to do the job in a stressful situation.

The normal tendency for aging parents is to name one or more of their adult children. If you believe that your child is completely trustworthy and up to the task, then certainly naming a child as your Agent is a fine idea. If you trust more than one child, but one lives closer to you, then consider naming the closer-living child as your initial Agent, with the other child named in the document as the back-up Agent if, for any reason, the initial Agent fails or refuses to serve.

It is also possible to name co-Agents, but that can be problematic. You will need two signatures on everything, and anyone the Agent deals with will want to be sure that both Agents have agreed to the same course of action. If one of the Agents is ill or unavailable (out of the country, etc.), then it is as if you have no Agent named, since nothing can be done unless and until both Agents have agreed on the action to be taken.

Other family members are also good choices, if they are mature, stable, honest, trustworthy, and they understand that they will be making financial decisions on your behalf in stressful situations.

Important Medicaid Planning Clauses

When you are facing the possibility of needing long-term care and possibly qualifying for Medicaid, there are specific clauses that must be included in the POA document:

  • The power to make gifts to the spouse (if any) and/or children, for purposes of qualifying for Medicaid, as well as how such gifts should be allocated among family members.
  • The power to apply for Medicaid on your behalf and represent you in any Medicaid administrative appeals.
  • The power to transfer your assets into a "Medicaid annuity" or other non-countable form.
  • The power to make transfers to the Agent him or herself (normally not permitted under state law).
  • The power to transfer your assets to a new or existing trust for Medicaid planning.

I have never seen any off-the-shelf or even online POA document that contains even a portion of these powers! But also note that many attorneys who routinely prepare excellent durable POA documents but who do not deal with Medicaid planning issues will also fail to include these in their documents. So it is a good idea to mention these points to them to be sure they consider adding some (if not all) of the above powers.

Finally, note that a "durable" POA is one that continues to be effective even after you become mentally incapacitated. Of course, that's precisely when you need it, so be sure that's the type of POA document you sign!

K. Gabriel Heiser is an attorney with over 25 years of experience in elder law and estate planning. He is the author of "How to Protect Your Family's Assets from Devastating Nursing Home Costs: Medicaid Secrets," an annually updated practical guide for the layperson.

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13 Comments

Gabe is 100% correct and wish to thank you for your gratis on this. I had both my parents give me POA, which I did through legal zoom, however, at the time, I did not give myself any financial gain. My Dad died and when it came time to qualify my mother with Medicaid, so she could move to assisted living, without loosing all they worked for, my Elder Attorney had to change the POA so that I could benefit financially through a Personal Service Contract. I am her sole guardian now with Social Security as Rep Payee and all of her assets are in my name. I added my brother, who is the oldest, lives on the other side of the country to the bank accounts that we hold for my mothers assets and he also has the same POA, in the event something happens to me. We are not on the same POA, so I do make all the decisions financially for my mother and he will have access to continue on in the event I am unable. I endorse whole hardheartedly, the advice here, to seek out an Elder Attorney to save time and stress.
Social Security requires a yearly accounting? I've never heard of that. Do you have any more info on that?
This is what I was told at the Social Security Office and it was stated in a letter they sent to me that they will require a once a year accounting of what I did with my mothers money. Our Elder Attorney recommended that I write physical checks to create a paper trail (in this digital age, which I think would have been fine) and I save the images of cancelled checks to my computer so that I will have all documentation if they ask for it. Social Security even sent me blank copies of their accounting statements they will require filled out.