Three Provisions that Need to Be in Your Durable Power of Attorney
A durable power of attorney is an estate planning document that grants power to the agent you select to make decisions on your behalf. These decisions can govern legal and financial transactions. For example, provisions in your durable power of attorney could authorize your agent to deposit your paycheck or pay your mortgage.
The primary purpose of this estate planning tool is to ensure there is someone with legal authority who can make these critical decisions if you are unable to act for yourself. A valid durable power of attorney also allows us to retain control and avoid court proceedings to choose a decision maker. Most of us are familiar with the contractual concepts associated with this document and the need for it in the event of incapacity.
What we are less familiar with, however, is the use of the durable power of attorney in the elder law context. As we age, it is critical that we think about our potential long-term care needs. We need to determine how we will find, access and, ultimately, pay for the care we need. Unfortunately, most of us will not be able to age-in-place in our homes and will need to live in a long-term care facility. In these instances, we may need to turn to programs such as Medicaid to pay for care. The ability to plan for long-term care and access public benefits programs must be included within the durable power of attorney for your agent to use.
This is where many durable powers of attorney fall short today. They do not contemplate the need for long-term care planning strategies. Let us share three of the key provisions that need to be included in your durable power of attorney.
1. Plan for long-term care. Depending on when the durable power of attorney was initially drafted and executed, it may not have long-term care planning powers contained within it. Planning for long-term care is critical for you and your family. The costs of skilled nursing facilities continue to rise and many families cannot afford them without applying for a program such as Medicaid. Make sure your durable power of attorney gives your agent the authority needed to engage in this type of planning and apply for benefits.
2. Hire a family caregiver. Many of our clients want to stay in their homes for as long as possible. In some instances, this can happen when a family member steps in and provides care for the senior in the home setting. The agent needs to have the authority to hire him or her to care for the senior. It is also important to determine if the power of attorney limits or precludes gifts to family members. If this provision is present, it should be reviewed by your elder law attorney together with the ability to hire a family caregiver, to determine if a conflict exists.
3. The power to make gifts. Another power to consider granting your agent is the ability to make gifts. While gifting without a long-term care strategy in place can potentially harm your ability to qualify for public benefits, this is not necessarily the case when you work with your elder law attorney. Your elder law attorney can advise you on when gifting may be appropriate for your unique situation in light of your need for continued long-term care.
Attorney Alan L. Hougum can assist with Estate Planning and Elder Law needs. He can be reached at email@example.com or (715) 843-5001.