Every Florida adult needs a valid Durable Power of Attorney. This essential legal document gives one or more people – your “agents” – the authority to handle financial matters on your behalf. It provides you with important protections, one of which is keeping you from becoming a ward of a court-ordered guardian in the event you become incapacitated.
Why Your Durable Power of Attorney Is Important For Florida Medicaid Planning
The protections your Durable Power of Attorney (DPOA) affords you are commensurate with the powers you give your agent. If a specific power is not enumerated in the document, it is assumed that your agent does not have it. Blanket language like “My agent can do anything I can do” is legally insufficient. It follows then that your Durable Power of Attorney must be carefully crafted, and the language must be precise. Using pre-printed forms and do-it-yourself websites can be perilous.
Medicaid planning is one area that well illustrates why you should have a legally sound Durable Power of Attorney drafted by an experienced elder law attorney. Typically, our office is contacted for Medicaid planning services when a family is in a crisis or near-crisis situation. A loved one is usually incapacitated and residing in, or about to move into, a long-term care facility. With long-term care costs in Florida hovering at about $100,000 annually, the family’s funds are quickly diminishing. If the incapacitated person is married, the spouse is frightened that there will be little left to live on in the years ahead. The family is trying to preserve at least a portion of the assets that remain.
Our attorneys can often recommend strategies to hasten the incapacitated individual’s Medicaid eligibility, thus protecting a significant chunk of assets from nursing home costs. However, implementing those strategies is possible only if the Medicaid applicant’s agent has the legal authority to take certain steps. That is why the Durable Power of Attorney is critically important for Medicaid planning purposes.
“Superpowers” Are Key For Florida Medicaid Planning
When our attorneys examine the Durable Power of Attorney of the individual seeking Medicaid nursing home benefits, we look to see if it gives the agent certain powers that enable the agent to take the necessary steps. These powers are known as “superpowers,” and fall outside the scope of traditional fiduciary duties. With respect to Medicaid planning, some of the superpowers we look for are:
- The power to make gifts to others from the principal’s funds. This will allow the agent to make gifts, with our guidance. This is important because, despite the 5-year look-back rule, doing so can help establish Medicaid eligibility.
- The power to create or amend an inter-vivos (living) trust. This will be important if the applicant’s income is too high to qualify for Medicaid. In that case, we may recommend creating a qualified income trust to hold the excess income. The agent must have the legal authority to establish such a trust on the applicant’s behalf.
- The power to make changes to or create beneficiary designations or rights of survivorship.
- The power to waive the principal’s right to be beneficiary of certain retirement plans and annuities.
The execution requirements for “superpowers” are specific and rigorous. Each of the superpowers must be clearly listed on the DPOA, and the principal must physically initial each section that defines each superpower.
What if our attorneys determine that a DPOA is not adequate for Medicaid planning purposes? Unfortunately, if the applicant is currently incapacitated, as is typically the case, a new DPOA cannot be created. The only recourse at that point may be for the family to seek guardianship of the incapacitated person. Of course, that means more delays in applying for Medicaid benefits, more time having to private pay, and more money lost to nursing home costs.
What If My Existing DPOA Doesn’t Include These Superpowers, Or I Don’t Have A DPOA?
Clearly, you should establish a sound Durable Power of Attorney in advance, before it’s needed. If you have an older Durable Power of Attorney that does not include these very important superpowers, you should have your attorney create a new one that does include them. That way, Medicaid planning can be done on your behalf if it is ever needed.
Also, you should be aware that financial institutions tend not to honor older documents. It is always wise to keep your DPOA updated. And if you do not have a Durable Power of Attorney, this is the time to have your elder law/estate planning attorney draft one for you. As noted above, once you become incapacitated, it will be too late to do so, and guardianship may be necessary.
Contact The Karp Law Firm and we can review your Durable Power of Attorney or create one for you. We will make sure the document supports any Medicaid planning steps that may be needed in the future, and is in sync with your overall estate plan.