Many of my clients arrive with a “durable” power of attorney, believing they are ready. However, after carefully reviewing it, I invariably have to recommend that you need a new one. Why is that?
First, if the power of attorney is more than five years old, many financial institutions may simply refuse to honor it, believing that it may have been revoked.
You may not realize it, but some states even stipulate that anyone who arbitrarily or without reasonable cause refuses to comply with the instructions of the agent named in a valid power of attorney will be responsible for the costs, expenses and attorney’s fees for appoint a curator. or go to court to enforce the power of attorney.
Unfortunately, even if the law says they must comply with the power of attorney, it could be a costly and time-consuming proposition to force them to do so. A better idea is to simply sign an updated one every few years.
Second, most power of attorney documents do not allow the agent named on the document to give them away, or if they do, it is mishandled! Some documents limit donations to the annual federal gift tax exclusion (currently $ 12,000 per person per year) or prohibit donations to the person acting as agent. While those provisions can be helpful to a wealthy client, they can really get in the way of effective Medicaid planning. In fact, it would be better if the document said nothing about gifts than to include such limitations, because it is always possible to go to court for permission to make large gifts for Medicaid planning purposes, but once the judge sees those limits on the power of attorney document, it may not allow it.
So what are the “mandatory” provisions to include in a durable power of attorney? It should specifically address gifts for Medicaid planning purposes. You should allow gifts to the agent, perhaps by someone other than the agent. It must include the power to purchase a “Medicaid annuity” and make a loan secured by a Medicaid-compliant promissory note. Must include at least one successor or backup agent. It should include many powers that you think you don’t need, but may need in the future!
In short, the cheap or free forms you get at the office supply store or online are bogus businesses. Spend the small fee it costs to get a good power of attorney, one that includes the important provisions mentioned above. In the long run, it could save your family thousands of dollars. And this is good!