By Linda M. Toga, Esq.
THE FACTS: My elderly aunt, Mary, has no spouse or children and is getting to the point where her health is failing and she is forgetting to pay her bills. Mary has a will and a health care proxy, but she has not appointed anyone to handle her financial affairs or assets.
THE QUESTION: What do you suggest?
THE ANSWER: Mary should make an appointment with an experienced estate planning/elder law attorney to discuss the benefits of having a power of attorney prepared.
HOW IT WORKS: A power of attorney is a legal document whereby a person can delegate to another person authority to carry out specific types of transactions on their behalf.
The person who delegates authority under a power of attorney is the principal. The people to whom authority is delegated are called agents. A principal can name a single agent or co-agents. When a single agent is named, it is important to name a successor agent in case the person who is named as the sole agent is unable to serve. If co-agents are named, the principal must decide whether the agents must act together or may act alone.
The New York State Legislature created a basic power of attorney form that was most recently revised in 2010. This statutory form allows the principal to delegate authority to carry out banking transactions, sell real and personal property, deal with insurance carriers and address health care billing and payment matters, among other things.
Although the basic power of attorney may be sufficient for some people, due to her age and her situation, Mary should sign what I refer to as an enhanced power of attorney. An enhanced power of attorney allows people to delegate authority to another person to perform transactions that are not covered in a basic power of attorney and that may be needed in the context of estate and Medicaid planning.
These transactions include, but are not limited to, creating and/or revoking trusts, changing beneficiaries on accounts, life insurance policies and pension plans, accessing online accounts, entering into care giver agreements, borrowing money, making loans, making arrangements for pet care, waiving attorney/client privilege and signing intent to return home letters for Medicaid purposes.
As mentioned above, the basic power of attorney is not adequate to address the countless types of transactions that may be needed in the context of estate and/or Medicaid planning. That is why it is important for Mary to speak with an attorney who concentrates in the areas of estate planning and elder law.
In addition to being able to provide Mary with a power of attorney that meets her needs, the attorney will be able to discuss with Mary the importance of signing the Statutory Gifts Rider that is part of the New York statutory form. By signing the rider, Mary will be able to give her agent gifting authority to make gifts in excess of $500 per year to individuals or charitable organizations. This gifting authority is essential if Mary will be applying for Medicaid and has assets that must be moved out of her name in order to qualify for benefits.
Without the rider, the power of attorney will not allow Mary’s agent to engage in last minute Medicaid planning that could mean the difference between being eligible for benefits and being forced to spend down her assets before receiving Medicaid.
Linda M. Toga provides legal services in the areas of estate planning/elder law, probate and estate administration, real estate, small business service and litigation from her East Setauket office.