When applying for Medicaid you need a Powerful Power of Attorney.
Kerry Peck and Rick L. Law in their book “Alzheimer’s and the Law” refer to what they call a powerful power of attorney. A powerful financial power of attorney is one that includes the power to do Medicaid-related asset protection. It might include the following provisions:
- the Power to make gifts to specified loved ones such as a spouse or disabled child
- the power to create a trust, or if the person has a trust the power to add or remove assets from the trust.
- The power to apply for public entitlements like Medicaid
Why are these provisions important in a financial power of attorney for a person who has Alzheimer’s? Here’s an example of a situation we recently encountered.
A son hired us to file an application for Medicaid for his father. The father had no assets, however his income exceeded Medicaid’s maximum allowed monthly income of approximately $2022.00. In order to qualify the father, we suggested an approved strategy of preparing a Qualified Income Trust (Miller Trust) to reduce the father’s income below the maximum monthly income allowed.
Since the father was no longer competent to sign the trust documents, the son provided us with the copy of a standard power of attorney naming the son as the father’s agent. However, the power of attorney failed to state that the son had authority create a trust.
Several banks advised us that without this authority they would not set up a checking account for the Trust. The son was faced with the prospect of having to go to court and apply for a conservatorship, with its additional cost and reporting requirements to get the authority he needed to set up the Trust.
This situation could have been avoided by creating a powerful not powerless power of attorney. If filing for Medicaid is a possibility for an older adult, remember to include in the financial power of attorney the authority to complete the necessary transactions to qualify for Medicaid.
Tom Packer is an Elder Law Attorney serving all of Southeast Idaho. As part of his law practice, Tom offers Life Care Planning to deal with the challenges created by long-term illness, disability and incapacity. If you have a question about a senior’s legal, financial or healthcare needs, please call us.