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Understanding Financial Powers of Attorney – Are They a “License to Steal”?
Estate Planning

Understanding Financial Powers of Attorney – Are They a “License to Steal”?

by Guest Blogger
written by Guest Blogger

A financial power of attorney is a valuable legal document that ensures that your financial matters will continue to be handled – should you become incapacitated and unable to do so yourself. However, placed into the wrong hands, these documents can become a license to steal. Understanding Financial Powers of Attorney – Are They a “License to Steal”?
In your power of attorney, you’re called the “principal” and the person you select to have authority over your finances is called the “agent” (or “attorney-in-fact”).

A general power of attorney allows your selected agent to do everything that you could do with your assets. They can sell your home, execute a new deed and transfer title, take out a loan, and access your bank accounts. It’s a very broad and powerful document.

A special power of attorney limits your agent’s authority. You might choose to grant them the ability to access only one of your bank accounts, or to sign specific real estate documents while you’re out of the country.

Your agent’s authority becomes effective either immediately or only when you become incapacitated. Granting immediate authority is generally not advisable (except in the limited capacity of a special power of attorney). Why give someone the authority to access and control your finances when you’re perfectly capable of doing it yourself?

A “springing power” gives your agent financial authority only if you become incapacitated. The test to determine “incapacity” should generally require that two medical doctors state, in writing and under penalty of perjury, that they have examined you and concluded that you are unable to make sound financial decisions. Your agent’s authority then “springs into being”. Your agent can then literally staple the two doctors’ declarations to the back of your power of attorney, and have full authority to handle all financial matters.

You can see where this could lead if the agent you selected turns out to be a crook.

A typical scenario is a widowed mom who is becoming more and more forgetful and is developing signs of dementia. Years earlier, she signed a financial power of attorney and named her son as her agent. At the time, all was fine because son was financially stable and trustworthy. However, he’s now lost his job, his house is about to go into foreclosure, and his wife is pressuring him to use the power of attorney to access “just a little” of mom’s money to get them through this hard time.

Of course, once the son and his wife enjoy this newly found cash cow, it gets easier and easier to continue to take money. Mom has no clue what’s going on.

It can get worse. When the checking and savings are gone, there’s still a lot of equity in mom’s home. “We’ll just take out a small loan”, says the son. Not much later, he and his wife need to take out a second loan to use that money to make the monthly mortgage payments. Before long, mom’s house is being foreclosed on.
Perhaps 9 out of 10 financial elder abuse cases involve a family member as the perpetrator – usually a son or daughter. And in many such cases, a financial power of attorney was the vehicle used to accomplish the rip-off.

These documents are important and can be very useful. Many a conservatorship (or guardianship) can be avoided if valid financial powers of attorney are in place.

Obviously, the key point is to make absolutely certain that the selected agent is honest and trustworthy. Placed into the wrong hands, these documents can become a license to steal.

George F. Dickerman is a Riverside, California elder law attorney. His practice focuses on advocating for, and protecting, the elderly and their loved ones. For more information, please visit: elder-law-advocate.com.

Understanding Financial Powers of Attorney – Are They a “License to Steal”?

Understanding Financial Powers of Attorney – Are They a “License to Steal”?

Understanding Financial Powers of Attorney – Are They a “License to Steal”? Understanding Financial Powers of Attorney – Are They a “License to Steal”? Understanding Financial Powers of Attorney – Are They a “License to Steal”?

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Medicare Plans

Do You Really Have to Wait Five Years to Access Medicaid Benefits?

by Guest Blogger
written by Guest Blogger

If you or someone you love is trying to qualify for Medicaid, you may have heard people talking about—or in most cases, complaining about—having to wait five years to access benefits. If you don’t have access to professional guidance, you could easily fall victim to this common misconception about Medicaid.

When people complain about waiting for Medicaid to kick in, what are they talking about? It’s what Medicaid calls its five-year lookback period.

How does this work? Let’s say you’re applying for Medicaid. As part of the application process, you may be required to provide financial information for the previous five years. This includes bank statements, brokerage statements, 401(k) statements, IRA statements, life insurance policies, deeds, and more for you—and your spouse, if you have one. The Medicaid office scrutinizes all transfers made by the individual during the preceding five years to determine if any of those transfers should trigger a penalty.

A penalty-triggering transfer can take a number of forms including a cash gift, a real estate gift, a gift of valuable personal property, such as a vehicle, and the sale of an asset at below fair market value. If the Medicaid applicant made any penalty-triggering transfers during the preceding five years, it results in a period of ineligibility for Medicaid benefits. Medicaid determines the period of ineligibility by taking the sum of all penalty-triggering transfers and dividing it by a “transfer of asset divisor,” which is intended to approximate the monthly cost of a skilled nursing facility. As of July 1, 2018, the “transfer of asset divisor” is equal to $9,171. The penalty period will start once you apply for Medicaid and are otherwise eligible.

For example, if your mom, a Medicaid applicant, transferred $200,000 to you within five years of applying, it would result in a period of ineligibility of about 20 months. This is meant to disincentivize Medicaid applicants from gifting their assets away in order to become “poor on paper.” The intention of the penalty period is to force the Medicaid applicant to use up those transferred funds before Medicaid will provide any benefits.

When people hear this, they usually panic. And if they don’t get professional advice from an attorney experienced in Medicaid Planning, that panic will often result in some very bad decisions.

Even if someone you love will need Medicaid right away, in most cases, at least some of those assets can be preserved. In the elder law world, we call that Crisis Planning. Depending on the language in your loved one’s Durable Power of Attorney, we can usually get them qualified for Medicaid immediately.

However, if you start planning earlier, before the nursing home crisis happens, we can save even more. The secret is what we call Pre-Crisis Planning. This often involves creating an Irrevocable Trust and transferring ownership of the elder’s assets into that trust. But not all seniors are thrilled about this powerful asset protection tool because it means giving up dominion and control of their assets. But those who are willing to follow the guidance of an elder law attorney experienced in Medicaid Planning will usually be able to save more of their hard-earned assets than those who wait. It may feel like the nuclear option to a senior who doesn’t need nursing home care—YET—but it will feel like a blessing to the family members who are looking out for the elder’s legal and financial well-being when the time comes.

You don’t have to wait five years for Medicaid benefits to kick in, even if you didn’t plan.

Written by Kathleen Flammia, Attorney at Law, one of Florida’s TOP Elder Law & Estate Planning Attorneys. Attorney Flammia is a Member of the National ElderCare Matters Alliance, and she and her firm are Featured in ElderCareMatters.com – America’s National Directory of Elde

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Retirement Planning

Increasing Financial Confidence of Older Americans and Adult Children

by Guest Blogger
written by Guest Blogger

Do These Things for Better Retirement Planning

Retirement planning is at the forefront of a lot of Americans’ minds, considering a top concern is not having enough money. Magnifying this is stock market cycles surrounding COVID-19. Those who felt confident at the beginning of 2020 now have reason to question their preparedness. Moreover, adult children are getting increasingly involved, asking new questions related to economic concerns, healthcare costs and living arrangements.

Are older Americans and their children/caregivers on the same page? We asked more than 1,300 American adults 65 and older to share their perspectives on personal finances, retirement decisions and discussing these matters with their children. We also asked more than 1,300 financially independent adult children the same questions about their parents.

I hope our insights will help you navigate your own conversations with loved ones.

1. Don’t be Afraid to Talk about COVID-19 and Stock Market Gyrations

Many older Americans and their adult children are talking about personal finances during the COVID-19 pandemic and feel similarly about financial security. Both groups similarly report (at 43 percent) being “concerned” or “very concerned” about financial security. However, talking about it now and having these conversations is the first step toward better preparedness.

2. Make Financial Plans to Pay for Future Healthcare

We asked those 65 and older their greatest financial concerns, and affording healthcare was number one. Grown children had the same concern about their parents.

Men in the 65-and-up age bracket have much less concern about having ample funds, with men being far more likely than women to cite no financial concerns (19.6 percent vs. 12.4 percent) and women being more likely to say running out of money is their primary financial fear (25.9 percent vs. 19.1 percent).

As one might expect, financial fears depend largely on income, and those on the lower end of the scale have more urgent concerns like paying for medical care and ensuring they have enough money, while higher-income individuals fear not being able to maintain their current lifestyle.

3. Discuss Finances and POA – Older Americans Are Comfortable With It

For adult children of people at or near retirement age, there is little reason for fear over discussing financial matters with parents — but adult children were far more likely than their parents’ group to report discomfort with the idea. In fact, only about one in 10 people in the 65-and-older group said they were “very uncomfortable” or “uncomfortable” with the idea of discussing their finances with their adult children, while more than 16 percent of the adult children’s group said the same.

A similar disconnect exists between retirement-age people and their adult children when it comes to giving their children (or caregiver) power of attorney. While majorities of both groups indicated that the plan would be to authorize power of attorney, those in the older age group were far more likely to say so (69.9 percent vs. 57.9 percent).

4. Caregivers, Be Prepared to Contribute to Healthcare Costs

How about those 65 and older receiving financial assistance from their children? Two-thirds expect to not need financial help, and just seven percent expect to need help (27 percent are unsure).

This is quite a different answer than their children provide. Just one-third of adult children expect their parents to not need financial help, and 39 percent do expect to provide financial support or already do provide it.

5. Mitigate Uncertainty by Working with a Financial Advisor

Most older adults believe they are prepared to tackle the challenges of retirement, though their grown children may not agree. However, knowing that the adult children of those 65 and older are largely uncomfortable talking to their parents about finances, it’s likely that adult children aren’t all that well-informed about where their parents stand in retirement planning.

About two-thirds of individuals 65 and older say they are prepared for retirement, but a troublingly large group (more than 1 in 10) say they are unprepared or very unprepared for a life without income from their jobs.

Consulting with a finance professional appears to have a considerable impact on the ease with which people think about retirement. In fact, having met with a financial adviser reduced by half the percentage of people 65 and older who feel unprepared for retirement.

By Jeff Hoyt

Jeff Hoyt is editor-in-chief at SeniorLiving.org, a comprehensive directory of living options. SeniorLiving’s mission is to help older Americans age with ease.

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Aging

How to Make End of Life Plans Part 1

by Kylie Johnson
written by Kylie Johnson

According to the CDC, around 60 percent of U.S. adults have no plan in place for the end of their lives. Consequently, close friends and family are left to sort through personal belongings, funeral arrangements and asset distribution while they’re mourning. Solidifying an end of life plan can ease the minds of everyone involved. Your loved one’s final wishes can be known and recorded as an objective legal document. This gives you and your family a map to follow.

This process involves discussing all the conditions surrounding someone’s death before they die, as opposed to during or after. Having these discussions up front can make the process easier.

This article explains some of the benefits of end of life planning and explains the different parts of it: advance health care directives, memorialization and burial, financial affairs and preferred location of death.

Making health care decisions

An advance health care directive is a form that tells you how your loved ones want to be taken care of, in the case that they’re unable to do so themselves. Advance health care directives are sometimes known as living wills. An advance health care directive or living will is different from a power of attorney, which ensures that an agent of your loved one’s choosing can make medical decisions that are not covered by a living will.

If they’re incapacitated by a disease, an advance care directive will specify whether or not they wish to receive medical treatments such as:

  • CPR
  • Artificial respiration
  • Artificial hydration
  • Feeding tubes
  • Ventilators

 

Advance care directives allow adults of any age to control how they spend their final days.

These forms, once signed by two witnesses, are legal documents with legal power in the United States. While they don’t force your loved one’s doctor to comply, a doctor can’t be legally prosecuted for doing so.

However, not all situations will be covered by the advance health care directive. In the cases that aren’t covered, doctors can consult the health care proxy.

Health care proxy

Named in the advance care directive, the proxy (sometimes known as an “agent”) is legally able to make health care decisions on behalf of the dying person in the event that they’re unable to do so for themselves. The proxy can be anyone: friend, family, it doesn’t matter. This applies only when the advance health care directive doesn’t cover the situation.

How to do it

Download and print the advance health care directive form for your state. After talking it over with your loved one, ask them to fill out the questions or help them fill it out. Have two witnesses over 18 years old present when your loved one signs it.

The document is legally recognized once your loved one and witnesses have signed it, so you’re not required to take it to a lawyer. However, it’s always recommended to get legal consultation on these issues, if you’re able.

Make several copies for yourself, your loved one, concerned family members, your loved one’s physician and faith leaders. Discuss the advance health care directive with your loved one’s physician, and make sure they understand what your loved one wants to avoid confusion.

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Power & Limitations of Power of Attorney Documents
Money Tips

Power & Limitations of Power of Attorney Documents

by Carol Marak
written by Carol Marak

Estate planning structures current and projected assets for future allocation and disposal. It eliminates the uncertainties over probate and maximizes the value of a families’ or individual’s estate. Having one helps reduce taxes and other expenses. Power & Limitations of Power of Attorney Documents
The estate covers all the things a person owns – a car, home, another real estate, checking and savings accounts, investments, life insurance, furniture, personal possessions, even pets.
Estate planning includes a will, trusts, beneficiary names, powers of appointment, a person writing the will selects a person (agent) to distribute the property under the will. An estate plan also includes several components: Will, Medical Power of Attorney, Financial Power of Attorney, and Advanced Healthcare Directives.
The POA documents allow an individual to decide in advance whom they trust and want to act on their behalf if they become incapable of making decisions. The selected person to act on behalf of the individual is the agent. Next, a person must distinguish between a medical and financial POA.
A medical POA is a legal form and called a health care directive or health care proxy that oversees your wishes for health care. It gives a trustworthy friend or family member (the agent) the ability to make decisions about the care the individual receives if one becomes incapacitated.
A financial POA is a legal form that gives the assigned agent the authority to handle financial transactions on an individual’s behalf. It is common to appoint one person to act as an agent for both financial and healthcare decisions, but in some cases, separate the two.
A health care agent decides:

  • What medical care the individual receives at the hospital, the surgery, medical treatment, home health care, etc.
  • The choice of doctors and care providers.
  • The location where the individual lives regarding residential long-term care. However, the individual must be able to afford these arrangements and the financial POA must approve these costs.
  • What food and nourishment the individual eats.
  • Who tends to activities of daily living.

A financial agent acts on the individual’s behalf:

  • Has access to the financial accounts and pays housing, care costs, and bills.
  • Files taxes.
  • Makes investment decisions.
  • Collects debts, manage property, applies for public benefits such as Medicaid, etc.

What the agent cannot do:

  • Change the will.
  • Break the fiduciary duty to act in the best interest.
  • Make decisions on behalf of the principal after their death.
  • Transfer POA responsibilities, but the agent has the right to decline their appointment at any time.

Carol Marak, aging advocate, Seniorcare.com. She’s earned a Certificate in the Fundamentals of Gerontology from UC Davis, School of Gerontology.

Power & Limitations of Power of Attorney Documents

Power & Limitations of Power of Attorney Documents

Power & Limitations of Power of Attorney Documents Power & Limitations of Power of Attorney Documents Power & Limitations of Power of Attorney Documents Power & Limitations of Power of Attorney Documents Power & Limitations of Power of Attorney Documents Power & Limitations of Power of Attorney Documents Power & Limitations of Power of Attorney Documents

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