What is a durable property power of attorney? A durable property power of attorney is a legal document where one person (the principal) authorizes another (the agent) to act on the principal’s behalf regarding financial decisions. It is an estate planning document which allows a person to plan for the care and control of property in the event he or she becomes incapacitated.
Powers of attorney are the single most important documents to put in place so that a family member or trusted friend will have the legal authority to carry out your wishes if you can no longer speak or act for yourself. Without a power of attorney, if something happens to you that results in your inability to make decisions, your family may later face court proceedings and a court supervised conservatorship.
Do I need a lawyer to draft my property power of attorney? No. However, please see the case below as an example of what can happen when you do not have the proper wording in your document. Without proper, specific wording, your agent may not be able to deal with some of the issues that are important to you.
We have had clients come to our office with “form document” property powers of attorney they purchased at an office supply store or downloaded off the Internet. While these documents legally authorize persons to act on the behalf of another person, there are certain things a traditional or standard power of attorney may not address. In fact, the law provides there are certain matters your agent cannot handle unless there is specific wording in the document which empowers them to do so. Such matters include the power to apply for public entitlements (such as Medi-Cal), the power to make gifts on your behalf, and the power to remove and/or add assets to a trust.
Here is the case that prompted me to write this issue of the Elder Law Today: Mary* came into our office to discuss Medi-Cal planning for her mother, Mildred.* Mildred was in a nursing home costing over $6,000 per month. She had income of only $800 per month. With assets totaling $80,000, Mary knew her mother would run out of money quickly. Mary was interested in establishing a gifting program, where Mildred would be able to gift money so that once her mother met the spend down and qualified for Medi-Cal benefits, Mary could afford to help keep mom in a private room.
Mildred was incapacitated, but Mary had a property power of attorney that allowed her to hire an attorney on Mildred’s behalf. I told Mary that if her power of attorney had the proper language, Mildred could in fact save a large portion of her assets by gifting money to Mary and still qualify for Medi-Cal (so long as the gifting was done properly, taking into account the appropriate penalty periods).
I then asked Mary for a copy of Mildred’s property power of attorney. Upon review, I had to explain to her that she did not have the authority to make gifts of her mother’s money. I further explained that if Mary did begin gifting under the current power of attorney, it may be considered elder abuse. Mary was devastated: “But, I am her only child…she left everything to me.” I had to tell Mary it did not matter. “I am on all of her bank accounts,” she said. I told her that unless she contributed money to those accounts, it did not matter. Mary then pointed out the standard language in her mother’s power of attorney which states, “I authorize my attorney-in-fact to engage in, transact and perform any and all actions as my attorney-in-fact may think proper; as fully to all intents and purposes as I might or could do if personally present at the time thereof.” Again, I had to tell Mary it did not matter. Unless the power of attorney specifically authorizes the agent to make gifts to him or herself, an agent is unable to establish a Medi-Cal gifting program.
Unfortunately, this situation is not unique. Many people feel their power of attorney allows their agent to do anything and everything. Had Mildred come into our office (or that of another elder law attorney familiar with Medi-Cal and estate planning) while she was still competent to sign a power of attorney, Mildred would have had a power of attorney in place that would allow for gifting, she could have set aside thousands of dollars by gifting money to her daughter, and would still qualify for Medi-Cal.
Bottom line: If you want to include language which would empower your agent to deal with matters affecting older clients today, you should consult with an experienced elder law attorney for assistance in drafting your durable property power of attorney.
* Names have been changed for privacy
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