A durable power of attorney is a document that is often used in the elder law field to account for possible latter life incapacity. Though it is not a very pleasant subject of discussion, the hard truth is that many elders do become incapacitated at some point in time.
There are various different causes of incapacity, but when you look into the facts, you see that Alzheimer’s disease strikes at an incredibly high rate. About 45 percent of people who are 85 years of age and older are suffering from Alzheimer’s disease, and of course Alzheimer’s causes dementia.
Before you are a senior citizen, the idea of reaching the age of 85 can seem like a reach. In fact, when you look at longevity statistics, you may be surprised. The oldest segment of the population is growing at a rapid rate. The Census Bureau tells us that it is the fastest-growing portion of the population.
At the present time, the life expectancy for a 67-year-old person is at least 85 depending on the gender of the individual in question.
Preventing a Guardianship
What happens if someone becomes unable to handle his or her own affairs as a senior citizen? The answer is that response that you never wanted to hear from your parents when you were a child: it all depends.
Interested parties could petition the state to appoint a guardian to act on behalf of an incapacitated adult. This is a useful and necessary societal safeguard, but at the same time, it comes with some disadvantages.
For one, if you were to become incapacitated, the representative that is appointed by the state to represent you may not be the same person that you would have chosen when you were fully competent. Secondly, a guardianship proceeding can be quite costly, because there are court costs and legal expenses.
There is also the matter of potential disagreements among family members, and this is a third potential difficulty.
To avoid these drawbacks, you could utilize a durable power of attorney. Just about everyone is aware of the fact that a power of attorney is a document that can be used to give someone else the ability to act on your behalf in a legally binding manner. The thing that may confuse you is the “durable” designation.
This is actually quite relevant when it comes to incapacity planning. A standard power of attorney that is not durable would no longer be in effect if the person who granted the power was to become incapacitated. When a power of attorney is durable, it does remain in effect, so this is the explanation.
If you execute a durable power of attorney, someone that you have hand-picked would be empowered to handle your financial affairs if you ever become unable to manage them on your own.
Now we can get to the matter of power of attorney and Medicaid planning. Many incapacitated adults ultimately require nursing home care. Clearly, if you are suffering from advanced Alzheimer’s induced dementia, you are not going to be able to do many things on your own.
Nursing home care is exorbitantly expensive. A few years in a nursing home could cost hundreds of thousands of dollars, and Medicare does not pay for long-term care.
The Medicaid program will pay for nursing home care if you can qualify, but it is a need-based program. It is only available to people who have very limited financial resources. Senior citizens who are looking ahead toward future Medicaid eligibility often give away assets so that they can stay within the $2000 limit.
If you give the agent the power to act on your behalf under a durable power of attorney, you can take steps to empower this person to give gifts on your behalf so that you can qualify for Medicaid. However, the inclusion of a gifting provision would be necessary in most jurisdictions.
Something you should understand when it comes to gift giving, whether you give gifts yourself or whether gifts are given by a representative, is that there is a five-year look-back period. Any gift giving must be completed at least five years before the submission of the application for Medicaid coverage. If this rule is violated, Medicaid eligibility is delayed.
Set Up a Consultation
We would be glad to help if you would like to discuss this rather complicated matter with a licensed professional. Our firm offers no obligation consultations, and we can answer all of your questions for you.
Simply send us a message through our contact page or call us at (908) 222-8803 to set the wheels in motion.
- Medicaid Attorneys Explain How a Pre-Paid Funeral Contract Can Help - March 31, 2021
- What Is a QTIP Trust? - March 25, 2021
- How Would You Feel about a Robot Caregiver in the Future? - March 18, 2021