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Powers of Attorney and Long Term Planning
 Last
month, I was retained by a lovely woman, named Diana, who needed
assistance with her 93 year old brother, Robert, who had had a
stroke, and was in a hospital awaiting long term care placement.
Robert's short-term memory had been significantly compromised by
the stroke, and it was clear that he could no longer live in the
community. At least it was clear to everyone, but Robert.
So, now Diana has a big problem
because she has no authority to place Robert in a long term care
facility, and no authority to access his assets to pay his
bills. As a result, she had to retain my office to commence a
guardianship proceeding in Supreme Court in order to act on
Robert's behalf with respect to his personal needs and finances.
Such a proceeding costs between $10,000.00 to $20,000.00 in New
York, and could have been avoided easily if Robert had executed
a health care proxy and power of attorney anytime prior to his
stroke. (See our website for more information on health care
proxies.)
Such documents cost a mere
fraction of the legal fees to commence a guardianship. Attorneys
charge anywhere from $100.00 to $250.00 for the preparation of
each document, depending on a host of factors. Sometimes, they
charge nothing extra if a power of attorney is included in an
overall estate plan that encompasses a will or trust.
Personally, if I prepare an entire estate plan, I include a
power of attorney for no extra charge. And not having a power of
attorney is a very costly error if what happened to Diana
happens to your family.
Powers of Attorney
All
estate plans should include a durable power of attorney whereby
an individual, or principal, directs another person, his agent,
to act in his stead with respect to a list of property
management, or financial, powers. The principal may direct that
the appointment survives his or her incompetence, or may direct
that the power springs from his or her incompetence. In New York
State, there have been some changes in the form of a power of
attorney and those changes shall take effect on September 1,
2009. Check with your attorney for any technical questions with
respect to the changes in form content and execution.
I discourage people from preparing and executing their own
documents; all you need is one small mistake, and your efforts
will attain you absolutely nothing. Each year, I have several
clients calling to correct a mistake such as that; frequently,
there is nothing that can be done, and the client must live with
a costly, but well-meaning mistake.
Medicaid Planning and Powers of Attorney
Now
let's change our scenario a bit and say that just prior to his
stroke, Robert and Diana had been living together in a Brooklyn
brownstone that they owned as joint owners, with rights of
survivorship, for five years. Let's also assume that Robert is
Medicaid eligible, and that the doctors determine that he can no
longer return to his home, that he requires long term care in a
nursing home for the duration of his life. The new power of
attorney laws provide that, after the effective date, if a
principal wishes to grant major gifting powers to his agent,
here to the extent of protecting a jointly held house from the
reach of a Medicaid lien, he may.
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"Primary
residence planning is crucial today, more than ever.
Medicaid is placing liens on homes, cooperative
apartments and condominium units more than ever before.
Put simply, Medicaid needs the money." |
A principal may sign what is
referred to as a major gifts rider to his power of attorney in
order to accomplish that goal. Certainly, this alternative to
guardianship is far simpler and much cheaper than Diana
petitioning the court to be appointed guardian and then, many
months later, and if the judge permits it, the court granting
that request.
Primary residence planning is crucial today, more than ever.
Medicaid is placing liens on homes, cooperative apartments and
condominium units more than ever before. Put simply, Medicaid
needs the money. In this economy, everyone does, so it is
important to have planning documents prepared and, if documents
were prepared years ago, to have them reviewed by counsel.
Powers of attorney properly signed and notarized prior to
September 1, 2009 shall remain effective, but any changes
thereafter shall have to be in conformance with the new rules.
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