How a Florida Durable Power of Attorney Helps in Medicaid Planning
A Durable Power of Attorney (DPOA) is a document that gives a trusted person of your choosing, the “Agent”, legal authority to act on your behalf regarding financial matters. A DPOA withstands incapacity and is a very important document for you to have in the event you lose capacity due to a stroke, memory loss, or injury.
However, not all DPOAs are created equal. If certain powers are not specifically mentioned in the document or initialed properly, then the Agent cannot meet all your future needs. Many elders need to implement Medicaid planning when they need nursing home care, assisted living or extensive home care. When it comes to Medicaid planning there are many financial planning steps that need to be taken in order to complete proper Medicaid planning. Oftentimes, the elder in need of Medicaid will have to rely on their Agent named in their DPOA to handle planning on their behalf. However, if the DPOA is insufficient then the elder and their family can find themselves in a difficult and costly situation, where a guardianship may be required.
“Super Powers” for Medicaid Planning
The Revised Florida Power of Attorney Act from October 1, 2011 (Fla. Stat. Section 709.2202) introduced what are called “Super Powers” or specific grants of authority, which include, among others:
1) The power to create an Inter Vivos Trust,
2) The power to amend, modify, revoke or terminate a trust created by the Principal,
3) The power to make gifts,
4) The power to create or change rights of survivorship,
5) The power to create or change beneficiary designations, and
6) The power to deal with IRAs or other retirement assets including annuities
These powers are very important when it comes to Medicaid planning and must be initialed properly to be legally effective. Here are some examples of specific powers and initials needed in a DPOA to accomplish Medicaid planning:
1) An elder is over the income limit for Medicaid long term care.
The DPOA will need to allow the agent to create a Qualified Income Trust (QIT) or pooled special needs trust joinder to allow the elder to be eligible for Medicaid. The power will also need to be initialed in accordance with Florida Law.
2) An elder is applying for Medicaid and asset protection planning is necessary to leave assets to the elder’s children and avoid probate.
The DPOA will need initialed super powers to change ownership and add beneficiary designations, consistent with the elder’s estate planning wishes.
3) An elder is over the asset limit for Medicaid long term care.
The DPOA will need certain powers to allow for various planning strategies such as: executing a personal care contract, real estate powers for investing in income producing property, making funeral arrangements, dealing with pooled special needs trusts, purchasing Medicaid compliant annuities or promissory notes. The DPOA must have initialed super powers to complete these planning options and have additional specific language to effectuate the Medicaid planning.
4) An elder going into the nursing home for long term care is otherwise qualified for Medicaid except for his IRA.
The IRA counts as an asset unless the elder is taking regular withdrawals. The agent under DPOA will need to work with the IRA custodian to start regular monthly withdrawals, even though no RMD is legally required this year, in order to not disqualify the elder due to the amount in his IRA.
5) An elder has a DPOA signed in 2016 that has many of the Medicaid planning super powers mentioned above, but the individual powers are not separately initialed on the documents.
The powers are not legally effective. There must be initials next to each enumerated super power under Florida law. Even one initial at the bottom of the page that purports to include all the powers on that page is not legally sufficient.
These are just a few examples we see daily. It is important for your future that an experienced elder law attorney review and draft your DPOA to make sure it is sufficient for future Medicaid planning. If you do not have a DPOA or if it is older or was done in another state, it is important to have an experienced elder law attorney review it. Don’t delay-often people wait until it is too late, and the elder lacks capacity to update the DPOA.
At Burzynski Elder Law, we have experienced attorneys and legal staff to help you make sure your documents are current and comprehensive. If you need more information, call us at 239-434-8557 or visit our website at www.burzynskilaw.com.