Why is a durable power of attorney important in Medicaid planning?

A durable power of attorney allows a trusted agent to handle financial matters and Medicaid planning steps if the principal becomes incapacitated.

What are super powers in a Florida durable power of attorney?

Super powers are specific grants of authority under Florida law, such as the power to create trusts, make gifts, change beneficiary designations, and deal with retirement assets. These powers must generally be separately initialed to be effective.

Can an old power of attorney be insufficient for Medicaid planning?

Yes. Older powers of attorney may not contain the specific language or separately initialed powers required under current Florida law for Medicaid planning.

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, known as your “Agent,” legal authority to act on your behalf regarding financial matters. A DPOA remains effective even if you become incapacitated, making it a very important document in the event of a stroke, memory loss, or serious injury.

However, not all DPOAs are created equal. If certain powers are not specifically included in the document or properly initialed, the Agent may not be able to meet all of your future needs. Many older adults eventually need Medicaid planning when nursing home care, assisted living, or extensive home care becomes necessary.

When Medicaid planning is needed, there are often important financial steps that must be taken. In many cases, the individual in need of Medicaid benefits must rely on the Agent named in the DPOA to carry out planning on their behalf. If the DPOA is insufficient, however, the elder and their family may find themselves in a difficult and costly situation where guardianship becomes necessary.

“Super Powers” for Medicaid Planning

The Revised Florida Power of Attorney Act, effective October 1, 2011, introduced what are commonly called “super powers,” or specific grants of authority, under Fla. Stat. Section 709.2202. These powers include, among others:

The power to create an inter vivos trust
The power to amend, modify, revoke, or terminate a trust created by the principal
The power to make gifts
The power to create or change rights of survivorship
The power to create or change beneficiary designations
The power to deal with IRAs, annuities, and other retirement assets

These powers are extremely important in Medicaid planning and must be properly initialed to be legally effective under Florida law. Below are several common examples of how these powers may be needed.

Examples of How a DPOA Helps in Medicaid Planning

Creating a Qualified Income Trust.
If an elder is over the income limit for Florida Medicaid long-term care, the DPOA may need to authorize the Agent to create a Qualified Income Trust (QIT) or a pooled special needs trust joinder to help the elder qualify for Medicaid. This power must also be properly initialed in accordance with Florida law.
Asset protection and avoiding probate.
If an elder is applying for Medicaid and asset protection planning is needed to preserve assets for children or other heirs, the DPOA may need properly initialed super powers to change ownership or add beneficiary designations consistent with the elder’s estate planning wishes.
Planning when assets exceed the Medicaid limit.
If an elder is over the asset limit for Medicaid long-term care, the DPOA may need to authorize a variety of planning strategies, such as entering into a personal care contract, handling real estate transactions, making funeral arrangements, working with pooled special needs trusts, or purchasing Medicaid-compliant annuities or promissory notes. The DPOA must contain the proper powers and specific language to allow these strategies to be carried out.
Handling IRA withdrawals.
If an elder is otherwise eligible for Medicaid but owns an IRA, that IRA may count as an asset unless regular withdrawals are being taken. The Agent under a properly drafted DPOA may need to work with the IRA custodian to begin regular monthly withdrawals, even in a year when no required minimum distribution is otherwise due.
Older DPOAs may not be sufficient.
An elder may have a DPOA signed years ago that appears to include many Medicaid planning powers, but if the individual super powers were not separately initialed, they may not be legally effective. Under Florida law, each enumerated super power generally must be separately initialed. A single initial at the bottom of the page is not enough.

These are just a few of the situations we see regularly. It is important to have 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, if your DPOA is older, or if it was prepared in another state, it is wise to have it reviewed as soon as possible.

Do not delay. Too often, families wait until it is too late and the elder no longer has the capacity to update the document.

At Burzynski Elder Law, our experienced attorneys and legal staff can help ensure your documents are current and comprehensive. If you need more information, call 239-434-8557 or visit burzynskilaw.com.