A power of attorney is an incredibly important and powerful tool. When signed, it allows the person you appoint, “the Agent,” to take legal and financial actions on your behalf when you cannot act. This can include paying bills, selling property, and investing your funds, for example. However, a well-drafted Power of Attorney that goes beyond the basics, and empowers your Agent sufficiently in a crisis, is a vital component of the estate plan.
A well-drafted Power of Attorney can and should allow for “gifting.” This use of the term gifting is a bit misplaced here. What we truly use the gifting power for is “transferring” assets to protect them from the costs of nursing home care.
A good Power of Attorney will not only have the gifting power but will also include modifications that will include creating and modifying trusts, changing beneficiaries on certain accounts, filing Medicaid applications, and other important powers. If a loved one ends up in a nursing home, and the family wants to protect assets, the above powers are critical to give the elder law attorney an opportunity to do crisis planning. A bare-bones Power of Attorney is simply insufficient to provide protection under many
circumstances.
The only alternative under the law to a Power of Attorney is to obtain a guardianship over the incapacitated person. Not only is a guardianship time-consuming and litigious in nature, but it likely will cost 10 to 15 times that of a good Power of Attorney would cost. Guardianship also does not allow the principal to choose the person or persons who will act on his/her behalf, that choice is left to a judge. Finally, it requires strict annual reporting to the court which is time-consuming and potentially
expensive.
The Power of Attorney is one of three core documents (the others being a Will and Health Care Proxy) all adults should have in place. Completing a Power of Attorney provides peace of mind that your personal and financial matters will be properly tended to if you become incapacitated. It also substantially eases the emotional and financial burden on your family members by clearly stating who is in charge and allowing those people to resolve matters efficiently on your behalf should that situation arise. Of the three core documents, the Power of Attorney is arguably the most important.
As a general rule, if you have not completed or updated your estate documents in over five years, you should consult with an estate planning attorney to review, update and/or complete them as soon as possible.
Robert K. Hilton is an attorney with the law firm of Hilton Estate & Elder Law, LLC, with offices in Utica, Boonville, Rome, Syracuse, Lowville, and Gouverneur, NY. He has over thirty years of legal experience and currently concentrates in estate planning matters, including Wills, Powers of Attorney, Health Care Proxies, Revocable and Irrevocable Trusts, Asset Protection, Nursing Home/Medicaid planning and related litigation issues. He can be reached at (315) 624-9600 for free initial, confidential consultation. Visit us on the web at: https://www.hiltonlawny.com/