When someone hears the term “estate planning,” they almost always think of a Last Will and Testament. However, planning starts and continues during life, which is why a power of attorney is an essential component of any estate plan.
A power of attorney is effective during life and becomes ineffective when the principal (the person for whom the power of attorney is drafted) dies. The execution of a power of attorney, however, ensures that, upon a person’s incapacitation, a trusted individual of the principal’s choosing can handle his or her financial and medical decisions. When effectively drafted by an attorney, a power of attorney should convey the client’s values, intentions, and goals and memorialize those wishes such that that they may be respected and pursued in the event of incapacitation.
One such goal often includes “Medicaid Planning,” which seeks to protect an individual’s accumulated wealth from the threat of long-term care costs, such as those associated with a skilled nursing home. Unfortunately, while no one has a crystal ball to predict future health needs, we do know that skilled care can cost up to $15,000 per month presently.
In the face of such high costs, effective planning can assist in achieving financial stability for a person’s spouse or loved ones. Language contained in an individual’s power of attorney is determinative as to whether an agent acting under the power of attorney can effectively engage in such planning techniques. Without such language, the agent’s ability to preserve the principal’s assets may be severely limited or jeopardized altogether.
Medical Assistance, commonly referred to as Medicaid, is the only government benefit available to cover the costs of skilled care, whether provided in-home or in a nursing home. Medicaid is a means-tested program, however, which means an applicant must generally be both medically and financially in need to qualify for assistance. The rules surrounding Medicaid eligibility are complex and often in flux, requiring the assistance of experienced professionals to avoid missteps and maximize savings.
To reiterate, however, the basic concept of Medicaid planning begins with and centers around certain powers granted within a power of attorney. Such powers enable the Medicaid applicant, through his or her agent, to protect as much wealth as possible for his or her family, by qualifying for Medicaid benefits sooner and avoiding the rapid depletion of assets via costly monthly nursing home bills.
Accordingly, proper estate planning, including an effective power of attorney, needs to be completed sooner rather than later. The estate planning attorneys at Stock and Leader are here to assist you with your wealth and financial planning goals.