A financial durable power of attorney is one of the most essential legal documents prepared by an attorney on behalf of his or her elderly clients. It provides an effective alternative to guardianship proceedings when an individual becomes incapacitated, saving the time, expense and loss of privacy that such a proceeding often entails.
The execution of a power of attorney insures that, upon a client’s incapacitation, a predetermined trusted individual handles the client’s most intimate financial and medical decisions on behalf of the client. An effectively drafted power of attorney conveys the client’s values, intentions, and goals and further insures that they be respected and pursued in the event of incapacitation. The principal also retains the right to revoke or modify his or her power of attorney.
One such goal often includes “Medicaid Planning,” which seeks to protect an individual’s accumulated wealth from the threat of rising healthcare and nursing home costsEffective planning can assist in achieving financial stability for a client’s spouse or other family members. The language contained in a client’s power of attorney is determinative as to whether an agent acting under the power of attorney can effectively engage in such planning techniques. Carefully crafted language granting the agent appropriate authority is required. Without such language, the agent’s ability to preserve a client’s assets is seriously jeopardized. Medicaid Planning rules are complex and often in flux, requiring the assistance of experienced professionals skilled in such matters.
Alternatively, a guardianship is a proceeding in which the court appoints an individual or entity to assist an “incapacitated person,” that is, and adult who cannot receive or evaluate information effectively or whose ability to communicate decisions is impaired so that his or her health, safety, rights or finances are at risk of harm. The circumstances under which a guardian can be appointed vary widely.
Guardianships are not merely reserved for the elderly, who may be suffering from dementia or Alzheimer’s, although many people diagnosed with those conditions are in need of a guardian. Rather, a guardianship may be necessary for an 18 year old suffering from a disabling injury or for a happily married 45 year old diagnosed with a sudden, debilitating illness.
Once an individual attains the age of majority, no other individual has the legal authority to make decisions for him or her. This is true even if the individual is married. Therefore, if one is unable to make or communicate responsible decisions regarding his or her health, safety or finances, he or she is likely in need of a guardian — without an appropriate power of attorney in place.
One does not have to be totally incapacitated to require a guardian. The court is required to determine what abilities the person has, and may only appoint a guardian to assist in those areas in which the individual requires assistance. A guardian who is appointed to assist with a specific objective is referred to as a “limited guardian”. A guardian who is given broad authority to act for the incapacitated individual is referred to as a “plenary guardian”. A guardian may be appointed to make personal decisions, financial decisions, or both.
Even if a person is deemed incapacitated, he or she may not need a guardian if he or she has done proper advanced planning. Done properly, and prior to incapacity, a power of attorney can often take the place of a guardianship when the need for one arises. When Decisions Matter, contact our Estate Planning Attorneys with any questions regarding Medicaid planning, guardianships, powers of attorney, and any other disability or estate planning measures.