Now or Later?
Durable Power of Attorney
When it comes to planning ahead, the most thing is having in place a good durable power of attorney. When I say good here I mean a document that has all of the required powers that will be necessary for your backup person to be able to step in your shoes and do those things that are required in order to obtain Medicaid benefits. Many power of attorney documents, especially those produce by non-lawyers, do not contain the language that will be required to qualify for Medicaid benefits.
The BIG Five Powers
- Five powers that need to be in every power of attorney but are most commonly missing:
- The power to create a trust, including both revocable and irrevocable trusts.
- The power to fully manage individual retirement accounts (IRAs).
- The power to make gifts, especially to the named power of attorney.
- The power to convey the home and all the principle’s interest.
- The provision specifying the backup to the named power of attorney.
The Uh-Oh client
On the other end of this planning spectrum, is what I refer to as the uh-oh client. This is typically the client who has not done any prior planning or has been surprised by some sort of sudden need for placement in a nursing home or assisted living facility. The term comes from the situation where the person receives the nursing home bill, sees the amount that is being charged on a per month basis and then says to himself uh-oh. While this may be the most common client that I see, some planning opportunities can be lost by waiting to the lase minute. This brings up to the third type of client…
The writing on the wall client
There is a bible story from the book of Daniel that talks about writing on the wall, literally a warning from God, and that is a good idea to head that warning. Many of my clients may have a similar heads-up regarding future care needs and the need for Medicaid. When such advanced warnings exist, it is a VERY good idea to begin the process of establishing eligibility and taking action to address the many issues that are present. Failure to take action usually results in a less than optimal outcome.
Failure to plan is a plan to fail
One of the most common reasons for lack of planning in the world of public benefits and specifically Medicaid is the commonly held misconception that if you have not taken any action at least 5 years in advance then you are out of luck and cannot do anything but pay privately for the nursing home care. This is just wrong. The 5 year rule only relates to the making of gifts/transfers of assets prior to application of benefits. It is never too late to solve the problem, to take control of the situation and put into place a plan of action to obtain benefits to help pay the cost of long term care. It is only too late if you do not take action.