Power of Attorney: Planning for Incapacity

Powers of attorney let you plan for your incapacity.
A power of attorney names a person to make decisions for you under rules that you establish, and ensures someone can handle your affairs if you cannot.

Without a durable power of attorney, helping a family member or loved one who cannot act on their own becomes far more difficult and stressful. Powers of attorney, also known as POAs, typically give the agent specific powers to conduct the principal’s (person creating the power of attorney) financial business, explains the Aiken Standard in the article “The durable power of attorney.”

For financial powers of attorney, there are different types, including non-durable, springing and durable. A non-durable POA is time limited.  It either expires at the end of a set amount of time or upon the death or incapacity of the principal.  Non-durable powers of attorney are typically used for specific circumstances, such as real estate closings or for transferring car titles.

The durable power of attorney is in effect from the moment it is executed. It is not revoked if the person becomes incapacitated (hence the term “durable”), nor by the passage of time. The person can alter or terminate a durable POA at any time before he or she lacks capacity, however, and it does end when the person dies.

Springing powers of attorney become effective at a future date. They “spring” into power, according to the terms of the document. That may be the occurrence of a particular event, like the person becoming incapacitated or disabled. They can be problematic, as there will be a need to prove that the person has become incapacitated and/or disabled.

The advantage of the durable power of attorney is that it remains in effect even after the person has become impaired. You can choose to let your agent act right away or make it springing as described above.  It is often prudent to make them effective immediately so that if time is of the essence (i.e., there is an emergency that requires quick action), there is no need to prove incapacity or that a condition has occurred.

In addition to a financial POAs, there’s also a healthcare power of attorney, which is a separate document that gives the named person the authority to make medical decisions when the principal is not able to do so.  There are also several other documents which plan for incapacity, such as living wills and HIPAA releases, which should be considered as well.

In Texas, powers of attorney rules are strict, so how they are drafted is very specific.  They provide for many powers or restrictions to the agent which the principal should consider when preparing a power of attorney, such as whether his or her agent should be compensated, whether the agent can make gifts and naming successor agents if the first cannot serve.

Power of attorney documents should be created and executed, along with a complete estate plan, long before an individual begins having problems in aspects of their lives.  These documents are essential as part of planning for incapacity.  See my past article for more detailed information.  https://www.galliganmanning.com/estate-planning-when-faced-with-a-serious-illness/

When they are signed, it is necessary for the person to have mental capacity. They have to be able to be “of sound mind.” If they have been diagnosed with dementia or Alzheimer’s, it is necessary that all these documents be prepared as soon as possible.

Without a durable power of attorney, family and friends won’t be able to make important financial decisions, pay bills, make healthcare decisions and engage in any kind of Medicaid planning. If a person does not create a power of attorney and then suffers a health problem which makes them unable to handle their own affairs, anyone who wanted to take on any of these responsibilities would have to go to court and be appointed the person’s guardian. It’s much easier to tackle these tasks in advance, so that the family can act on their loved one’s behalf in a timely and effective manner.

Reference: Aiken Standard (August 24, 2019) “The durable power of attorney”

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Checklist When Visiting Assisted Living Facilities

When visiting an assisted living for you or your loved one, ask the right questions to find a safe, affordable community with quality care.

When you are trying to find an assisted living community for yourself or a loved one, you need to do your homework to find at least three candidates that meet all the needs of the future resident. After you have narrowed your search down to those facilities, you should visit each one with the person who will be living there. Know what you want to look for before you visit the first center, so you will get all the information you need from every facility.

It is easy to get overwhelmed in the process of finding the right assisted living community. To help you in this quest, use this checklist when visiting assisted living facilities.

  1. First impressions count. Pay close attention to your initial thoughts and feelings about the assisted living center as you approach and enter. Your instincts often pick up on “micro-symptoms” that can indicate a problem, even before you notice the issue itself.
  2. Try to see down the road. Visualize yourself or your loved one actually living at the assisted living community. Ask yourself if you would be happy there. Pay attention to whether you feel comfortable or anxious. Evaluate whether the staff and other residents are friendly and inviting.  Does this facility have skilled nursing on site?  If the resident’s health worsens, would they have to move?
  3. Use your Nose. When you walk through the building, pay attention to the smells. You should not be able to detect any unpleasant odors. Strong “cover-up” scents are also a potential warning that the place likely has cleanliness issues.
  4. Look for dirt, dust, and grime in the obvious locations and places, like the baseboards and windows. Cleanliness counts in an assisted living facility.
  5. The staff in action. Watch the staff when they are interacting with the residents. Look at the body language of both the staff and residents.  Is the staff courteous and warm?  Are the residents resentful or fearful? Keep looking until you find an assisted living facility where both the residents and the staff are happy, warm and friendly.
  6. The proof is in the pudding. Good food is one of the highlights for many people who reside in assisted living. Visit during mealtime and arrange to eat a meal there. Find out if the meals are both nutritious and tasty. Get a copy of the monthly menus to check for variety. Find out the center’s policy, when a resident cannot come to the dining room.
  7. Explore the both outdoor areas and the indoor facilities. Make sure that your loved one would be safe when enjoying some fresh air outside.
  8. The current residents. You can find out valuable information from the people who already live at the center. Without making them feel uncomfortable, notice whether the residents are well-groomed and wearing clean clothes. Sit and visit with some residents. Let them know you are considering this community for yourself or a loved one. Ask for their advice. Find out if they have to wait a long time for personal care or other services. If so, the facility is likely under-staffed.
  9. Check the price.  Assisted living isn’t cheap, but don’t let price drive the decision.  If you go to the cheapest place, you can expect to get a matching level of care.  Instead, consider the price and then consider how you’ll pay for assisted living.  Medicaid isn’t always available for assisted living, but may be if health worsens and your loved one is in a nursing home.  Perhaps the Veterans Administration offers a benefit you can use, or perhaps you have long-term care insurance.  See our Elder Law page for a longer overview.  https://www.galliganmanning.com/practice-areas/elder-law/ 

In the end, this is an important decision and you should do your homework to find the right assisted living for your or your loved one.

References:

A Place for Mom. “Tips for Touring Assisted Living Communities.” (accessed August 7, 2019) https://www.aplaceformom.com/planning-and-advice/articles/tips-for-touring-assisted-living

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What Should I Know About a Special Needs Trust?

Leaving assets to loved ones with disabilities in a special needs trust can provide support while preserving government benefits.

Your loved ones with disabilities may be eligible for a number of government programs. However, Pauls Valley (OK) Democrat’s recent article asks “Can your family benefit from a special needs trust?” The article reminds us that these programs don’t cover everything. You may need to close the gaps.

Many government programs have eligibility restrictions based on the amount and type of financial assets that are available to the recipient. This means the financial help you want to provide may do more harm than good, unless you establish a special needs trust.

A special needs trust, also known as a supplemental needs trust and by the acronym SNT, is a trust that provides assets for a disabled beneficiary in the discretion of the trustee.  The beneficiary typically can’t use the trust for basic support or to receive benefits that can be provided by the government. The special needs trust can be used to provide specialized therapy, special equipment, recreational outings and other expenses.  In short, for the needs not already served by the government benefits.

These types of trusts come up more often than people realize.  Often, clients consider making special needs trust for their children with disabilities.  But, it is also important to consider that elderly loved ones may utilize Medicaid for their long-term care.  If they do (or might) then it makes sense to set up a special needs trust for them as well.  This might be for elderly parents, siblings, or even spouses!  See our overview for more detail.  https://www.galliganmanning.com/practice-areas/elder-law/

When considering a special needs trust, you’ll need to look at several issues with your attorney.  First, whose assets will it hold?  If the disabled individual is creating or funding a trust with their own assets (called a First Party Special Needs Trust), you have a very different set of rules which I won’t address here.  If you are creating the special needs trust for someone else (called a Third Party Special Needs Trust) you need to consider who will be the trustee.

You could name a family member or close friend as a trustee. While this works well for many, it has the potential to cause family conflicts and becomes a burden.  You could also name a trust company.  A trust company can provide professional management, expertise and continuity of administration, especially for younger beneficiaries who will outlive their care providers. A third option is to name an individual and a trust company as trustees.

The second critical issue with a special needs trust is funding the trust. You can fund the trust during your lifetime or have it activated when you die.  Note that you don’t have to be the sole donor. A special needs trust can be created so other family members can also contribute to it, as long as the person receiving benefits doesn’t contribute.  The trust can be funded with securities (stocks and bonds), IRA proceeds, insurance death benefits and other assets. 

You’ll need to understand the requirements of various federal, state and local benefit programs for people with disabilities, so that your loved one’s benefits are not at risk.

Speak with an experienced elder law or estate planning attorney about how you can to make life better for a family member with disabilities by using a special needs trust.

Reference:  Pauls Valley (OK) Democrat (August 1, 2019) “Can your family benefit from a special needs trust?”

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