If you think you may need long term care in the future, and are interested in doing asset protection planning or Medicaid planning to protect your assets for your spouse or children, one of the best things you can do now is make sure you have a well-drafted power of attorney document.
That’s because Medicaid planning often involves making gifts. In order for Medicaid to pay for long term care (in a nursing home or other setting), applicants must spend down their assets below $2,000. Medicaid planning seeks to spend those assets in a way that provides benefit or value to family members, instead of spending everything on nursing home bills or other long term care. That often involves making gifts in a structured, planned way, working with New Jersey elder law attorneys like FriedmanLaw to do planned Medicaid gifts.
However, people who need long term care often lack capacity to manage their affairs, due to conditions that affect mental capacity such as dementia, Alzheimer’s disease or severe stroke. If you can’t make gifts yourself, it limits your ability to do Medicaid planning.
With a power of attorney, you can appoint someone you trust to manage your financial affairs. That person is called your attorney-in-fact. You can give your attorney-in-fact broad powers over your finances – buying and selling property, paying for things, moving money between accounts, signing contracts and starting or ending lawsuits, etc. However, your attorney-in-fact cannot make gifts of your assets unless you explicitly authorize him or her to do so. (That is because of a law, N.J.S.A. 46:2B-8.13A, which Larry Friedman helped draft.) A blanket grant of authority is not enough.
Often, power of attorney documents that are not prepared by attorneys familiar with elder law do not include this gift provision, and if you don’t have a power of attorney with the right language, your family will have to apply to court for guardianship to get this authority, which may or may not be granted.
So if you may need long term care in the future, and you may want to do Medicaid planning to protect assets, it’s worth talking with an elder law attorney to make sure you have the right power of attorney. FriedmanLaw is available to help, call or email us today.