With technology and innovation creating access to the legal world easier than ever before, it is common for me to see a power of attorney that someone downloaded from the Internet that is ineffective in dealing with matters related to aging and securing long-term care. Prior to Ohio’s adoption of the Uniform Power of Attorney Act, every attorney drafted their own, unique power of attorney document. This created problems with financial institutions finding deficiencies in the language of the document, causing the financial institution to refuse to honor the power of attorney. When a person needs to use a power of attorney, it is usually because the person that granted the power of attorney is incapacitated and may not have the capacity to grant a new power of attorney. Even after Ohio adopted the Statutory Form Power of Attorney, which provided a uniform model for these documents, there are issues that the elderly face that are not addressed in Ohio’s form or are often not executed properly.
For instance, the Statutory Form states that there are actions that require express authority, like creating a trust, making a gift, creating or changing rights of survivorship or beneficiary designations. The statutory form states, “unless expressly authorized and initialed by me in the Special Instructions, this power of attorney does not grant authority to my agent to do an of the…” actions mentioned above. That means if your mother has a stroke and is admitted to a nursing home, even if you are her duly appointed power of attorney, but she didn’t expressly authorize you create a trust or make a gift, you couldn’t take certain important steps that would preserve her assets while qualifying her for Medicaid benefits.
Our Durable Power of Attorney (DPOA) has a number of express powers that are specifically included to deal with issues related to asset protection and long-term care. For example, our DPOA authorizes the agent to establish any trust, especially trusts authorized by the Medicaid Act, and authorizes the agent to transfer money into that trust. Our DPOA permits the agent to make gifts for the benefit of particular people chosen by the principal – this power is often utilized to save assets from going to the nursing home. Our DPOA authorizes the agent to change beneficiary designations, which is an important power if the agent needs to convert an existing insurance policy to a Medicaid-compliant annuity, for example.
These are just a few examples of how an effective power of attorney must be tailored to the potential needs of an elderly person. If you have a power of attorney in place, you are off to a great start. I believe it is the most important estate planning document. But you may want to take a second look to ensure it is tailored to meet your specific potential needs.