Most people who hold a General Power of Attorney believe that it allows them to do “anything” that could be helpful, if needed. Not True! The opposite is true. It only allows an agent to do what is specifically authorized and has strict limitations. A General Durable Power of Attorney, also known as a financial Power of Attorney, may not provide you with adequate protection in the event that you can no longer make decisions for yourself. Most people have what is known as a “short form” Power of Attorney that is 2-3 pages long because this is the form most North Carolina attorneys use for their clients. These Powers of Attorney reference the N.C. General Statutes, which specifically sets out the authority and/or limitations granted to your agent to make decisions on your behalf. The short form POA appears to give much more authority than it actually gives to your agent.
One limitation of the short form Powers of Attorney is that it does not allow certain types of gifting, even if you have checked the box to allow gifting. The General Statutes further define the authority given to only allow gifts that you have historically given. If your document does not specifically list a power, then your agent cannot act in that manner. Short form Powers of Attorney are often missing key provisions that could allow your agent to transfer your assets into an irrevocable trust, gift more than the annual tax exclusion amount ($14,000 per person, per year); or gift any gifts other than those that you historically make. Unless granted, it does not allow the agent to make gifts to himself/herself; this creates a problem because most often the agent is your spouse, and your spouse is the only person you can make a gift to without creating a penalty or sanction prior to a Medicaid application.
As seniors age, their agents may need to gift their interests in real property, as well as other property interests, to their spouse, and sometimes their children, in order to protect their assets for government benefits planning. If your General Durable Power of Attorney does not specifically mention the power to gift real property, then your agent cannot help you. At that time, your loved ones may be forced to implement a guardianship proceeding to declare you incompetent, which can be both traumatic and expensive. In order to avoid these types of planning mishaps, contact an experienced elder law attorney to review your documents. He or she can ensure that you have the documents required to properly protect you in the event of a long-term care crisis.
If you have questions about your documents, Medicaid, or Veterans benefits, consider W.G. Alexander & Associates – we offer a unique blend of asset protection, Elder Law and estate planning. You can also attend our free seminars, learn more through our website at www.wgalaw.com, or call us at (919) 256-7000.
Attorney Bill Alexander discusses these issues and more every Tuesday morning on W.G. Alexander & Associates’ radio program, “Asset Protection Today,” on TalkRadio 850 WPTK (AM). Be sure to listen from 9:00-10:00 AM.