Life is uncertain and dangerous. We are always at risk of becoming disabled due to accident, illness, or aging. Disability, as defined by the Americans with Disabilities Act, is an individual’s physical or mental impairment that substantially limits one or more major life activities of that individual.
The incidence of disability increases with age especially after age 65. The oldest old (aged 85 and over) are at highest risk. We cannot avoid this risk, but we can prepare for it.
In the event we become disabled we may require the assistance of others to help us handle the complicated tasks of living. A power of attorney is a legal document that allows you (the “principal”) to give someone else (your “agent”) the authority to act and make decisions for you in you are ever unable to act on your own behalf.
If you do ever lose the ability to handle your affairs and/or make appropriate decisions, the power of attorney may become the most important legal document you ever signed. Through advance preparation you can help ensure that the right decisions will be made for you by the right people at the right time and that your goals and values will always be respected.
Powers of attorney can be created to deal with personal and health care decisions, or financial matters, or both.
How can you ensure that this most important document will best meet your needs and goals if your agent is ever required to act? The reality is that you are going to need expert help.
Avoid relying on one-size-fits-all standard documents or forms. Standard form documents may limit your agent’s authority to what is provided in a state law. Or, they may grant your agent much more in the way of powers than you would want.
Standard form powers of attorney may omit functions that could be essential to allow your agent to meet your needs and achieve your goals. Your document needs to be prepared with your individual circumstances and goals in mind.
For those of us who are at risk of someday needing long term care (and that’s pretty much everyone) a power of attorney can be the key that opens the door to effective asset protection planning. It can protect us and our families from financial devastation due to personal care and health care costs. But a standard form or other poorly drafted document can deny our agent the power to do what is needed to preserve our assets.
Unfortunately many documents, even when prepared by a lawyer, fail to address the critical issue of paying for long term care. Long term care is not covered by Medicare and most private insurance policies. Asset protection planning may be required to protect what you own from the cost of care. This is a complicated area of law and your power of attorney should be prepared by a lawyer who understands it and is an expert in benefit programs like Medicaid and VA pension.
If you are concerned with protecting your home and other assets from health care and personal care costs that may arise if you become disabled you should (1) find a lawyer who is an expert in this kind of planning, (2) discuss your wishes with the lawyer – don’t hesitate to bring the matter up yourself if the lawyer fails to do so, and (3) make sure your power of attorney specifies the conditions, if any, under which your agent will be authorized to divest your assets in order to preserve them. The absence of appropriate authorizations in the document can seriously jeopardize the financial security of your spouse and family.
The Pennsylvania law that governs powers of attorney changed on January 1, 2015, so this is a particularly good time to create (or review and update) your power of attorney document. If you live in Pennsylvania you can contact my law firm, Marshall, Parker and Weber, for further information and assistance.
