The power of attorney is a crucial estate planning document—it allows a third party to step in and make important financial decisions for you, if you are no longer able to make those decisions for yourself. Having a properly executed comprehensive durable power of attorney can preclude the need for guardianship when it comes to your financial affairs.

Last week, I met with a client whose spouse fell in their home and has been comatose for the last month. Now faced with the cost of a nursing home, my client came in to try to protect their assets; however, they did not have a power of attorney, among other documents, and so we had to explore guardianship.

It is important to understand that married couples who are jointly holding assets do not always have carte blanche to make unilateral decisions regarding the assets. A spouse cannot unilaterally transfer the interest in the house or Co-op without both spouses’ signatures or a comprehensive power of attorney. The same holds true for protecting a traditional IRA. Medicaid requires that the asset be in a proper payout based on the Medicaid table, not the IRS tables.

This affects anyone over the age of 18, especially families who are doing Medicaid planning to finance home care or nursing home care. The law allows the sick spouse to transfer all of the assets to the well spouse and apply for Medicaid nursing home coverage during the following month without penalty. And so, all assets can be transferred and eligibility would be granted a month later (assuming that no other transfers took place over the 5-year-look-back period).  

In this scenario, if a power of attorney is not in place, the only way to transfer jointly held assets is a guardianship.

There are also rules allowing an individual to transfer to siblings, children, disabled children and trusts for disabled individuals.  All of these options would be a consideration, based on your circumstances, if you had a comprehensive durable power of attorney in place.
A will and jointly held assets are not enough—advance directives, such as a comprehensive durable power of attorney, are essential. Contact us today to ensure that your estate planning is complete.  

Deanna M. Eble
Russo Law Group, P.C.
100 Quentin Roosevelt Blvd., Suite 102
Garden City, NY 11530
800-680-1717