Protecting Your Assets from the Nursing Home (Contd.)
Do not think that just because you have a financial power of attorney
drafted by a lawyer, that your financial agent has the authority to protect
your assets and make these transfers. Your financial power of attorney must
have been given the specific authority to make these transfers. The specific
authority given to your financial agent in a financial power of attorney must
comply with the recent changes in the financial power of attorney statute,
which confirmed existing court case law.
In order to make transfers to your loved ones and protect your assets, your
financial power of attorney must have very broad gifting powers. Your financial
power of attorney must have specific provisions to allow your financial agent
to make gifts of your assets to your spouse or other loved ones, including to
your financial agent.
Most financial powers of attorney that have been brought to our office for
review were prepared by lawyers or others who were not familiar with the
Medicaid rules and do not include the appropriate language. Some financial
powers of attorney prohibit gifting all together. Others limit gifts each year
to the federal gift tax annual exclusion amount, which in 2012 is $13,000.
Another annual limitation that has been in financial powers of attorney is
that gifts can be made, but they must not exceed the greater of five percent of
your assets or $5,000. Other financial powers of attorney prohibit any gifts
that would benefit the financial agent.
Any of these limitations can have detrimental effects on protecting your
assets for your spouse or other loved ones. The gifting power that is in your
financial power of attorney must allow your financial agent to make gifts of
substantially all of your assets to your loved ones. If you want your agent to
be able to make gifts to him or herself, there must be a specific provision