A durable power of attorney refers to a legal arrangement that is frequently used to deal with a person’s incapacity. While it is often a grim subject to address the prospect of a person’s eventual incapacity, failure to create the appropriate estate planning documents can later result in additional undesirable complications.
Incapacity can be caused by countless factors. For example, Alzheimer’s Disease impacts a large number of older adults. Data shows that approximately 45% of people who are 85 years old or older and suffering from Alzheimer’s disease, which can, in turn, lead to dementia. While some people think that living to an advanced age is unlikely, data shows that a continuing number of people are reaching old age. The Census Bureau reports that the oldest segment of the population in the United States is also the fastest-growing portion of the country.
Understandably, many people see the value in creating a power of attorney to deal with potential issues that could arise involving incapacity. New York state even provides statutory power of attorney forms in the hopes that this can speed up the process. This form is legally valid and if completed properly will give another individual certain powers to manage your finances if you end up incapacitated.
Remember, however, making any type of financial decision can be complex and this is true with power of attorney documents. The following are some critical elements of power of attorney arrangements including the difference between standard form documents and personalized ones.
You Cannot Revise Beneficiaries
Revising beneficiaries on documents like life insurance policies and retirement accounts are often a routine part of Medicaid planning. While standard power of attorney documents let a person perform many estate planning actions, they will not let you revise who is a beneficiary. Custom power of attorney documents, however, can be structured to authorize an agent to make these changes if needed. To make sure that your agent has the power to fully respond to more unpredictable changes that might happen and impact your estate plan, it is worth considering creating a personally tailored estate plan instead of using a form.
Limited Gifting Options
When deciding whether to engage in Medicaid planning, many people decide that it is necessary to make gifts to achieve certain goals. Statutory power of attorney forms often contain language that limits the agent’s ability to receive gifts. The forms achieve this goal by requiring gifts to be less than the $15,000 annual gift tax exclusion. While this limitation protects its creator from agents who make undesirable gifts, these limitations can also make it more challenging for a person to engage in Medicaid planning. Instead, it is often preferable to make gifts that are greater than the $15,000 threshold. Personally tailored power of attorney documents can provide flexibility as well as protection. Some personally tailored language that you might decide to add include limiting the agent’s power to make gifts under normal circumstances to a maximum amount as well as creating an exception permitting the agent to make certain gifts under distinct circumstances.
You Might be Limited in Asset Division
Oklahoma law divides property during a divorce equitably, which means that courts consider the circumstances of the case as well as the behavior of the parties involved while dividing assets. Standard financial power of attorney documents do not provide the creator with the ability to enter into any type of marital property agreement that might include details about how property should be divided. Personalized estate planning documents, however, can contain terms that directly address the issue of property division.
Contact an Experienced Estate Planning Attorney
Medicaid can be a difficult area of estate planning. If you need the help of an experienced estate planning lawyer, do not hesitate to contact attorney Jim A. Lyon today to schedule a free case evaluation.