A power of attorney can be an invaluable tool in planning for the future and ensuring that your family will be as prepared as possible if one day you are unable to make decisions for yourself. Just like a health care power of attorney, a financial power of attorney enables you to arrange for someone to make decisions for you in the event that you become incapacitated. However, financial powers of attorney, just like they sound, deal with the managing of your finances.
WHAT YOUR POWER OF ATTORNEY MUST SAY BUT PROBABLY DOESN’T.
One of my frustrations is that Powers of Attorney are not properly used to help people plan and pay for care. In particular, there are three provisions that you must have in your power of attorney. They are laid out immediately below. If your power of attorney does not have these provisions or something similar, then you need to update your power of attorney. Here they are:
(ii) create and fund a qualified income trust in accordance with United States Code,
Title 42, Section 1396p(d)(4)(B) if such a trust should be deemed necessary to
qualify me for Medicaid benefits, and make arrangements for the diversion of
my income to such a trust as necessary to comply with applicable Medicaid
rules and regulations; and
(iii) sign all necessary documents to allow me to join any trust qualifying under United States Code, Title 42, Section 1396p(d)(4)(C) and transfer any portion of my assets to such trust
These provisions are important because they enable your agent to set up and fund exempt trusts that make it easier to obtain long term care benefits later if needed.
This vital tip aside, many other provisions are common. Usually, people give their attorney-in-fact broad power to handle all of their finances, but you can give your agent as much or as little power as you wish. The following is a brief list of things you may want your attorney-in-fact to be able to do.
- use your assets to pay your everyday expenses and family expenses
- buy, sell, maintain, pay taxes on, and mortgage real estate and other property
- collect Social Security, Medicare, or other government benefits
- invest your money in stocks, bonds, and mutual funds
- handle transactions with banks and other financial institutions
- buy and sell insurance policies and annuities for you
- file and pay your taxes
- operate your small business
- claim property you inherit or are otherwise entitled to
- transfer property to a trust you’ve already created
- hire someone to represent you in court, and manage your retirement accounts