Long term care is expensive. A nursing home or assisted living facility can easily cost between $5,000 and $10,000 a month. Medicaid is a government health care program that will cover the cost of long term care when you meet certain income and asset requirements. Under current rules, an individual can have no more than $1,500 in countable assets and a healthy spouse can keep up to half her baseline countable assets up to $119,220.
The goal of Medicaid planning is to preserve assets, either for yourself, your spouse, your children or other loved ones. The law is constantly changing and with it, Medicaid planning techniques. However, one thing remains the same. If you become incompetent due to a dementia, stroke, etc., you will be unable to engage in Medicaid planning if you do not have the appropriate Financial Power of Attorney in place.
A Financial Power of Attorney allows you to appoint an agent to conduct financial transactions on your behalf. It can go into effect immediately or it can go into effect upon a triggering event like your incapacity. Not all financial powers of attorney are the same. Some financial powers of attorney only give general powers like the ability to sell real estate, conduct bank transactions, and file taxes.
In order to engage in Medicaid planning, your financial power of attorney should, at a minimum, give these five special powers to the agent:
- It should give unlimited gifting authority. Under Ohio law, there is a presumption that a gifting clause only gives an agent authority to make gifts under the federal gift tax exemption unless the document states otherwise. A Medicaid gifting plan requires the ability to give in excess of the gift tax exemption and the power of attorney must state the same. It should also say explicitly that gifts can be made to your agent if that is your preference. Gifting provisions can limit the individuals who can receive gifts. It can also require equal distributions to loved ones, if preferred.
- It should give authority to set up a trust, and amend, revoke or withdraw assets from a living trust. Irrevocable trust are often used to create gifting plans that better protect the Medicaid applicant. Authority may also be needed to remove assets from a revocable trust for a gifting plan.
- It should give authority to purchase annuities or annutize annuities. Annuities can be helpful planning tools for the benefit of a healthy spouse.
- It should give authority to disclaim inheritances, life insurance proceeds and other interests to which you may be entitled. An benefit received by a Medicaid recipient can effect eligibility.
- It should give authority to change ownership and beneficiaries of life insurance policies.
Further, the signer of the financial power of attorney should specifically initial the powers given on the document.
In conclusion, if you want to be able to engage in Medicaid planning upon your incapacity it is essential that you have an appropriate financial power of attorney drawn up by a Cleveland elder law lawyer or Cleveland Medicaid planning lawyer. If you have any questions upon the financial power of attorney you do have in place, visit a Cleveland Medicaid planning or Cleveland elder law lawyer to have it reviewed.