I like to write about topics that I feel are of interest to the public and potential clients. I like to educate people. And I find myself writing about this topic over and over again, because I see so many people using do-it-yourself DIY legal forms to prepare their estate planning documents. And over and over, I see that they are doing them wrong, or signing them incorrectly (which makes the documents useless) or simply not knowing what language to put in their documents to accomplish their goals.
The biggest DIY form that can cause problems is the Durable Power of Attorney (DPOA). A DPOA is a document signed by someone, when they are competent and still have their wits about them. The DPOA allows an individual to designate an agent, someone to step into their shoes, to make financial decisions for them. The purpose of this document is to insure that, if you become incapacitated and can no longer make your own financial decisions, you have someone there who can do it for you.
What happens if you do not have a DPOA in place and you become incapacitated? Usually, a guardianship has to be set up for the benefit of an incapacitated person. A guardianship is a court proceeding where an examining committee is appointed to evaluate the alleged incapacitated person and they make a determination whether the alleged incapacitated person is able to keep their rights or their rights must be removed (such as the right to determine where you live, to make financial decisions, to make health care decisions, to vote, to drive, etc.). This committee makes recommendations to the court, and a judge decides, based on these recommendations, whether the individuals rights need to be removed and a legal guardian appointed for the individual. This is not a cheap process (both the guardian and the ward are required to have their own attorneys), nor it is without stress for the alleged incapacitated person and the family.
Do you see why it is important to have a good DPOA in place and may make sense to have an attorney prepare it rather than doing it yourself? Here’s an example straight from an appointment I had recently (some facts have been changed to protect identities of the clients). Two sisters came into my office because their mother was suffering from dementia. She had been in an assisted living facility and doing pretty well when she fell and had to go to the hospital. The hospital gave her medication that made her dementia symptoms worse, and she was not able to go back to the ALF. She had to stay in skilled nursing care. The mother had just enough income to pay for the ALF (with her kids contributing some money to meet her needs). However, the cost of the skilled nursing facility where she had to stay was twice the cost of the ALF (she went from having to pay $4,000 per month to over $8,000 per month).
The client’s daughters came into my office wanting to see about their mother getting on Medicaid to help pay for the nursing home. With Medicaid, the nursing home would basically receive the client’s income, and Medicaid would pay the rest of the bill (so the kids would not be paying out of their own pockets). However, the client’s income was too high. In order to receive Medicaid benefits for skilled nursing care, your income cannot be more than $2,199 per month (this number usually goes up every year). The client had about $3,800 in income, so she was over the income cap amount allowed by Medicaid. This problem can be solved by placing the excess income into a Qualified Income Trust. However, ither the client needs to be able to sign the trust to create it, or the agent under the DPOA needs to have the authority to sign it. Do you see where I am going with this?
You got it! The DPOA that the daughters had their mother sign was done through Legal Zoom and gave absolutely no authority to the agent (which was one of the daughters) to create a trust. It was actually a pretty poorly written DPOA because it did not give the agent much authority to do anything. Money NOT well spent. The alternative did not appeal to the children because this required going to court, having a guardian appointed, and asking the court to allow the guardian to create the trust (a much more expensive alternative that could have been avoided).
If you follow my blogs, you are probably tired of seeing me write about this topic, however, I write about it in the hopes that I will educate those DIY’ers and (hopefully) keep you from making a costly mistake. I write about it because it breaks my heart to have a family come into my office, only to be told, there is nothing I can do for them that isn’t going to be way more expensive than they were anticipating. I write about it because, I hope that, I can reach some individuals who are on the fence about setting an appointment with an elder law attorney. And, I hope that by writing about this, I can make a difference for someone.
Would you like additional guidance from a knowledgable attorney? Schedule a complimentary phone consultation with Attorney Laurie Ohall by calling 813.438.8503 or online.