AS an Elder Law attorney specializing in estate planning and Medi-Cal for Long-Term Care, I receive phone calls from adult children all over the country who have an aging parent here in California. Quite often, our conversation goes something like this: “My father (or mother) is in a nursing home in California, has a home and some assets in the bank. My parent’s medical bills are $8,000 a month. The nursing home gave me your name and told me you could help.”
My first question is usually “Do you have power of attorney for your parent?” If the answer is yes, we can usually help the family preserve assets and protect the family home . If the answer is no, then my next question is “Does your parent still have mental capacity?” If the answer is in the affirmative, there is no problem because we can execute the Power of Attorney at that time.
If the parent does not have capacity, things get a little more difficult. Usually, we must advise the family to court and get a conservatorship over the disabled parent. It can be a long and difficult process that entails going through probate court. 4 to 5 months later the family could have spent $40,000 to $50,000 in legal fees and healthcare expenses. For this reason, we advise all of our clients to execute a Power of Attorney.
So what is a Power of Attorney? It is a legal document that gives someone other than yourself the right to sign your name. The person giving the power is called the “principal;” the person being appointed is called the “attorney-in-fact” or “agent.” There are only two types: one is for assets, the other for health care.
A health care power of attorney allows the “attorney-in-fact” to make health care decisions for you. This would include giving or withholding consent to any care, treatment, service or procedure that could keep you alive.
The other Power of Attorney is for “asset management.” This will allow the “attorney-in-fact” to do your banking, mortgage your home, amend your trust, make gifts, and much more. It is important that your Power of Attorney says “durable.” A “durable” power of attorney is a power of attorney that remains effective upon the principal’s becoming incompetent or incapacitated. If the word “durable” is absent, the power of attorney is deemed revoked upon incapacity – which defeats the purpose in the first place.
Why do you need a power of attorney? If you are ever incapacitated (unable to manage your own affairs) due to accident, stroke, dementia, or Alzheimer’s , your agent would be able to access your finances to pay bills, manage your assets, or even qualify you for Medi-Cal. If you are ever terminally ill and unable to make your own decisions, your agent named in a healthcare power of attorney would be able to make decisions for you according to your wishes (i.e. when extraordinary life saving measures should and shouldn’t be used).
While everyone should have these documents as a part of their estate plan, you have to be careful when creating them, as with all legal documents. You are giving someone access to your bank accounts and the power to make financial and real estate transactions for you; you should make sure your attorney-in-fact is a person that you trust completely like a spouse, child, or good friend (even though they are legally obligated to act in your interest, not theirs). One way to protect yourself is to make your power of attorney “springing,” which means it does not become effective upon incapacity, as determined by a licensed physician not related by blood or marriage under penalty of perjury. In other words, as long as you have capacity, you haven’t given anybody the right to sign your name until it “springs” into action.
While no one enjoys thinking about the worst case scenarios of life, executing these two simple documents can save you and your family a lot of trouble in the future. It is always good to have a solid estate plan, just in case.
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Elder Law Services of California is proud to announce that attorney Andrew Paranal has joined its trust department. Mr. Paranal began his career in estate planning in 2013 and has since expanded into asset protection and Medi-Cal planning. He became interested in Elder Law after helping care for a family member who experienced a debilitating event. Mr. Paranal is excited to join an established law firm and hopes to educate his Filipino community about the tremendous benefits of proper estate planning.
For more information, please visit elderlawcalifornia.com or call 1-800-411-0546