One of the most fundamental rights we have as U.S. citizens is the right not to be deprived of our property without due process of law. You have the right to protect what is yours.
If you become mentally disabled, a loved one may not handle your financial and personal affairs for you unless, either:
- he or she has been appointed by a court after costly and sometimes demeaning process (guardianship and or conservatorship), which can be expensive and time consuming, or
- you have authorized a loved one to handle matters for you in a power of attorney, which will be effective even if you are disabled mentally.
The power given to your agent can be can be either "immediately effective" or it can be "springing" (effective only if two doctors certify they have examined you and determined you are incapable of effectively managing your affairs). Most people make their powers of attorney "immediately effective" so as to avoid the need for two doctors to diagnose mental disability.
If you want to protect and preserve your assets from the prospect of complete dissipation due to long-term health care costs, then your power of attorney should authorize Medicaid planning.
If your power of attorney does not authorize Medicaid planning, then all your assets could be dissipated because your agent will not be able to do this kind of planning. Usually, the power to do Medicaid planning is conditioned on the agent acting with the counsel of a lawyer who handles Medicaid planning.
For those in the U.S.A. needing long-term care, about 70 percent of them are on Medicaid. Therefore, in most cases, we include these "asset protection powers" in their general power of attorney.
You also should have a good updated health care power of attorney so you can preserve your dignity and make sure your specific wishes for health care and life-saving measures are upheld.
If you want your assets to pass to love ones outside the court process, which most do, then you should plan with revocable living trusts.
Assets in a revocable trust do not go through probate. It is basically a will, but it can own property. Upon your disability or death, your named trustee will handle your property as you direct.
The trust property will avoid probate, so there will be no need to pay the treasurer a fee based on the value of your assets. The savings can be substantial.
Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local asset protection, estate and elder law planning attorney. mwinnesq.com