Dear Attorney Tully,
Our family is in a bad situation. My husband is permanently in the nursing home. He is incapable of making decisions and cannot communicate. We are being told by the state that we need to spend down to get him eligible for Medicaid title 19. We have a checking account and a savings account. The majority of our money is in my husband’s IRA and I cannot get access to this account. While we have a Power of Attorney, the financial institution is not recognizing it. What can we do? Please help us.
ANSWER: You are not alone. A lot of financial institutions and banks are making it increasingly difficult for families to access the funds of their loved ones. There are a few things that you should keep in mind when trying to access your loved one’s finances. You should always have your loved one’s data: birth date, social security number, and password readily available. You should also have a good, well-drafted and up-to-date Power of Attorney.
Because your financial institution is not acknowledging the validity of your husband’s existing Power of Attorney, it is necessary to authenticate or certify the power of attorney. This is why it is important to use an attorney in drafting and executing your power of attorney. Besides making sure that your documents are properly drafted, an attorney can certify at a later date the document is still valid.
A durable Power of Attorney (POA) for financial is a written document that allows you (the principal) to designate someone else (the agent) to make financial and legal decisions for you regarding finances – paying the bills, handling investments and bank accounts, paying taxes, dealing with real estate issues and so on. The principal must be able to understand, in a reasonable manner, the nature of the effect of signing a POA. As long as a principal remains competent, a POA can be revoked or changed. In addition, the law also requires the following:
- The principal must sign the POA willingly and without coercion.
- A notary public must notarize the document. Many attorneys recommend having two witnesses, unrelated to the principal, witness and sign the document.
In the last few years, laws about POAs have become stricter. The agent must use the principal’s assets only for the benefit of the principal. For the agent to receive any benefit at all from the principal’s assets, the document must specifically grant such authority.
A POA can be a powerful tool in Elder Law planning. In many cases, the POA is the most important tool to be used for planning purposes. It can be used by the agent to make decisions for your loved one when he or she can longer do so.
While there are good and valid reasons why a bank or financial institution needs to safeguard the assets of your loved one, it is imperative that your family be able to access assets that are in your loved one’s name alone. In the event of a healthcare crisis, failing to spend down in a timely fashion could cost your family thousands, possibly hundreds of thousands of dollars, needlessly on healthcare costs.
One question each family needs to ask is, in the event of a healthcare crisis, how quickly could I access the assets of my loved one that is in his or her name alone? The second question is, how liquid are the assets that you need to access if it is all tied up in the stock market or in real estate? If it is something that is not very liquid, would it be hard to turn the asset into cash to pay for healthcare costs?
Families are often under the misinformation that because something is in an IRA or 401(k) or retirement account that these assets are protected from a spenddown. That is just not the case. Please keep in mind that there are legal and ethical ways to protect everything that you own, but being able to access your loved one’s assets are key to this planning strategy.
