Power of Attorney for Finances: An Essential Tool for Elder Care Planning

Most people understand the need to have a will, so that when they pass away, assets will go to their chosen beneficiaries. Most people do not realize that they also need to appoint a power of attorney to make financial decisions and manage assets for them, if they become incapacitated.

If you think about it, most any financial decision we make requires a signature. Selling a house, writing a check, entering into agreements, etc., all require that we be able to sign documents. A signature itself is not even enough; the law imposes a requirement that the person signing the document have sufficient mental capacity to understand what they are signing.

As we age, there is a greater possibility that a time will come when we are not able to sign important legal documents. Or, even if we can sign our name, we may not understand what we are signing. At that point, assets are frozen unless someone has been given the legal authority to make financial decisions for you. The best way to do this is through a power of attorney for finances.

A power of attorney for finances is a document you can sign to appoint another person to make important financial decisions for you in the event you become incapacitated. The person you appoint is called your "agent". It is a good idea to name one or more alternate agents, in the event your first choice is unable or unwilling to serve in that role.

As an Elder Law attorney, one of the most common phone calls we receive is "I need to get power of attorney for my Mom." My answer is always, "that's great, we'd love to help your Mom. Let's schedule a time for her to come in and discuss it." "Well, that's a problem," replies the caller "because Mom has Alzheimer's Disease, and she won't understand what you are talking about."

In this situation, it may be too late to get a power of attorney. A power of attorney must be signed by a person who is legally competent. This means the signer must have the ability to understand the nature and importance of the document. If someone already has Alzheimer's Disease, or dementia, or has suffered a stroke, it may be too late to sign a power of attorney. Therefore, it is important to sign a power of attorney while a person has mental capacity to understand the document.

When deciding who should be your agent, remember that the most important qualities are honesty and good financial management skills. The main disadvantage to having a power of attorney is, a dishonest agent could use the power of attorney to misappropriate your assets. Therefore, only appoint the most trustworthy people to serve in this role. There are also professional trust companies that may agree to serve as your agent.

A power of attorney should always be prepared by an experienced elder law attorney. It is possible to obtain a generic power of attorney from a legal stationery store. However, this form will not give the agent the ability to make many types of important decisions for a disabled person. An experienced elder law attorney can provide a power of attorney that will give your agent flexibility to make important financial decisions if you are not able to make them yourself, such as disability planning, creating trusts, long-term care cost planning and tax planning.


Geoff Bernhardt is an elder law attorney in Portland, Oregon. For more information on his firm and on Medicaid planning, please see his website at www.elderlawpdx.com.

How an Elder Law Attorney can Help with Long-Term Care Planning

Elder Law attorneys help older people and their families with all of the legal consequences of aging. These consequences tend to fall into three categories: surrogate decision making for finances and health care; estate planning; and long-term care cost planning. We use powers of attorney for finances and advance directives for health care, wills and trusts, and a variety of strategies to help people get and pay for good care. When an older person lacks the ability to pay for care over their life expectancy using private savings or long-term care insurance, an elder law attorney will advise him or her on qualifying for long-term care assistance through the Medicaid program.

It is appropriate to refer an older person and his or her family to an elder law attorney for possible Medicaid planning in most cases where there is a need for long-term care. The elder law attorney will meet with the elder and his or her supportive family members. We will look at the income and resources available to the elder, and try to assess the level of care needed. We will also consider the needs of other family members, such as a healthy spouse or a disabled child, who may be dependent on the same income and resources for support. We can then advise the elder and his or her family whether the private resources are sufficient to pay for the care of the elder and to support the healthy spouse and any disabled children. If there is any chance the private resources will be insufficient for these purposes, the elder law attorney will suggest Medicaid planning.

Medicaid planning involves the restructuring of an elder's finances in order to qualify for Medicaid long-term care assistance without losing everything. Medicaid is a means-tested program, and the elder's assets often have to be spent down to very low levels before he or she will qualify. In the case of an unmarried person, his or her assets have to be spent down to $2,000. If the ill person is married, the healthy spouse can keep a portion of the assets, however, this portion is usually insufficient to pay for the spouse's care for his or her life expectancy. Through the process of Medicaid planning, an elder law attorney can get a much better result for the ill person, a healthy spouse, and any disabled children.

The bottom line for this type of planning is good care and personal dignity for the elder. In our system of health care, money is often necessary to insure a good quality of life for the elder. Protected funds can be used to support a healthy spouse in the community, pay for a geriatric care manager for the ill spouse, and provide for special needs items for a disabled child. An elder law attorney is an important part of the long-term care team and can make a tremendous, positive difference in the dignity and quality of life for elders facing serious health issues.

Geoff Bernhardt is an elder law attorney in Portland, Oregon. For more information on his firm and on Medicaid planning, please see his website at www.elderlawpdx.com.