By James S. Rizzo, Esq.*
“A man who procrastinates in his choosing will inevitably have his choice made for him by circumstance.”
– Hunter S. Thompson
Clients are often surprised when I tell them the Power of Attorney is arguably the most urgent estate planning document to have completed, with a Will and Health Care Proxy as close runners up. Ideally, all three documents should be in place for anyone over 18. However, if you have a short or long term health setback where you cannot manage your own assets and have not properly authorized someone to handle them, your return to health may be met with overwhelming financial strain. With a Power of Attorney, you designate which individuals are in control of your assets and who can take care of your affairs if you are unable to do so.
The following are a few of the common and very avoidable problems that can arise without an up to date Power of Attorney in place:
- Your family may need to undertake a Guardianship Proceeding. If you become incapacitated, your loved ones may be forced into court to apply for guardianship in order to act on your behalf. This is true even if you are married, to allow for a spouse to act on your behalf. The legal cost of a guardianship proceeding can be in the thousands and take several months to complete. It may also increase the potential for animosity and expensive litigation if other family members disagree and challenge the application.
- Serious Financial Problems. This is a broad and potentially devastating category. If bills, accounts, mortgages, etc., are only in your name, someone will need the authority to pay such debts on your behalf. Bad credit, house foreclosure, loss or lapses of insurance coverage, having judgments and liens filed against you and being forced into bankruptcy are just some of the avoidable financial black holes one may fall into without a responsible adult having the authority to manage debts.
- Nursing Home bills and denial of Medicaid Eligibility. With the average cost of nursing homes in Upstate New York ranging between $10,000 – $12,000 per month, even one month of Medicaid ineligibility can result in great financial distress. The Medicaid application process, even with qualified attorneys involved, requires a diligent and responsible person to gather a multitude of records, sign numerous documents and follow through with the myriad requirements to achieve Medicaid coverage. If a Medicaid application is denied, generally you will need a personal representative to proceed with an appeal or fair hearing to get coverage in place.
- Inability to obtain Medical Records. A Power of Attorney should include an authorization for your appointed agent to take care of health care billing and payment matters and access medical records in compliance with the strict privacy requirements of the Health Insurance Portability and Accountability Act (“HIPAA”). Without such authority, even a spouse or other close family member may be denied access to review records and/or the ability to oversee proper treatment and care. This becomes more urgent if you suspect medical malpractice or mistreatment by providers.
- Inability to transfer assets if necessary. There can be a host of circumstances where an estate attorney may recommend transferring an asset such as a home or other large assets out of an incapacitated person’s name. The most common circumstance, and one usually fraught with peril without a qualified estate attorney involved, is during the Medicaid application process when a person requires nursing home care. There may be other tragic circumstances, such as a person in the final stages of life, where transferring an asset while the person is still alive can avoid a long and protracted probate proceeding after they die. Such a transfer of assets can only take place if the Power of Attorney is up to date and has a fully executed “Statutory Gift” authorization in place.
While there are many unexpected and stressful circumstances that can ensue without a Power of Attorney in place, the good news is these situations can be easily avoided by meeting with an estate attorney for usually less than an hour. The Power of Attorney should be an inexpensive component of any estate plan. It provides peace of mind, can be easily updated and substantially eases the emotional and financial burden on your family members by clearly stating who is in charge and allowing those persons to resolve matters efficiently on your behalf should these situations arise.
In short, do not let procrastination and chance determine what happens to your hard earned assets!
James S. Rizzo is an attorney with the law firm of Rheinhardt and Bray, P.C., with offices in Rome and Ilion, NY and serving the CNY area. He has over twenty-five years of legal experience and concentrates in Estate Planning matters, including Wills, Revocable & Irrevocable Trusts, Powers of Attorney, Health Care Proxies, Asset Protection & Nursing Home/Medicaid planning. He can be reached at (315) 339-0503 or jrizzo@cnyelderlaw.com for a free, confidential initial consultation. Visit us on the web at: www.cnyelderlaw.com.
Last Revised: July 16, 2021