Intent for Power of Attorney to Continue Gifting Program

Power Of Attorney: Why Should I Give My Agent The Power To Make Gifts?

The idea behind a Durable General Power of Attorney (POA) is to appoint someone (your agent) who can manage your financial affairs if you (the principal) are unable to do so. The overwhelming majority of the language in the document describes the various things that your agent can do. Most POAs (including mine) contain language to allow the agent to make gifts on the principal's behalf. After receiving their draft POAs, my clients will often call asking why we are allowing their agent to give their stuff away! This post explains the purpose of the gifting power.

Exhaustive List of Powers

If you have ever read a POA, you know that it should be prescribed as a cure for insomnia. The POA is basically an exhaustive list of all the various things that your agent can do on your behalf. For example, your agent can:

• sell any interest I own in any kind of property, real or personal, tangible or intangible,
• buy any kind of property,
• invest and reinvest all or any part of my property, and
• may enter into contracts of any type and for any purpose.

And the list goes on . . . and on, and on. Our standard POA is 28 pages long, single spaced!

The goal of the POA is to give your agent the power to do anything that they might need to do. As we cannot predict the future, we are uncertain as to what they may need to do. So we attempt to give them the power to do everything. Unfortunately the law does not allow us to have a simple document that just reads "I give my agent the power to do everything that I could do." If a power is not specifically given to an agent, they don't have that power. As a result, we get 28 page POAs that list every conceivable power that your agent may need to have.

Gifting Power

The power to make gifts will likely be one of a long list of enumerated powers. The purpose of giving your agent this power is in case you need to be qualified for Medicaid. Medicaid is a state and federal program that can be used to pay for nursing home care. In order to be eligible for Medicaid in the state of Maryland, your resources (stuff you own) must be less than $2,500. In order to become eligible, your property may need to be given away – hence the gifting power.

Here's a typical scenario. Your mother has dementia and needs to go into a nursing home. When your mother was younger, she named you as her agent in her POA. Your mother has saved $200,000 over her lifetime with the hope of leaving a substantial inheritance to her children. At $10,000 a month for nursing home care, if your mother stays in the nursing home for 2 years there will be no inheritance for the children. All of the money she had saved during her life will go to the nursing home with none going to her children.

This is where the gifting power in the POA comes into play. A competent Elder Law attorney may be able to assist you in gifting away a portion of the assets to the children in order to qualify your mother for Medicaid. (Note: this is not as simple as simply giving the assets away. You must have qualified legal help to navigate the Medicaid gifting and penalty period rules.) Once qualified, Medicaid will pay for the ongoing nursing home care and your mother will be able to leave an inheritance to her children. Without the gifting power in the POA, this option would not have been available.

Some of my clients are concerned that the gifting power could be used to, in effect, steal from them. My responses to that concern are threefold. First, it is important to understand that the powers that you give to your agents are only to be used for your benefit. Second, bad people certainly exist who would use the powers in a POA to steal. These people would probably be stealing from the principal regardless of the existence of a gifting power. Third, the gifting power isn't the problem, the choice of agent is. So long as the agent you choose is 100% trustworthy, there should be no problems.

By David Galinis

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Source: https://www.marylandworkerscompensationlaw.com/wills-estates/power-of-attorney-why-should-i-give-my-agent-the-power-to-make-gifts/

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