Many families believe they are ‘covered’ once a Power of Attorney (POA) is executed. It is one of the most practical documents in any estate plan, allowing a trusted person to step in and manage finances when you cannot.
But when it comes to Medicaid planning in New York, not all Powers of Attorney are created equal. A standard POA, especially if it is simply the form included online with the governing statute, can be dangerously insufficient if it lacks the right authority and flexibility.
1. Medicaid Planning Often Requires Asset Repositioning
Qualifying for Medicaid frequently involves strategic asset transfers, such as gifting assets, funding trusts, or converting resources into exempt assets under Medicaid law. If your POA does not explicitly authorize gifting, your agent may be unable to take these steps.
2. New York POA Law Is Technical and Strict
New York law requires clear authority for major gifting transactions and has specific execution and notarization requirements. Without proper drafting, financial institutions may reject transactions or agents may be unable to implement a Medicaid plan.
3. Timing Matters and Capacity May Be Gone
Medicaid planning is often needed during health crises. If the individual lacks capacity and the POA is insufficient, families may need to pursue guardianship, which is an expensive and time-consuming court proceeding, rather than a private transaction in the attorney’s office. Too often, families wait until there is a crisis to reach out for assistance with creating a suitable POA. If a loved one receives any kind of dementia diagnosis, act immediately, as they may decline quickly. It is recommended that all adults of any age have a power of attorney in place.
4. Flexibility Is Just as Important as Gifting Authority
Even when gifting authority exists, it must be broad enough to allow changing strategies, such as trust planning that may include creating, amending and funding trusts for the principal; beneficiary designation changes; and creation and implementation of a Medicaid crisis plan. If gifting is limited to the IRS annual exclusion amount under the Internal Revenue Code (currently $19,000 per person per year) that will prevent strategic asset transfers in most instances, especially if real estate needs to be put in the name of the well spouse or a “note and gift” plan is needed for liquid assets.
5. This Is Not a One Size Fits All Document
A downloaded form will not have the required customization to do proper planning and allow for strategic transfers or changes to beneficiary designations. General practitioners will often have a standard form for their clients to sign that includes none of the special provisions a skilled elder law attorney includes regularly as safeguards. These POAs may work for bill-paying, but will fail when crisis hits and strategic moves are needed
The Bottom Line
A Power of Attorney is not just about who is empowered to act, but what they are empowered to do. A well-drafted POA with gifting authority and flexibility can preserve options and avoid costly court involvement. Everyone should have their POA reviewed regularly by an elder law attorney to ensure it meets technical legal requirements under current law and provides the necessary authority and flexibility to ensure personal wishes and needs are honored.
Our Trusts and Estates Practice Group routinely handles Power of Attorney executions and other matters related to estate planning. If you have questions or concerns, please reach out to attorney Lisa M. Powers at (585) 419-8869 and lpowers@harrisbeachmurtha.com; or the Harris Beach Murtha attorney with whom you most frequently work.
This alert is not a substitute for advice of counsel on specific legal issues.
Harris Beach Murtha’s lawyers and consultants practice from offices throughout Connecticut in Bantam, Hartford, New Haven and Stamford; New York State in Albany, Binghamton, Buffalo, Ithaca, New York City, Niagara Falls, Rochester, Saratoga Springs, Syracuse, Long Island and White Plains; as well as in Boston, Massachusetts, and Newark, New Jersey.