We recently met with a family whose mother had entered the nursing home. The monthly cost for her nursing home care would be approximately $11,300. The family was terrified that their father would lose a large portion of his assets. 

We were able to explain that in Pennsylvania we are able to protect 100% of the assets for the community spouse so that his assets don’t get spent down to low levels under the Medicaid rules. The family was ecstatic, but we did have one hurdle to overcome.

In the first meeting I informed the family that the power of attorney that their family attorney drafted was not going to work, and that we had to redo the document. The family was perplexed – and a little annoyed – because they had the power of attorney done recently, and they had known the attorney for a long time. I explained that, although the attorney was very good, his power of attorney specifically limited the ability to do the type of planning that we needed to. 

In fact, all of the planning was subject to the limitation that nothing can be done in excess of the annual federal gift tax exclusion amount. This is a tax phrase that is used to govern the amount of gifts that can be made in a year tax fee to a family, but many attorneys limit the ability to do gifting in a power of attorney only up to that amount. The document even specifically applied that limit to spouses also. With this limitation in the document, we would not have been able to assist the family to the extent we would have liked.

However, the family was very lucky that the wife still had capacity, and we were able to have her do a new power of attorney, and ultimately were able to protect the assets for the husband, the community spouse. We recently received approval on this case, and the family was obviously quite happy.

To protect your assets in this situation, it is essential that your powers of attorney are prepared by somebody who does asset protection and Medicaid planning, as opposed to a traditional estate planning attorney.  If you have questions about this or anything else estate planning related just click here and fill out our simple "Contact Us" form, and we'll be in touch.

Jeffrey Bellomo