Powers of Attorney

					          Elder Law
Focusing on the Legal Needs of the Elderly

                       J. Gregory Wallace
                       Monroe, Wyne, & Wallace, P.A.
                       Raleigh, North Carolina
Health & Personal Care Planning
“Advance Directive for a Natural Death”
Living Will

    •Three situations set out for possible
         •incurable or irreversible condition that will result in
         death within a relatively short period of time,

         •or having advanced dementia or similar condition that
         results in the loss of substantial cognitive ability,

         •or have become unconscious and not expected to regain
Living Will
Statutory Form

  Declaration of treatment wishes for each
  option are to direct that the medical personnel
  may withhold or shall withhold:
      Life-prolonging measures and/or
          Artificial nutrition and/or hydration
Living Will
Statutory Provisions

     •A person cannot be required to sign a
     declaration as a condition for receiving any
     medical treatment
     •Declaration may be revoked without regard to
     person’s mental or physical condition
     •Declaration does not authorize an affirmative
     or deliberate act to end life other than to permit
     the natural process to take place
Health Care Power of Attorney
Controlling decisions about your medical care

      •Statutory model in N.C.G.S. Chapter 32A
      •Model is a springing power, requiring
      determination of physician or physicians that
      principal lacks sufficient understanding or
      capacity to make or communicate health care
      •Terminates on revocation, or upon death of
Health Care Power of Attorney

 •Shall not confer any power with respect to
 property or financial matters, but health care
 agent may contract for health care services
 and may incur reasonable costs for them
Powers of Attorney
      Definition of POA

• A written instrument
• By which one person (the “principal”)
• Appoints another person or persons as his
  agent (the “attorney-in-fact” or “agent”)
• Grants authority to agent to perform certain
  acts on behalf of the principal
• Creates an agency relationship between
  principal and agent
  General or Special POA

• Special Powers of Attorney are limited in
  duration or in scope of action.
  • “… for one year from date”
  • “to execute all documents required for the sale
    of my home at …”

• General Powers of Attorney grant the agent
  the authority to perform any act that the
  principal may delegate to an agent.
Durable Powers of Attorney
• Common Law terminated agency
  relationship on death or incapacity of the
• Durable Power of Attorney survives
  incompetence or incapacity
• Language must be contained in document to
  show principal’s intent that it survive his
• Terminates on revocation or upon death of
Recording and Filing Durable POA
    • Durable Power of Attorney must be recorded in
      Register of Deeds’ Office to continue to be
      effective upon grantor’s incompetence or
       • In County where principal has principal place of
         residence, and/or
       • In County where principal owns real estate.

    • Then file with Clerk of Superior Court and file
      inventory and accountings as with guardianship
      – unless the POA waives rendering inventory
      and accountings.
2006 Formal Ethics Opinion 11
   • Opinion rules that, outside of the
     commercial or business context, a lawyer
     may not, at the request of a third party,
     prepare documents, such as a will or trust
     instrument, that purport to speak solely for
     principal without consulting with,
     exercising independent professional
     judgment on behalf of, and obtaining
     consent from the principal.
   • Extends 2003 FEO 7 to all personal
     documents and issues.
Gifting Powers in POAs
Gifts under Short Form POA

 • If gifting is chosen, the agent is allowed to
   make gifts “in accordance with the
   principal’s personal history of making or
   joining in the making of lifetime gifts.”

 • If gifting authority is omitted, in short form
   or any POA, then gifting is considered
   under the statutory default of NCGS 32A-
NCGS 32A-14.1 Default Gifting
   • If the POA shows principal’s intent to give
     agent full power to handle principal’s
     affairs or deal with his property, the agent
     has authority to make gifts
     • in any amount
     • to any person or charitable organization
     • in accordance with the principal’s personal
       history of making lifetime gifts
   • Except no gifts to agent himself or his
     estate or creditors without Court order
   • However, if there are two agents, they may
     make gifts to each other.
Excluding Gifting from POAs

 • Omitting gifting from a general power of attorney
   does not exclude that power entirely under NCGS
 • Principal must specifically exclude gifting if he
   does not want the agent to have that authority.

    • “This Durable Power of Attorney shall in no way be
      construed to grant the power to make gifts of my
      property to third parties or to the agent(s) as
      individual(s), nor to revise, revoke, or execute estate
      planning documents for me.”
Gifting Limited to Annual Gift Tax
  • Many bank-originated POAs include this type of
    gifting clause because their paradigm is gifts made
    to next generation.
  • Idea is that those having taxable estates need to be
    careful not to exceed the $12K annual gift tax

     • “The power to make gifts of my real or personal
       property or my interest in such property to my children,
       grandchildren, great-grandchildren and their spouses in
       amounts not to exceed the annual exclusion for federal
       gift tax purposes at the time the gifts are made…”
Broader Gifting Authority

• Many ways to state broader gifting authority.
• Key is whether there is an objective limitation or
  whether it is entirely at the discretion of the agent.

   • “The power to make gifts of my real or personal
     property or my interest in such property to any person
     or entity, including any church or other charitable
     organization, including any person who may be acting
     as my Attorney-in-Fact, in amounts and in such manner
     as my Attorney-in-Fact may deem appropriate…”
Balancing Broad Gifting with
• There are good financial and planning reasons for
  having broad gifting authority, but the agent must
  be aware of issues of Medicaid sanctions, capital
  gains and gift taxes, and testamentary wishes.
• One way to control unchecked gifting is to require
  in the POA that gifts require the approval of a
  neutral attorney or accountant.
   • Typical language might be as follows:
     “Notwithstanding the gifting provisions I have set out
     in this paragraph, no gifts shall be made from my estate
     except upon review and written certification of an
     attorney or a certified public accountant that such gift is
     appropriate and is consistent with the purposes
     expressed herein….”
  Public Benefit Programs
Medicare, Medicaid and Special Assistance
   Medicare Part A - 2008

• Hospital Coverage - First 60 days for each
  “spell of illness” with $1,024 deductible
• Co-insurance $256/day for hospital days
• 60 reserve lifetime hospital days with co-
  payment of $512/day
• Nursing Home rehab – 20 days full, up to
  80 additional days with $128/day co-pay
• Home Care rehab and Hospice benefits
Medicare Part B and Medigap
• Physician’s Fees
• Outpatient Care
• Medical Equipment Rental
• Part B costs $96.40 in 2008 with income-related
  premiums for those over $80K
• Annual deductible of $135 in 2008, then 20%

• Medigap policies cover deductibles and copays
       Medicare Part D
• First-ever federally subsidized drug program for
  seniors, in which private health insurers will offer
  limited insurance coverage of prescription drugs to
  elderly and disabled Medicare recipients.
• National average annual premium expected to be
  $386, or about $32 per mo.
• $250 deductible, plan pays 75% of next $2,000 of
  drug costs during the year
• Individual pays all of the next $2,850 of annual
  drug costs (the “doughnut hole”)
• Plan pays 95% of all remaining drug costs over
  $5,100 for the year.
      Medicare Part D
• Each drug plan will offer a different formulary,
  and the same drug may vary in price from plan to
• The most important job for a Medicare beneficiary
  signing up for Part D is to determine whether the
  prescription drugs they need – or anticipate
  needing -- will be covered under a particular plan
  and how much they will cost.
• www.medicare.gov has a comparison tool to
  allow you to search for Medicare private drug
  plans in your region and compare their costs,
  covered drugs and pharmacy networks
       Medicare Part D

• Original beneficiaries who wished to enroll
  in the drug benefit program had between
  November 15, 2005, and May 15, 2006, to
  choose a plan without paying a penalty.
• Open Season for enrollment each year is
  November 15 through end of year.
• 7-month window for enrollment opportunity
  around person’s date of eligibility for
         Medicare Part D
• For those who have high drug costs and no drug
  coverage now, or who qualify for a low-income
  subsidy, Medicare Part D may be a huge help.
• The poorest among the elderly and disabled will
  pay virtually nothing for their drugs.
• For those who may not be able to afford the
  premium and who don't have high drug costs, it's a
  tougher call.
• Those who continue with a drug plan that is equal
  to or better than Medicare's will not be assessed a
  late enrollment penalty.
• Those who sign up with Medicare Part D will lose
  their current drug coverage and risk losing all their
  health benefits under their private plan.
Housing Issues
        Staying at Home

• Depends upon health, personal financial
  resources and available assistance in the
• When health fails, supervision by family,
  friends or paid attendants is necessary
• Around-the-Clock attendant care will easily
  cost $60,000 to $140,000 per year, more if
  nurse is required.
        Staying at Home

• Ancillary home services:
• Meals on Wheels
• Senior financial counseling
• Waiting lists for service
• Adult Day Care (Total Life Centers)
• Can extend time a person can live at home
  and provides respite for caregivers
• Cost is about 1/3 to 1/2 of institutional care
• Should have supervision and visits by
  nurses or physicians
Staying at Home - Accessibility

 • Modifications to home can extend time a
   person can stay at home
 • If ordered by physician, mods may be
   deductible medical expenses
 • Ramps and accessible showers
 • Add-on guest room for attendant or family
Using LTC Insurance to Stay Home

  • Look for home health care rider in LTC
    policy – note cost of rider vs. benefits
  • This insurance may cover cost of limited
    attendant care and case management
  • Read the Policy! Be aware of the
    limitations on home care.
  • Rarely can family members be paid, and
    they won’t cover 24-7 nursing care.
Using Equity – Reverse Mortgage

  • Mortgage-free property may be most
    valuable asset.
  • With goal of staying home, access to equity
    may be critical.
  • No payments until death, sell house, or
    permanently move out.
  • Must receive counseling (Resources for
    Seniors in Wake County) about terms.
Accessory Apartment or Room

 • Some children invite parent into child’s
   home or add-on apartment
 • Wise to formalize any financial
   arrangements in writing.
 • ECHO – Elder Cottage Housing
   Opportunity AARP initiative to provide
   modular cottages for seniors on child’s land
   – but beware of zoning issues.
    Congregate Care Facilities

•   “Independent Living”
•   Separate apartments
•   Some housekeeping services
•   One or more daily group meals
•   Usually no personal care or health oversight
       Adult Care Home

• “Assisted Living”
• Room, meals, help with ADLs, and
  medication supervision
• May have protective supervision by
  electronics or secured wing
• NC uses regulatory terms Adult Care Home
  and Assisted Living Facility
           Nursing Homes

• Long-term care institutions that provide
  nursing care and other specialized services
• Most are certified under Medicare,
  Medicaid, or both.
  Continuing Care Retirement

• Retirement facilites that provide shelter,
  health services and support services for as
  long as one lives in the facility.
• Usually a one-time entrance fee, though
  newer business models include purchasing
  your unit
• Adjustable monthly fees, depending on
  level of care needed.
Paying for Institutional Care
 Cost of Institutional Care

• Average Private Pay Cost of Nursing Home
  Bed in Wake County is over $6,000.00 per

• Average Private Pay Cost of Assisted
  Living Bed in Wake County is between
  $2,500.00 and $4,000.00 per month
Who Pays for Institutional Care

 • NOT Health Insurance Plans (usually)
 • NOT Medicare
 • Income, Savings, Investments
 • Long-Term Care Insurance
 • State-County Special Assistance for
   Assisted Living
 • Medicaid for Nursing Home Care
Medicaid & Special Assistance

 • Medicaid is a Federal-State program to help
   the aged, blind and disabled pay for long-
   term care in a NURSING HOME.

 • Special Assistance is a State-County
   program to help low-income people pay for
   ASSISTED LIVING care in an adult care
      Special Assistance

• Since July 1, 2002, SA program has become
  significantly LESS available.
• Income cap of $1,239.00 per month for
  applicant (2008); no maintenance allowance
  for spouse
• Asset cap of $2,000.00; no resource
  allowance for spouse, except for home,
  contents, and one automobile.
       Special Assistance

• Assets held jointly with spouse are entirely
  countable to applicant, but transfers to
  spouse are NOT sanctioned.
• Assets held solely by spouse generally not
  countable to applicant.
• SA’s Medicaid-like sanction for transfers of
  countable property to anyone (other than
  spouse) will cause a disqualification of 1
  month for each $2,000 of gifts

• Three areas of qualification:
• MEDICAL - must require Intermediate or Skilled
  Nursing Care - Nursing Home levels of care
• ASSETS - “countable assets” of applicant may
  not exceed $2,000.00
• INCOME - except for small personal needs
  allowance and possible spousal support, income
  must be used to pay nursing home costs. Practical
  limit is that income must be less than Medicaid
  would pay for nursing home care - about $3,500
  per month

• Income:
  • Medicaid Patient KEEPS $30 per month
  • If spouse has less gross income than $1,750 per
    month, augment spouse’s income
  • If spouse has more than $525 per month of
    housing expenses, consider excess housing
  • Remaining income used for medicals and
    nursing home cost – Medicaid pays balance.

• Non-Countable Property Includes:
  • Personal residence (under certain
  • Personal possessions: clothing, furniture,
    appliances and jewelry
  • One motor vehicle
  • Income-producing (real) property -- but not
    more than $6,000.00 worth
  • Assets of certain family businesses
  • Inaccessible assets
• All property of both spouses is counted.

• The applicant spouse may keep non-countable
  assets and not more than $2,000 of countable

• The spouse remaining in the community may
  keep non-countable assets and half of the couple’s
  countable assets, but not less than $20,880 and not
  more than $104,400 (2008)

• MYTH: I can only “spend down” my assets on
  medical or nursing home bills.

•   Pre-need funeral plan(s) and burial plot(s)
•   Pay off mortgage or consumer debt
•   New automobile
•   Home repairs, furniture, appliances
•   Term life insurance
•   Gifts??? (Hold that thought)
     Gifting to Spouses
• Both Medicaid and Special Assistance treat the
  spouse specially:
   • No sanctions are imposed for gifts or transfers to
   • SA does not count spouse’s assets at all
   • Medicaid allows spouse to keep outright a certain
     amount of the couple’s liquid assets: the Community
     Spouse Resource Allowance.
      • Additional assets may be protected for spouse’s benefit.
• All transfers to spouse involve gifting
• Many transfers to spouse involve POAs or
Special Assistance Gifting
• Gifts made within three years of applying
  for SA are sanctioned at the rate of one
  month per $2,000 given away.
  • Sanction calculated from month after gift
  • If gifting is properly staged, $72,000 can be
    given away during the three-year “lookback
  • Principal’s cost of care must be privately paid
    during period of sanction.
    *Medicaid Gifting *
Gifts made prior to November 1, 2007:

• Gifts made more than three years prior to
  applying for Medicaid generally do not
  count against applicant.
• Gifts made within three years of applying
  for Medicaid are sanctioned at the rate of
  one month per $5,000 given away.
  • Sanction calculated from month of gift
  • Principal’s cost of care must be privately paid
    during period of sanction.
   Pre-NCDRA Sanction Period

Lookback                         NCDRA
10/1/05                          11/1/07

    $50,000 Gift         $50,000 Gift       Application
      1/1/06               8/1/07            10/1/08

  Gift of $50,000 made before effective date of DRA is sanctioned
  under Old Medicaid Rules. 10 month sanction begins in
  January, 2006, and again in August, 2007. No sanction in effect
  at date of application.
       *Medicaid Gifting *
Gifts made on or after November 1, 2007:

• Gifts made prior to 11/1/07 are considered
  under old law.
• Gifts made within five years of applying for
  Medicaid are sanctioned at the rate of one
  month per $5,000 given away.
  • Sanction calculated from month of Medicaid
  • Principal’s cost of care must be privately paid
    during period of sanction.
 DRA Extension of Look-Back

$50,000 Gift       $50,000 Gift                            Application
  1/1/06             12/1/07                                10/1/09

Gift of $50,000 made before effective date of DRA is sanctioned
under Old Medicaid Rules. 10 month sanction begins in
January, 2006.

Gift of $50,000 made after effective date of DRA is sanctioned
under DRA provisions.
  Post-NCDRA Penalty Period

  $50,000 Gift                                      Application
   12/25/07                                           6/1/12

Gift of $50,000 made after effective date of DRA is sanctioned
under DRA Medicaid Rules if application made after effective
date of DRA in NC. 10 month sanction begins in June, 2112.
"How will older Americans, as well as
      their middle aged children,
use the income, savings and property
they have acquired through a lifetime
  of hard work to provide them with
access to quality health and long-term
 care for the remainder of their lives?"