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A Better Partnership

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Apr 2014
09
April 09, 2014

Understanding Medicaid, Durable Powers of Attorney is Important When Planning End of Life Care


Do you want your agent under durable power of attorney to be able to take extraordinary measures to conserve your assets for family members in the event you suffer a catastrophic health event requiring long-term care? If so, it is important that you include provisions in your durable power of attorney that grant specific authority to your agent to take those measures.

For example, if you suffered a debilitating accident or developed Alzheimer’s disease, there is a good chance you would need long-term care for a significant period of time, perhaps even the rest of your life. With the cost of nursing home care averaging nearly $8,000 per month in Michigan, this can be an expense that will drain your family’s finances. 

Medicaid will pay for long-term care expenses, but you must meet strict asset and income tests in order to qualify. Planning measures are available to help you meet these tests. The types of measures necessary to help you meet these tests are extraordinary. They may include establishing or amending trusts on your behalf, making gifts of all or nearly all of your assets, changing ownership and beneficiary designations on life insurance policies and establishing joint accounts with your agent. 

It is important that you specifically authorize your agent to carry out these actions for a number of reasons: Michigan law requires it in some cases; third parties may question your agent’s authority to carry out these actions without specific authority; and if your agent is a family member who will potentially benefit from gifts or other measures, granting specific authority will help protect your agent from claims of self-dealing. 

Asset transfers are closely scrutinized by the agency that administers Medicaid. Ill-conceived asset transfers can result in disqualification from Medicaid and a lack of resources to privately pay for long-term care.  It is important that your Agent carefully plan any asset transfers with your attorney to stay within Medicaid’s rules. 

If long-term care and asset protection planning are important to you, existing wills and trusts can be amended to include greater asset protection measures. Long-term care insurance also may provide significant protection and greater flexibility in care options for those who are insurable and can afford the premiums.  

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