Utah Powers of Attorney
1. Pick up a 2 page pre-printed Power of Attorney (“POA”) at a big box office supply store. Fill in your name, initial some boxes, get it notarized and voilà – you have a POA.
2. Want more? Go to an online legal form provider: Nolo, Rocket Lawyer, Legal Zoom etc. Cheap, more words (5-6 pages) and when printed out looks more “professional.” Still need it notarized.
3. Have an attorney who specializes in Medicaid planning, ElderLaw or Estate Planning prepare it.
WHAT DO PEOPLE MISUNDERSTAND ABOUT POA’S?
Most people think when they have a POA, their Agent can present it to a third party like a bank, financial institution, insurance company, governmental agency, business – etc. and it has to be honored. This isn’t true in Utah. There is no law that requires an institution or business to honor a POA. Even if it’s been validly executed and specifically states the Agent has authority to do what he’s requesting.
To third parties, the POA you show them is nothing more than a piece of paper with writing on it. They don’t know if it is valid or forged. They don’t know if it has been revoked. They don’t know if the Principal was competent at the time the Power of Attorney was signed. They don’t know whether the Principal has died.
Third parties don’t want the liability if anything goes wrong. Some third parties refuse to honor a POA because they believe they are protecting the Principal from possible unscrupulous conduct.
SO ANSWER THIS QUESTION
Which POA do you think a third party bank, financial institution, insurance company, governmental agency, business or other entity is more likely to honor? The 2 page preprinted one, the online form, or the 25 pager prepared by an attorney.
WHAT IF THE POA IS NOT HONORED?
Well, your only option might be to petition a court to appoint a conservator to manage the incapacitated person’s affairs. And just as you expect, conservatorships are expensive and time intensive to manage. Plus, conservatorships are much more restrictive and inflexible when it comes to implementing a long-term care planning asset protection strategy (generally court approval is required).
The POA I draft for clients is a “springing” power of attorney that only becomes effective if a “disability panel” composed of designated family member (and possibly a physician) sign a statement agreeing that the Principal is disabled and powers granted to the Agent “spring” into effect. Do you think a third party would be more comfortable about accept this kind of a POA?
In almost every case, for a POA agent to implement a Medicaid asset protection strategy for an incapacitated Principal, the POA must include 4 specific statutory provisions, and one critical legal power if you have an irrevocable trust.
The POA must specifically state that the Agent has the power to:
(1) create, modify, or revoke an inter vivos revocable trust created by the principal;
(2) fund, with the principal’s property, a trust not created by the principal or by a person authorized to create a trust on behalf of the principal
(3) make or revoke a gift of the principal’s property, in trust or otherwise; or
(4) designate or change the designation of beneficiaries to receive any property, benefit, or contract right on the principal’s death.
If you have an irrevocable trust (used to protect assets if you have 5 years or longer before Medicaid is needed) the POA must specifically authorize your Agent to modify or terminate it.
One More Critical Provision
The asset protection strategies I use to save a Medicaid applicants assets for their family, often involves gifting their excess assets to family members. In most instances, we are doing this using the POA. However, under the law, because an Agent must always act in the best interests of the Principal (a fiduciary duty) and cannot “self-deal” or benefit from the Principal’s assets, if the acting Agent is one of the family members, unless the POA allows self-dealing for the family member acting as Agent, that person cannot benefit from the gifting strategy.