Occasionally, families find that they can take care of their loved ones themselves without any type of formal arrangement. However, the more common situation is that more official control or management is required in order to have legal access your parent’s finances and assist them in their affairs. Also, having a formal arrangement can be useful in preventing exploitation. For different reasons, a conservatorship may be necessary. Conservatorships are not the simplest or least expensive solutions, though, so be sure to discuss possible alternatives with your Sacramento estate planning attorneys.
Understanding how a conservatorship works
A conservatorship is the process in which someone is appointed to manage the personal affairs of someone else after that person has been determined to be incapacitated. Conservatorships need to be established through a costly and time-consuming court proceeding. Due to the serious consequences of being determined by a court of law to be incapacitated, as well as the resulting loss of individual rights, in many cases, conservatorships should be the “last resort.” Put another way, conservatorships should not be established merely because your loved one makes some decisions with which you do not agree. Nor should a conservatorship be considered based solely on a disability or medical diagnosis.
The basics regarding a power of attorney
A power of attorney is a legally binding device that is used across the legal field for multiple different purposes. You would utilize a power of attorney to give someone else the power to act on your behalf in a legally binding fashion. The person who is creating the power of attorney is called the principal or the grantor of the device. The grantor names an agent or attorney-in-fact. This person is given the power to act on behalf of the grantor. There are different types of powers of attorney. Here are a few of them.
General Power of Attorney
When you create a general power of attorney, you give your agent sweeping power to act on your behalf. For the most part, the agent could enter into any agreement that you could enter into for yourself.
This is a great deal of latitude to give another person. You should certainly be very discerning when you are granting a general power of attorney.
A significant limitation of a general power of attorney is that unless it states expressly that it will continue to be effective in the event of your incapacity (normally called a “durable” power of attorney, your agent may lose his or her authority once you are found to be incompetent.
Limited Power of Attorney
One can also grant a limited power of attorney. In a very real sense, the device is self-explanatory: With a limited power of attorney, you give the attorney-in-fact limited power to act on your behalf. A limited power of attorney can be granted for a single transaction if this is your choice. Once again, the extent of the power that you bestow to the agent is entirely up to you.
The extent of the limitations would be entirely up to you. It would be possible to give the agent the power to enter into certain types of contractual agreements on your behalf. You could alternatively give the agent the power to act for you in a comprehensive manner for a limited period of time.
When dealing with situations involving elderly persons whose mental capacities are likely to decline, a limited power of attorney may be inadequate to address some presently unforeseen circumstance.
Durable Power of Attorney
As a firm which focuses its services in the areas of elder law and estate planning, comprehensive durable powers of attorney are often utilized. Durable powers of attorney are used for incapacity planning purposes. A very significant percentage of senior citizens become unable to handle all of their own affairs when they reach an advanced age.
Having one of these documents may prevent the need for a conservatorship
When you create durable powers of attorney, you name decision-makers of your own choosing to act on your behalf in the event of your incapacitation. You could execute a durable financial power of attorney for financial matters, and a durable health care power of attorney (known as an Advance Health Care Directive in California) for medical decision-making.
As noted above, a “durable” power of attorney remains in effect even if the grantor becomes incapacitated. In order to prepare a power of attorney properly, you should consult with an experienced and qualified estate planning and elder law attorney.
While there are many generic powers of attorney available on the web or in form books, most will be wholly inadequate to address the myriad of issues one may face with an elderly loved one who needs assistance with handling his or her affairs.
Planning for the possible need for long-term care
Plus, there is also the matter of nursing home care. If you become incapacitated due to Alzheimer’s induced dementia or for some other reason, you may require more care than your family can give you.
Nursing homes are extremely expensive, and Medicare does not cover the custodial care that nursing homes provide. Medi-Cal is the solution for many, but it takes careful, informed planning to gain eligibility, because, without careful planning, you can’t qualify if you have more than $2000 in countable assets in your own name.
Many powers of attorney we review that were downloaded from the web or even drafted by attorneys who are not experts in long term care planning are of little use in helping to getting a loved one assistance in paying for long term care.
If you have questions regarding powers of attorney or any other estate planning matters, please contact us at the Northern California Center for Estate Planning and Elder Law for a consultation. You can contact us either online or by calling us at (916) 437-3500. We are here to help!
Latest posts by Timothy P. Murphy (see all)
- Can’t I Just Transfer My Assets to My Adult Child to Qualify for Medi-Cal? - August 19, 2019
- How Much is Too Much? - August 17, 2019
- The Importance of Communicating Your Plans - August 15, 2019