Powers of Attorney for Seniors Are Different

Meet the Journal’s new elder law columnists! This column replaces “Senior Moments,” by Monica J. Franklin, which was published here from 2009 to 2018.

Are you drafting Powers of Attorney for financial decisions with language that is different for seniors than the ones you draft for younger clients? Or, are you referencing the powers enumerated in Tenn. Code Ann. §34-6-109 and relying on those provisions to create a complete document? Perhaps you’ve created a form over the years that you believe works for any adult. The world of finances, government assistance benefits and medical care can change dramatically once people enter their senior years. In fact, the authority given in Tenn. Code Ann. §34-6-109, sections (6) (supporting others) and (15) (paying club dues), may actually work against your senior client if the possibility of applying for means-tested benefits is on the horizon.

It is extremely important that Powers of Attorney are written to address the issues often faced by seniors. Following are typical provisions for dealing with specific issues.
•  Always include the agent’s authority to apply and plan for assistance benefits.

EXAMPLE:  Application for Benefits. My agent shall have the authority to make application on my behalf for any type and/or form of public and/or private assistance, including, but not limited to, Medicare, Social Security, Social Security Disability, Veteran’s, Medicaid, Railroad Retirement, TennCare and the like. If, as part of the planning process to qualify for benefits, my agent deems it appropriate to make transfers of my assets to other persons, including to the agent him/herself, then my agent shall have the authority to do so, even if such transfers are irrevocable in nature. My agent shall have the authority to change my residence for benefits purposes. “Residence” changes may mean county to county, state to state, facility to facility. My agent has my specific authority to create and execute a Qualified Income Trust (QIT, “Miller Trust”) if such is needed to qualify for assistance benefits, and has my authority to act as my Trustee under such trust.1

•  Many clients hire family members to act as caregivers, but are concerned that paying a family member will inflame the transfer penalty rules. Using this provision, along with the appropriate family caregiver contract, will satisfy TennCare’s concerns about inappropriate transfers. (The caregiver will have to report any pay for services as income on his/her personal income tax return, but doing so further confirms the existence of a valid contract.)

EXAMPLE: Compensation for Care Services. If an individual provides personal care giving services to me that enable me to stay out of a long-term care facility (retirement, assisted living and/or nursing), or provides care management services to me while I am residing in such a facility or in a hospital, that individual may be paid a reasonable fee based on the value of the services I receive, and shall be paid either periodically or lump sum, depending on my financial status. My agent shall have the authority to enter into a written caregiver contract setting out payment for services if such contract is deemed appropriate, even if the caregiver contract provides for payment to my agent as my caregiver. 2

• Most clients do not want their mail forwarded to their long-term care facility where it is easily misplaced or ignored. The following language will satisfy the U.S. Postal Service.

EXAMPLE: To Receive Mail. To enter any mail box which I shall have hired, whether at a United States Post Office or elsewhere, and to surrender the box and terminate the lease in the agent’s discretion; to sign for any certified and/or registered mail directed to me, and to execute any order required to forward mail to any location selected by my agent.

•  Many seniors are not comfortable signing a financial Power of Attorney because they are aware that there is no formal supervision of the agent’s activities, and because we are typically advising them to appoint only one family member to serve at a time. That concern is greatly alleviated by using the following provision.

EXAMPLE: Accountability. My agent (other than my spouse) shall provide an accounting, on an annual basis (or upon their request), of all receipts and disbursements made by said agent from my funds/assets to the following persons: [may choose other family members, financial advisor, friend, “referee,” etc.]. Failure to provide an accounting within thirty (30) days of its request shall be cause for removal of the acting agent.

• Sometimes representing seniors means making investment decisions that seem “upside down” in that they are the polar opposite of the decisions a younger person might make. Because fiduciaries are, by law, expected to act prudently, conservatively, and in the best interest of the principal we need to give the agent the authority to act in ways that may seem adverse but serve the greater good of obtaining assistance benefits and planning for long-term care. In other words, we need to know how much money we have to work with going into the future.

EXAMPLE: Discarding Assets. My agent has my specific authority to abandon real property (e.g., deed, timeshare deed, timeshare contract) if the property cannot be sold, or if the attempt to sell such real property exceeds the anticipated value of the property. My agent has my authority to invest in (or, change investments to) low-return bank accounts, brokerage accounts, savings/certificates of deposit accounts, and the like in order to secure and/or maintain the principal amount of those investments and to avoid dramatic fluctuations in value. My agent has the authority to liquidate tangible items for fair market (or, best obtained) value even if such items are considered “collectibles” and insured as such.

•  “Facility Dumping” is a very real thing. It means that a senior will be admitted to a hospital or long-term care facility and the resulting bills are never paid. The senior has limited resources or no access to funds, and another person does not come through to make sure the bills are paid. More and more facilities, in an attempt to avoid being stuck with the bill, are requiring that either an agent under a power of attorney, or a conservator, be in place — and bonded — in order to admit the senior.  (However, no admission can be conditioned on the presentment of a health care Power of Attorney.)  The following language is helpful.

EXAMPLE: Bond. My agent shall not be required to purchase a bond unless my admission to a long-term care facility or the engagement of a home health care provider is contingent upon providing proof of such bond. Payment for bond shall be an expense of mine, to be paid out of whatever assets my agent deems most appropriate to finance this
requirement.

•  Many of our clients come into our office with documents that have been prepared outside of our office. Many of those documents have “gifting” provisions as allowed by Tenn. Code Ann. §34-6-110. However, while many attorneys include a provision that is compliant with the statute, the provision is typically written as to limit gifts to comply with current gift tax limits. When you represent seniors you often have to choose the lesser of the evils — tax consequences often being a lesser evil than the cost of paying for long-term care. Because there are times when it is best to transfer large value assets we toss the tax consequences to the wind.  This is a provision that really should be drafted specifically for each client because it deals not only with transfer issues, but also with self-dealing and the possible defeating of an estate plan by the agent.

Example: Gifts. To make gifts of any item of real or personal property I own for any reason deemed appropriate by my agent, and of any value deemed appropriate, including gifts that the agent may make to him/herself [however, such gifts shall be made in a manner and in shares that are consistent with the distributions made to those beneficiaries designated in my most recently executed Last Will and Testament, or to my intestate heirs should I not have a Will in place].

Notes

1. This trust is mandated by 42 U.S.C. §1396p(d)(4)(B). QIT forms are fairly uniform and can be obtained from a number of sources, including our office.
2. If you would like to receive a sample Caregiver Agreement simply email one of us and we’ll be happy to send it your way.

Matt and Kelly Frere are husband/wife partners in the Elder Law firm Guyton & Frere in Lenoir City. They are members of the Council of Advanced Practitioners of NAELA. Matt was Tennessee’s first certified Elder Law attorney.
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