section 1 - The American College Online Learning Center

(1) Often employed as a vehicle to hold and manage assets and makedistributions to the client and his or her family membersc. Irrevocable living trust(1) Might be used to make substantial gifts or provide for asset protection ifnecessary for the client who funds the trust and for future beneficiariesd. Special needs trust(1) Used in the circumstances where the client or another disabled familymember will need to remove assets to qualify for Medicaide. Guardian/conservator(1) Preferred that the actions of the guardian be limited and that most assetmanagement decisions be made through a more efficient mechanism6. Power of attorney for asset managementa. The “principal” delegates certain authorities to an agent (also known as attorney infact)b. Special power of attorney can be limited in scope to one or a few tasks.(1) For example, we may grant the power of attorney to an agent who can signan agreement of sale for a parcel of real estate.(2) Once the task and the time-frame have passed, the limited power ofattorney will terminate.c. A springing power of attorney is a document and process where the agent hasno current power but the power will spring into existence upon a specific event orcontingency.(1) Typically, the springing power of attorney will grant the power at the timethe principal loses capacity.(2) The problem with this type of document is how the loss of capacity isdetermined.d. The durable power of attorney currently grants an agent broad powers withrespect to the asset management and decision-making.7. Power of attorney(1) This power is defined in the document to affirmatively survive the principal’sloss of capacity.(2) This power will generally continue until the power is revoked, terminated,or at the principal’s death.(3) The durable power of attorney is typically viewed as the most effectiveform of power of attorney.a. Documents are construed narrowly by the courts under modern protective statutesto prevent financial elder abuse.b. Powers should be clearly specified, especially for special issues such as:(1) Powers to make Medicaid spend-downs(2) Powers to make gifts(3) Powers to fund, defund, create or revoke living trusts(4) Powers to make elections for tax or retirement plan purposes(5) Powers to deal with insurance contracts4.38