Medi-Cal Planning | Paying For Long-Term Care | Planning For Incapacity

About Legal Capacity

The issue of legal capacity often arises in elder law. Legal capacity is the term used to define someone who is able to understand and appreciate the consequences of his/her actions. A person who lacks legal capacity cannot, for example, enter into a contract, give a power of attorney, make a will, consent to medical treatment, or transfer property. The older we become the more likely we are to develop a mental disease or disability such as Alzheimer’s disease or dementia. Because legal incapacity is always a possibility, it is never too early to prepare for it by creating a document such as a durable power of attorney with gifting authority. However, if you are the spouse or child of an already incapacitated person, you may still be able to transfer your loved one’s assets by opting for a conservatorship. A spouse also has the alternative option of filing a petition for a proceeding to authorize a transaction involving an incompetent spouse (PC3101 petition). You should consult an elder law attorney to help you with these documents and procedures in order to assure that they are done correctly.

Durable Power of Attorneys

A durable power of attorney is a written document in which a person (called the principle) appoints someone else (called the agent or attorney-in-fact) to act on his/her behalf. A non-durable power of attorney terminates when the person who created it becomes legally incapacitated. A durable power of attorney, on the other hand, continues to be valid even after the principal becomes incapacitated. If you want to prepare a power of attorney but do not want the attorney-in-fact’s powers to vest until you become legally incapacitated, you can create a “springing power of attorney”. A springing power of attorney becomes effective only upon the happening of an event that you have designated. No matter what type of power of attorney you create, it will terminate automatically when you die.

The best time to create a power of attorney is when you are legally competent and in good health. But if you are suffering from some health problems or starting to see the early signs of dementia or Alzheimer’s disease, you should create one immediately. By creating a durable power of attorney for finances, with gifting authority, you can appoint someone else to handle your personal finances, including the authority to transfer your assets (the power to make gifts), even after you become incapacitated. This is important because if you become a Medi-Cal recipient and lose legal capacity, the person you appointed in your power of attorney would still be able to inplement plans to save your home and other valuable assets for you.

Conservatorships

A conservatorship comes into play when you or a loved one is already legally incapacitated. There is an immediate need for a conservatorship when the Medi-Cal recipient/applicant is legally incompetent, and has not created a good durable power of attorney. If you become legally incapacitated, you or a loved one can ask the probate court to appoint a conservator for your estate. A conservatorship is a legal arrangement whereby a person (called the conservator) is appointed to manage the personal or financial affairs of someone else who is incapacitated (the conservatee). As conservator of the incapacitated person’s estate, you can file a substituted judgment petition asking the court to authorize you to transfer the conservatee’s assets out of his/her own name for Medi-Cal planning purposes. Therefore, if you or a loved one becomes incapacitated it is still not too late to transfer assets out of your/their name before death.

A conservatorship can be costly and the procedure can take a long time. Consult a Medi-Cal planning/estate planning attorney if you or a loved one is in need of a conservatorship.

PC3101 Petitions

If you are the spouse of an incapacitated Medi-Cal recipient/applicant, you may be able to file a California Probate Code § 3101 petition for a proceeding to authorize a transaction involving an incompetent spouse with the probate court and avoid a conservatorship altogether. A PC3101 petition is a means of asking the probate court to authorize the Medi-Cal recipient’s/applicant’s spouse to initiate a transfer, or series of transfers, of the incapacitated spouse’s assets. The assets involved can be community property or the separate property of the incapacitated spouse. The petitioning spouse will have to prove that his/her spouse lacks legal capacity.

Contact the Kisner Law Firm today and start planning for tomorrow.