Standard estate planning documents are covered in our Estate Planning section. But for elder law and Medicaid planning, a power of attorney needs to do much more than the generic forms provide — and the consequences of getting it wrong can cost a family tens of thousands of dollars.
⚠ Generic POAs Are Not Enough
A power of attorney must specifically authorize the agent to make gifts, create trusts, and engage in Medicaid planning. A generic POA — including most internet forms — may not grant these powers. Without them, your agent cannot execute the asset protection strategies needed to qualify for Medicaid, and your family may need a court-appointed guardian ($3,000–$10,000+) to do what a $300 document should have covered.
A properly drafted durable financial POA for elder law purposes must expressly authorize the agent to:
Make gifts: Medicaid planning often requires transferring assets — to a spouse, to an irrevocable trust, or to family members. The default POA rule in Pennsylvania does not authorize gifts unless the document specifically says so (20 Pa.C.S. § 5601.3). Without gifting authority, the agent's hands are tied during the 5-year lookback period planning window.
Create and fund trusts: Asset protection trusts, special needs trusts, and Medicaid-qualifying trusts are core planning tools. The agent needs authority to create these instruments and transfer the principal's assets into them.
Apply for government benefits: Medicaid, VA Aid & Attendance, SSI, Medicare — the agent needs express authority to apply on the principal's behalf, provide required documentation, and negotiate with government agencies.
Access financial accounts and records: Banks and financial institutions increasingly require specific language in the POA before they'll honor it. Include HIPAA authorization and explicit authority to access tax records, bank statements, and insurance policies.
Manage real property: The agent may need to sell the home, refinance, or transfer into a life estate or trust. Real property transactions require express authority and the POA must be recorded with the Recorder of Deeds.
At minimum, your elder care documents should include:
Durable Financial POA with express authority for gifting, trust creation, benefit applications, and real property transactions. Must be durable — meaning it remains effective after the principal becomes incapacitated (20 Pa.C.S. § 5604).
Healthcare Directive / Living Will designating who makes medical decisions and specifying treatment preferences when the patient can no longer participate. This must comply with Pennsylvania's Health Care Agents and Representatives Act (20 Pa.C.S. Chapter 54).
HIPAA Authorization allowing your agent and family members to access medical records. Medicaid applications require extensive medical documentation, and providers will not release records without proper HIPAA authorization.
Timing Matters
These documents must be executed while the principal has legal capacity. Once a person lacks capacity to understand and sign a POA, the only option is guardianship through the Orphans' Court — a proceeding that typically costs $3,000–$10,000+, takes 4–8 weeks, and places decision-making under court supervision. A $300–$500 investment in proper documents today avoids this entirely.
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