Protect Mom or Dad From Financial Predators Without Filing for Guardianship

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Elder Care and Elder Law Attorney

In a recent client session I was advised that mom executed a general durable power of attorney (POA) appointing her son and daughter as her agents. Mom is now in a nursing home and is not competent to execute a new POA. Daughter was determined disabled by the Social Security Administration (SSA) when she was 49 and has been receiving Supplemental Security Disability Income (SSDI) since the age of 49 until she reached retirement age (daughter is now age 69). Daughter has been living in mom’s house and taking care of mom for 11 years prior to mom needing a nursing home. We are looking to make transfers of mom’s house and some liquid assets to the daughter (since the SSA papers confirm daughter is disabled a transfer to her is not an issue for Medicaid). However, the mom’s Power of Attorney does not include specific language authorizing a principal’s agents to make gifts on her behalf but does have the language that “grants her agents to generally do and perform all matters and things which may be requisite or proper to effectuate any matter or thing appertaining or belonging to me and generally to act for me in all matters affecting my business and property with the same force and effect to all intents and purposes as though I was personally present and acting for myself.” This is fairly routine language found in virtually all POA’s (or at least it should be).

One attorney told the family that (1) the daughter should resign as POA and the son, as remaining POA effectuate the transfer to the daughter even though there is no specific gifting provision in the POA or (2) Apply for guardianship and obtain court approval to effectuate the transfers to the daughter. I have a different approach.

First off, New Jersey law (N.J.S.A. 46:2B-8.13a) was enacted precisely to prevent gifting under a POA. In the early 2000s there were several instances of predator relatives using POAs to gift away the principals assets where it seemed highly unlikely that the principal would have favored the gifts. The law was written to prevent an agent under a POA from making gifts via the POA unless the POA clearly authorizes gifts. This law explicitly says that general authority isn’t enough. “An authorization in a power of attorney to generally perform all acts which the principal could perform if personally present and capable of acting, or words of like effect or meaning, is not an express or specific authorization to make gifts.”

If mom still has capacity to gift, she can authorize gifts. Otherwise, court authorization will be required either by statute N.J.S.A. 3B:12-1 et seq or full blown guardianship.

But don’t discount the use of a protective arrangement. A protective arrangement can be an effective tool used for “good”, like in this case and can be structured in a way where a full guardianship is not necessary. A superior court judge can direct or ratify any one or more transactions necessary or beneficial to address meeting the foreseeable needs of an incapacitated or alleged incapacitated person or those dependent upon him or her.

In our case the protective arrangement will allow the family to do the right thing without the expense and time a guardianship proceeding benefiting the disabled daughter and the mom who loves her.

To discuss your NJ Estate Planning, Medicaid Asset Protection and Elder Care matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.