Let’s clarify some of the terms and topics we’re most often asked about in our office. These concepts, once understood, can bring greater confidence, clarity, and peace of mind to your family’s legal and financial planning journey.
When Banks Push Back on POAs
Every adult should have a Durable Power of Attorney in place. Let’s suppose that your husband has named you as his agent. You reasonably believe you will have no problem in carrying out your responsibilities as his agent.
However, when you walk into a bank to conduct financial matters on his behalf, you encounter resistance from the bank officer. Some common objections clients have reported include:
- The document is too old.
- It does not exactly conform to the statutory form.
- There is no mention of whether the witnesses are unrelated to the principal.
- There’s no way to verify if the principal has revoked the power.
- There’s no way to confirm the principal’s competency when the document was signed.
- The bank doesn’t know who the Agent is.
- The document isn’t valid unless the principal is physically present with the agent at the bank.
- A copy of the document must be certified by a Delaware attorney.
- The bank only accepts a document drafted by the bank.
Your first instinct, understandably, might be to call the attorney who drafted the document to confirm its validity. Then the banker declines to speak with your attorney because he doesn’t know who he is – could be anyone, he says.
So, what are your options? Here are some helpful tips based on Delaware law. A document that is properly drafted and executed according to Delaware law is valid and enforceable. “Properly drafted” means the document names an agent to act on behalf of the principal and states that the agent’s authority endures even if the principal is deemed incompetent at a later time. “Properly executed” means the document was signed by the principal in the presence of at least one disinterested witness and a Notary Public (sometimes called “acknowledged”) and includes a signed Agent’s Certification and Notice of Principal.
A copy of the document is just as valid as the original, and it does not need to be certified. The principal cannot be required to sign a power of attorney drafted by the bank. The transaction of business under this document does not require the principal to be physically present at the bank.
According to Delaware law, a person must accept a notarized Power of Attorney unless they have actual knowledge that it has been terminated or revoked, is void or invalid, or that the agent does not have the authority to perform the act requested. (12 Del. Code § 49A-120). If a person improperly refuses to accept a valid Power of Attorney, they can be compelled to do so by the court and may be liable for damages, attorney fees, and costs.
What is Delaware Probate?
Probate is the court process for wrapping up a person’s affairs when they die. The court is the Register of Wills. The process takes about one year to complete. Probate of the estate is required when the descendant owns real estate as an individual or has individually owned financial accounts without beneficiaries that total $30,000 or more.
The process starts with filing the original will within 10 days of death. Creditors have eight months from the date of death to file claims against the estate. After the Will is filed, the executor should promptly petition the Court to issue an order (“short certificate”) authorizing them to administer the estate. The executor next files an Inventory of Assets to establish the date of death value for probate assets (individually owned, no beneficiary). The Inventory is due three months from the date the executor is appointed. Once the creditor period runs, the executor has approximately four months to file the final Accounting.
Doesn’t sound bad; what could go wrong? The devil is in the details, as they say. The Executor is accountable to the Court and the beneficiaries for mistakes and losses that may occur. You should speak with an estate administration attorney about the process before deciding to go it alone.
What is Medicaid Estate Recovery
Federal law requires each state’s Medicaid office to seek reimbursement from an individual’s (person receiving Medicaid benefits) probate estate when they die. This is known as estate recovery. Federal law also permits a state to elect expanded recovery against certain assets outside a person’s probate estate.
Delaware’s Medicaid regulations limit recovery to an individual’s probate estate. The probate estate consists of assets with no beneficiary designation that are titled in the individual’s name. From a practical point of view, there will be few assets to recover against because a Medicaid recipient’s assets are limited to a total of $2,000 or less. An individual’s house is not part of the probate estate if it is jointly owned.
Medicaid is required to place a lien on a person’s residence if that person becomes a long-term care patient in a nursing facility. The lien is waived if there is a spouse, caregiving child , disabled or underage child, or sibling living in the home at the time of the application for Medicaid benefits.
Can They/Will They Take My House?
Many seniors worry they will lose their homes and savings if they need the assistance of others with activities of daily living. When asked, “to whom?” the response is often to the “nursing home” or to “Medicaid.” This fear stems from a sense that something unjust will occur. The good news is that this fear, as it is commonly expressed, is largely unfounded.
When someone needs help with activities of daily living beyond what their family can provide, they will have to pay the care provider. For example, nursing homes provide an essential service – skilled care in a residential setting. They must charge for the care provided to remain viable over time. This is fair and does not amount to an unlawful taking.
Long-Term Care Medicaid is a joint federal program administered by the states. It covers long-term care services provided to seniors who are no longer independent with activities of daily living. By involving Medicaid at the correct time, it is possible to preserve 50% of the applicant’s assets from being consumed through paying for care. Generally, a person’s home is a protected asset for Medicaid qualification purposes. The preserved assets are not subject to Medicaid’s right of recovery when the patient dies. The patient’s house is rarely subject to the Medicaid lien.
What Happens to my Estate When I Die?
Do I Even Have One?
Many people ask, “What happens to my estate when I die?” or “Do I even have one?” Well, everyone has an estate, regardless of their wealth. Your estate includes tangible and intangible assets you have an ownership interest in—it starts with the clothes on your back and builds from there.
Every estate must be administered, regardless of its size or whether a will exists. If a will exists, the original document must be filed with the Register of Wills within 10 days of death. Thereafter, a determination is made regarding the type of administration required.
Probate is the formal court process for administering an estate; the court is the “Register of Wills.” In Delaware, probate is required if the decedent owned, in their individual name, (1) real estate, or (2) other assets without beneficiary designations valued at $30,000 or more. These assets are known as “probate assets”.
The probate process typically lasts around a year, and a fee of 2% is assessed on the financial assets involved. The individual responsible for administering the estate often works with an attorney to guide them through the process and ensure everything is handled correctly.
An estate without probate assets is classified as a “small estate.” There is no solely owned real estate and financial assets are valued at less than $30,000. Though small, the estate must still be administered.
Typically, a relative of the deceased obtains a small estate affidavit from the Register of Wills and executes it to become the “administrator of the estate.” The affidavit becomes available 30 days after the date of death. The affidavit grants the administrator authority to distribute the assets to the beneficiaries. The administrator does not need the help of an attorney in most cases.
