Q. My father suffers from advanced dementia and needs care in a nursing home. It costs about $9,500 per month, and we are rapidly spending down his savings.  I was told that he might qualify for a Medi-Cal subsidy to help with the cost once his savings are below $2,000.  Years ago he signed a power of attorney (“POA”) naming me as his agent.  Can I use that POA to gift his excess savings to myself and thereby accelerate his eligibility for a Medi-Cal subsidy?

A. The question may seem straight forward, but the answer is somewhat complicated. To get to a possible “yes”, there are a number of legal hurdles to overcome:

1) Is the POA “Durable”? The word “durable” means that the powers granted in the POA survive your father’s incapacity. If it is not durable, then it’s authorizations expired when your father lost capacity.  Fortunately, most of the POA’s that I see these days have been drafted as durable powers, and so it is likely that yours is also a durable POA.

2) If a “Springing” POA, Have The Triggers Been Satisfied?  Often POA’s are drafted to only spring into life when the signer loses capacity, usually then requiring one or two doctors’ letters so certifying. If this describes yours, make sure that you have secured the doctors’ letters in order to make the POA operative.

3) Is Gifting Expressly Authorized?  As your father’s agent (or, Attorney-In-Fact), you are a fiduciary and cannot give away your father’s assets, unless that power is expressly granted in the document; it cannot be implied.  If not expressly stated, the making of gifts might be considered a breach of your fiduciary duty and/or financial elder abuse.

4) Does the POA Set Gifting Limits? Very often, we see POA’s that do permit some gifting, but limit it by reference to an Internal Revenue Code (“IRC”) section, the import of which may not be immediately apparent.  Example: If the POA limits gifts to the maximum authorized under IRC§ 2503(b), then gifts would be limited to the amount of the Annual Exclusion Gift, currently $15,000 per year per recipient.

5) Can You Gift To Yourself?:    As your father’s Agent you are his fiduciary, and cannot make gifts to yourself unless the POA expressly so authorizes, usually by permitting what we call “self-dealing”. Sample Language to look for: “In exercising the power to make gifts of my assets, I hereby authorize my Agent to include himself/herself as a gift recipient, i.e. I authorize my Agent to self-deal.”

Also, sometimes, POA’s impose the aforesaid § 2503(b) gifting limit only upon gifts to the Agent, but not upon gifts to others. If so, know that there may yet be “work-a-rounds” to design a more generous gifting plan to all recipients, which is still compliant with the limits in the POA.

6) Gifting Prohibition By Medi-Cal: If you get over all of the above hurdles, remember the following over-arching caution: Medi-Cal does not like it when applicant’s give away their assets to qualify, and may disqualify an applicant for benefits based upon the value of the gifted assets. Nevertheless, there are lawful techniques that can still be used to give away assets without a loss of Medi-Cal benefits, but they should be designed and carefully supervised by an Elder Law attorney experienced in Medi-Cal planning.