Until fairly recently, I spent years railing against the Wisconsin statutory Financial Power of Attorney document provided by the Department of Health Services. “It’s not worth the paper it’s printed on” would be my common refrain. I would preach that it was too restrictive with the authorities it did not cover, and too broad with the authorities that it did cover.

Well, I took a closer look at the statutory form at the beginning of this year. It’s actually not bad.

OK, it’s not as bad as I thought. The form’s broad language used to cover its granted authorities is actually OK when you pair it with the corresponding statutes (which come downloadable with the statutory form).

So, I was wrong. It is worth the paper it’s printed on. And I’d recommend everyone who does not have their Financial Powers of Attorney in order to download the form and fill it out immediately! Having the statutory form in place puts you in a far, far better position if you become incapacitated than having no Financial Power of Attorney at all. (You can download free copies from this page.)

THAT SAID, you can do better. And if you hope to engage in asset-protection if you or your spouse require long-term care, you must do better. If that is or possibly may become a concern for you, then here are few things I want you to keep in mind regarding your Financial Power of Attorney.

Your Financial Power of Attorney really should be HUGE. The biggest problem that I still have with the statutory form (and other Financial Powers of Attorney documents I’ve reviewed that were clearly based off of the statutory form) is that they are too limiting. If they are not overtly limiting, with certain authorities specifically being barred (which I find completely baffling), they are limiting by omission. Per the Wisconsin Statutes, there are certain authorities that must be expressly and clearly given to an agent in the Financial Power of Attorney document, otherwise the agent if barred from having that authority.

Here’s the truth: you do no want to limit what your agent can do for you! Ideally, your agent can do with your finances and property anything and everything that you can do. Your agent’s job is to stand in your shoes and assist you in carrying out your financial and property-related wishes. This often includes tasks that the statutory form will not permit your agent to carry out.

As is such, your Financial Power of Attorney should specifically spell out everything your agent can do for you, with no room for misinterpretation. This means that your document should be quite large! As a reference, the Financial Powers of Attorney document that I commonly produce for my clients generally top 25 pages. That is actually a fairly common size for such documents produced by attorneys that specialize in Estate Planning and Elder Law.

Allow for gifts (without limitation). The statutory form does not allow for an agent to make gifts on behalf of the principal (the individual for whom the agent acts) at all. I’ve seen some other Financial Power of Attorney documents that do allow the agent to make gifts, but with significant restrictions such as
- The gifts cannot be in excess of the yearly federal gift tax exemption (currently $15,000), and
- Gifts may only be made to persons designated as beneficiaries of the principal’s current estate plan.

These may sound reasonable, but why have such restrictions? There may come a time in your life when you wish to make a gift of more than $15,000 to someone, and perhaps that someone is not a current beneficiary of your estate plan (Example: gifting $20,000 to a grandchild to help pay for college). Well, if you would conceivably do that, why would you restrict your agent from making such a gift for you?

To boot, gifting can sometimes be a component of a solid asset-protection strategy. While I don’t usually advise my clients to utilize outright gifting as a means of protecting assets from long-term care, if your agent did ultimately decide on gifting as the strategy to use, you certainly would not want such gifts to be limited to $15,000 per year!

Open the door to trusts. The statutory form allows an agent to transfer the assets of the principal to a trust, so long as that trust 1) is revocable, and 2) was created by the principal. So, an agent can work with a trust only if the principal had already created a revocable trust, but in no other circumstances.

This is problematic. Your agent should be given the authority to establish and fund new trusts, including irrevocable trust. Revocable trusts offer nothing in the realm of asset protection, but well-drafted irrevocable Medicaid trusts do! Utilizing Medicaid trusts is the strategy I recommend to my clients more than any other when the concern is long-term care costs, but when I step into a situation where an individual is already incapacitated and his or her Financial Power of Attorney does not allow for the agent to create or fund irrevocable trusts, implementing that strategy becomes extremely difficult if not impossible.

There are a few more points to make regarding the authorities you should give your agent in your Financial Power of Attorney, but it all boils down to that first point – give your agent all the authorities that you have over your finances and property. This sounds risky, but trust is an integral part to your protection. You have to be able to trust your agent to act in your best interest. And when you find that person that you can trust, don’t limit them! Limiting your agent can only come back to harm you in the end.

To learn more about basic estate planning or to schedule your free initial appointment, contact me at (920) 221-0320 or By Email.