An Often Overlooked Power in Durable Power of Attorney Documents
Your elderly mother lives and intends to continue residing in Florida. You live in New York. She becomes mentally incapacitated and you move her in with you to take good care of her. You are her agent as designated by her Durable Power of Attorney documents and you manage and handle all of her affairs like taking her to the doctor and getting her the attention she needs but you start to run into some problems when you attempt to enroll her in your state’s Medicare program and other entitlement programs. The power of attorney documents do not give you the power to establish her domicile. Even though your mother resides in New York now she still is domiciled in Florida and only qualifies for assistance in Florida.
How do you establish a new domicile and what is a domicile? Traditionally, establishing a new domicile is easy. Wherever you consider home, the place you intend to indefinitely stay, is your domicile. Proof of being domiciled in a certain state typically includes where your primary residence is, where you vote and where your family and children live. This is different from where your residence is. You can have multiple residences but only one domicile.
The problem when a person becomes incapacitated mentally is that they are unable to establish a new domicile. Because they are mentally incapacitated, they lack the ability to form the intent required under traditional principles. This means that the state they were previously domiciled in before they became incapacitated is where their domicile remains.
Why is this an issue? In planning for incapacity as a part of an estate plan, you want to avoid as many potential problems in the future as you can. If you are now incapacitated and residing in a state other than your domicile while being taken care of family, it can cause headaches for your caretakers when it comes time to file for social benefit and entitlement programs as well as managing property and filing taxes. Furthermore certain states’ laws may be more beneficial than the laws of other states regarding inheritance, probate and other property matters. Just because you were moved out of a state and living somewhere else after you are mentally incapacitated does not mean that your domicile moved as well.
By not allowing your power of attorney to establish a new domicile for you in the event that you become incapacitated, you may be needlessly tying their hands in regards your future care and management of your assets. Fortunately, having the proper clause in a document such as a Durable Power of Attorney that authorizes your agent to establish a new domicile for you can avoid this issue entirely. Granting your Durable Power of Attorney the necessary and proper powers before you become incapacitated gives you the best chance for having a properly managed estate.