In your blog post “How the Community Spouse Can Keep More Assets” you outline an example wherein husband John’s Alzheimer’s has progressed to a point that his wife, Joyce, can no longer care for him at home and she makes the decision to move him to a nursing home. She is concerned about her own financial future and wants to qualify John for Medicaid coverage. Part of the solution is for Joyce, using John’s durable power of attorney, to liquidate John’s IRA and transfer it and their house into her name. In so doing, does she need to be concerned about enriching herself at John’s expense while he is incapacitated? Is this concern mitigated because Medicaid is providing for him?
Yes, there is a potential conflict of interest when using a durable power of attorney, a spouse transfers her disabled spouse’s assets into her own name. But the interests of both spouses are consistent and not in conflict if the transer is the wish of both spouses.
In most cases like this, the disabled spouse only moves to a nursing home after the family has done everything in its power to care of him at home. There’s a bit of a conflict of interest if the healthy spouse acting under a durable power of attorney transfers her husband’s assets to herself, but (again, in most cases) we assume that it would be his wish if he were competent to protect the financial security of his spouse and family. Where this becomes more fraught is in second marriages or where there’s clear conflict between the spouses. For instance, the ill spouse may be refusing to move to the nursing home. Then the attorney may need to assess whether this objection is reasonable or rather a part of the dementia. Ideally, both spouses would be represented by separate counsel, but few clients have the resources or patience to take that step. However, in the case of second marriages separate counsel is generally necessary despite the increased cost.