Can You Sign Someone Else’s Trust or Will with a Power of Attorney?

What happens when you are incapacitated in the hospital and your family realizes you don’t have an estate plan? 

Well, in this case, a lady named Melinda, who had property in California, was incapacitated and living in a nursing home. She qualified for Medi-Cal, so Medi-Cal paid for the majority of her nursing home expenses.  

The family realized that she had no estate planning documents. The only document Melinda signed was a Power of Attorney in favor of her sister. Her sister could make all of her financial decisions for her. 

Armed with this Power of Attorney, the sister went to a document preparation service (usually run by paralegals), to get documents in place for her sister, who was living in the nursing home. 

Once the documents preparation service saw a valid Power of Attorney, they told the sister that she could sign Melinda’s will, her trust, and other important documents. They charged her $1,500 for the service.

Melinda passed away a little later, and what was the outcome?

First of all, there is a law in California that states that you cannot sign a will on behalf of someone else even if you have power of attorney.  So the will failed completely. 

Nevertheless, you can sign a trust on behalf of someone else with a valid power of attorney that specifically references this power. 

Here was the problem with the trust – it was not funded properly. Basically, the trust “bucket” was not filled up with Melinda’s assets.  

You see, most estate plans don’t work because they are just worthless pieces of paper. The sad part is, much like a broken parachute, most people don’t even realize this until it is too late.  

Because of lack of funding, the estate plan is missing a necessary ingredient. It will not work without this step. 

Nobody took the time or made the effort to transfer title to all the assets into the living trust. 

Are you unsure about the state of your estate planning documents? Schedule a strategy session today!

So, back to the story. We have an invalid will. We have an unfunded trust (even though the trust was valid). What does that leave us with? 

PROBATE!

The case went to probate court under the laws of intestacy. 

Now, remember the fact that Melinda was on Medi-Cal? Well, this is where the state of California comes in. 

When Medi-Cal pays your nursing home bills, the State asks what assets did you die with? If the answer is that you have assets, they will try to do Medi-Cal Recovery on your asset. Sometimes this is referred to as Medicaid Recovery or Asset Recovery. 

The state looks to your PROBATE ASSETS for Medi-Cal recovery, not your Trust assets. 

So because Melinda had to Probate her assets, and was on Medi-Cal for Long Term Care, the State of California took her entire house. Her family received NOTHING. 

So, what did the family do? What did the sister do?

She went back to the document preparation service place and said, “You told me that this was fine, and it’s not. Now I got nothing”.

She sued them for malpractice and ended up victorious. She got back all the money the family lost back from that document preparation service. But it wasn’t pretty. 

Would you like to avoid backyard estate planning documents? Schedule a strategy session today!