FEBRUARY 26, 1996 VOLUME 3, NUMBER 35
In 1988 George W. Pittman, Jr., signed a power of attorney giving his wife Rose the ability to handle his financial affairs. On the same day, Mr. Pittman’s attorney also prepared a deed giving Mr. Pittman’s interest in South Carolina real property to his two sisters; Mrs. Pittman signed the gift deed using Mr. Pittman’s power of attorney.
Mr. Pittman died two years later. His daughter Diane Whitford sued to set aside the transaction, alleging that Mr. Pittman was incompetent when he signed the power of attorney. Ms. Whitford also argued that the power of attorney did not specifically include the power to make gifts.
The North Carolina Court of Appeals neatly side-stepped the issue of Mr. Pittman’s competence by finding that the power to make gifts must be expressly included in a power of attorney before such transfers will be valid. Consequently, the transfer by Mrs. Pittman was invalid, and his real estate became part of his estate. Whitford v. Gaskill, South Carolina Court of Appeals, August 15, 1995.
The result in the Pittman case is consistent with the general rules governing powers of attorney. For most purposes, a power of attorney which does not explicitly include gift-giving powers can not be used to make transfers without receiving payment. This is the long-standing view of the Internal Revenue Service, which is frequently called upon to determine the validity of gifts made just before the death of the principal. The Arizona rule would almost certainly be the same; most form powers of attorney do not contain language permitting gifts, and transfers (even to a spouse) will therefore be suspect.
Who IS Buying Long-Term Care Insurance?
Many seniors consider purchasing long-term care insurance as a way of avoiding ALTCS (Medicaid) eligibility limitations. But what are the characteristics of the typical person who actually buys such insurance? A recent survey by the Health Insurance Association of America looked at buyers over age 55; the survey was based on 1994 purchases.
Not too surprisingly, given the cost of insurance, most purchasers are wealthier than the average older person. 41% have liquid assets of more than $100,000. Surprisingly, however, 28% have less than $30,000 in liquid assets.
Insurance buyers are also better educated than their uninsured peers. More than one-third (over twice the percentage of the general elderly population) of purchasers are college graduates.
According to the survey, the average annual premium was $1,500. Two-thirds of all policies included home health care benefits, about twice the rate reported in a similar study just four years earlier.
Almost half of policy buyers were over age 70. And only one in five of all those over age 55 even considered buying long-term care insurance; three of every five reported having “little or no awareness” of the availability or usefulness of such insurance.