Questions asked and answered from our last workshop!

WScrop

  1. I have elderly parents with modest assets. Is it possible to protect any of those assets?
  2. What is the financial impact of parents moving into my home for care? Do I have liability as their Power of Attorney? Is it possible to use Veterans Benefits for their care in my home?
  3. What is the criteria for a disabled child (exempt transfer)? Can I transfer assets to a disabled child without a Medicaid eligibility penalty?
  4. My mom is 87 years old and she is $600 short each month after paying for care. Should I sell her house?
  5. Can I do IRA planning to minimize taxes and maximize benefits to my heirs?
  6. What are the tax consequences of transferring $50,000 as a gift in a single year?

Join us at our next workshop and have your questions answered! Click here to see upcoming dates.

Questions asked & answered at yesterday’s “Estate Planning Essentials” workshop

asset-protect2

  1. Can I protect assets for my heirs?
  2. How can I avoid court and family disputes?
  3. How can I set up a trust?
  4. Is it true that “probate” costs a lot? Should I avoid probate?
  5. If I have no children or trustworthy people in my life, who can I appoint as my agent or executor?
  6. What is Medicaid Planning?

Join us at our next workshop and have your questions answered! Click here to see upcoming dates.

 

 

A few seats left for special edition of our workshop

Sykes Elder Law Resource & Education Center

Sykes Elder Law Resource & Education Center

For January we are presenting a special “New Year’s resolution” edition of our popular, free estate planning workshop.

The first one filled up quickly, and there are only a few seats left for the remaining workshop on Thursday, January 29, from 5:30 to 7:30 in the evening.

In addition to our usual information-packed instruction on how to achieve great estate planning and asset protection results, we will offer insight into why we tend to procrastinate estate planning and other important tasks, how to break inertia and get tasks done, and how you can use a simple device like a New Year’s resolution to break any type of productivity logjam.

We will offer extra assistance in helping attendees wrestle with difficult issues that could be holding them back, and will give an extra push toward getting estate planning done (and done well).

Before Spring, attendees can have completed his planning documents resting on a shelf at home and enjoy the satisfaction of knowing they have completed a vital life task that will benefit them and their family in the years to come.

So call soon to reserve one of the remaining spots. If you have been putting off your estate planning, you will not want to miss the session.

 

POAs in 2015 require greater attention to asset protection

Asset protection has grown in importance as a consideration in estate planning. Americans live longer now than ever before, and often spend more time in their senior years having diminished ability to manage their own affairs, or even to take care of themselves.

As a result, their estates are vulnerable for a number of reasons. They may be more vulnerable to lawsuits if they can’t drive well or take care of their properties. The unscrupulous may take advantage of their trust. They may need expensive nursing care for years.

The use of trusts has risen as a way to protect assets from depletion and save them for loved ones.

But it may get harder to use trusts for this purpose starting in 2015 (at least in Pennsylvania).

Here’s why. An important feature of a good asset protection plan is the ability to change course and adapt to changing circumstances. For example, a couple aged 80 and 78 may establish an irrevocable asset protection trust when they are in good health, and place most of their assets into it. Three years later, though, the husband (George) has dementia and enters a nursing home. A better strategy at that point may be to terminate the trust and divide assets according to Medicaid rules, making sure that George’s wife can keep and use as much of their combined estate as possible if George qualifies for Medicaid.

However, there’s a problem. Because George prepared his POA in 2015, it is subject to the rules of interpretation under Pennsylvania’s new statute. One of those rules is that an agent acting under a POA may “create, amend, revoke or terminate” a trust “only if the power of attorney expressly grants the agent the authority” to do so.

Unless George, or his attorney, anticipated this issue and specifically included a provision in his POA to allow George’s agent to consent to termination of the trust now that George has dementia, the assets may be tied up in the trust. Worse yet, the transfer of assets to the trust can earn the couple a period of ineligibility for Medicaid benefits if it was within Medicaid’s five-year look-back period.

The problem is easily managed if, when George set up his trust, he also obtained a good power of attorney that gave his agent all the powers that might be needed if his circumstances changed, especially during the first five years of the trust’s existence.

On the other hand, form POAs obtained from a non-specialist, bought as part of general estate planning software, or downloaded from the internet may pose dangers for the unwary under the new POA statute.

Bottom line: Make sure your power of attorney contains the right provisions to support your asset protection strategy.

How will Pennsylvania’s new POA statute affect you?

sign-docAs we reported previously, Pennsylvania has adopted changes to its power of attorney law. Some changes have already gone into effect and others will take effect January 1, 2015.

Here are some thoughts on how the new law may affect you, depending on your situation.

You have a current POA
If the POA you have now meets your needs, there is no need to change it. The new forms, and the new rules about what powers may be authorized under a POA, apply only to POAs created on or after January 1, 2015. Existing POAs are grandfathered in, with their current powers intact.

You serve as the agent under a POA
If you are already someone’s agent under a POA, your duties have been changed and clarified somewhat. In most cases the new rules will make no difference to what you are doing.

However, if you have accounts that are not entirely separate from the accounts of the principal, you may need to change them. Under the new rules, your funds must be kept separate unless they “were not kept separate as of the date of the execution” of the POA, or “the principal commingles the funds after the date of the execution of the power of attorney and the agent is the principal’s spouse.”

You should already be keeping a record of all receipts, disbursements and transactions. Under the new rules, you are required by law to do so unless the POA provides otherwise.

You are presented with a POA
If you work at a bank, or other entity that is asked to take action by an agent under POA, you will need to become familiar with the new rules on honoring a POA. Within 7 business days, you must usually accept the POA or make certain requests for clarification as allowed by the statute. However, there are some circumstances under which you are not required to accept a POA (such as when you know for a fact that it has been terminated). You may not require an additional or different form of POA.

Entities that are regularly presented with POAs are well advised to train their employees on the new guidelines.