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Welcome to the March issue of The Elder Law Update, a monthly e-newsletter full of the latest legal developments and other trends of vital interest to seniors and their advocates.
For those of you in the Ft. Myers, Florida area, you can hear Partner Howard S. Krooks on March 28 on WINK 1240/1270. He will be a guest on the one-hour weekly radio show, Retiring With Health & Wealth, which will air at 6:00 am. The focus of the discussion will be long term care.
Partner Ellen S. Morris presented "Litigation and Administrative Advocacy - Fair Hearings, What's Required, How to Prepare and Succeed," on January 24, 2008 at the Elder Law Section's Elder Law Certification Review Course in Orlando, FL.
Mr. Krooks was recently quoted in Newsday newpaper inLynn Brenner's Family Finance column entitled,
Dad's in Nursing Home, What Do We Do with House? Click here to read the article.
Ms. Morris, on behalf of the Joint Task Force of The Florida Bar Elder Law Section and the Academy of Florida Elder Law Attorneys, submitted an Amicus Brief to the 4th District Court of Appeals in Palm Beach County on the issue of the validity of personal service contracts in Medicaid planning. The appeal is ongoing.
Mr. Krooks presented "Beyond North Carolina: Implementation of DRA in Other States" at the North Carolina Bar Association Elder Law Section 12th Annual Elder Law Symposium on February 29, 2008 in Cary, NC.
We did it! We surpassed our team goal for the Alzheimer's Association Southeast Florida Chapter Memory Walk, which was on March 8th in West Palm Beach. Thanks to wide-spread support, we raised $5,320, making us the second highest fundraising team!  Our Memory Walk Team: (from left to right) Probate Paralegal Patricia McDaniel and her daughter, Office Manager Judith Miller and her son, Partner Ellen S. Morris, Receptionist Barbara Beckman, and Probate Paralegal Andrea Davis.
As always, we welcome your comments and questions. You may send them to Info@ElderLawAssociates.com. |
| Seniors Need to File Tax Return to Get Rebate Check
 Seniors can benefit from the economic stimulus law enacted on February 13, 2008, but they need to file an income tax return. Seniors, disabled veterans, and veterans' widows will receive $300 payments if they earned $3,000 in Social Security or veterans' disability benefits in 2007. In addition, workers who earned at least $3,000, but not enough to pay income taxes, will be eligible for payments of $300. For higher income individuals, the law provides rebate checks of up to $600 per individual. The stimulus payment begins to phase out for individuals with adjusted gross incomes (AGI) over $75,000 and married couples who file a joint return with AGI over $150,000.
In order to get a rebate, you need to file an income tax return even if you do not have any tax liability. If you are filing to receive your stimulus payment, you can use the IRS Free File program to help you file returns for 2007. To learn more about this, click here.
You will need to report any Social Security income on the tax return. This does not mean you will be taxed on your Social Security income, but you must report it in order to get the rebate. If you file the tax return on time, you should receive the rebate check in May or June.
For more information on the stimulus payments and what income tax forms to file, go to www.irs.gov or call 1-800-829-1040.
For a Senior Journal article "IRS Helps Low-Income Senior Citizens Qualify for Economic Stimulus Payments," click here. |
Why Not Just Use an Off-the-Shelf Power of Attorney Form?
 A durable power of attorney is one of the most important estate planning documents you can have. It allows you to appoint someone to act for you (your "agent" or "attorney-in-fact") if you become incapacitated. Without a power of attorney, your loved ones would not be able to make decisions for you or manage your finances without asking the court to appoint a guardian or conservator, which is an expensive and time-consuming process.
There are many do-it-yourself power of attorney forms available; however, it is a good idea to have an attorney draft the form for you. There are many issues to consider and one size does not fit all.
The agent's powers
The power of attorney document sets out the agent's powers. Powers given to an agent typically include buying or selling property, managing a business, paying debts, investing money, engaging in legal proceedings, borrowing money, cashing checks, and collecting debts. They may also include the power to consent to medical treatment. Some powers will not be included unless they are specifically mentioned. This includes the power to make gifts and the power to designate beneficiaries of your insurance policies.
The power to make gifts of your money and property is a particularly important power. If you want to ensure your agent has the authority to do Medicaid planning on your behalf in the event you need to enter a nursing home, then the power of attorney must give the agent the power to modify trusts and make gifts. The wording in a power of attorney can be significant, so it is necessary to consult an attorney.
Springing or immediate
The power of attorney can take effect immediately or it can become effective only once you are disabled; this is called a "springing" power of attorney. While a springing power seems like a good idea, it can cause delays and extra expense because incapacity will need to be determined. If the power of attorney is springing, it is very important that the method for determining incapacity is clearly spelled out in the document.
Joint agents
While it is possible to name more than one person as your agent, this can lead to confusion. If you do have more than one person named, you need to be clear whether both parties need to act together or whether they can each act independently. It might make more sense and be less confusing to name an alternative agent to act in case the first agent is unable to.
Appointing a guardian
Another use of a power of attorney can be to nominate a guardian in case guardianship proceedings become necessary. Including your preference for a guardian can allow you to have some say over who will be managing your affairs. Usually, the court decides who will be chosen as a guardian, but in most circumstances, the court will abide by your nomination in the durable power of attorney.
Executing the power of attorney
To be valid a power of attorney must be executed properly. Some states may require a signature, others may require the power of attorney to be notarized, and still others may require witnesses. It is important to consult with an estate planning attorney in your state to ensure your power of attorney is executed properly.
Accepting a power of attorney
Even if you do everything exactly right, some banks and other institutions are reluctant to accept a power of attorney. These institutions are afraid of a lawsuit if the power of attorney is no longer valid. Many banks or other financial institutions have their own standard power of attorney forms. To avoid problems, you may want to execute the forms offered by the institutions with which you have accounts. According to a MarketWatch.com article, you need to be careful that you don't sign a bank's document that inadvertently restricts a power of attorney's ability to deal with other assets, and you should check that any documents you sign with a bank match the original power of attorney. For more information, click here.
For more information on powers of attorney, click here. | |
Book Review: Coping with Your Difficult Older Parent.
 Sherri Goss. My Life Book. Rosenberg Financial Group, Inc. 2007. 64 pages.
$20. Click on book to order.
When a loved one dies, family members have a lot to do -- from calling family and friends to sorting through household finances -- and My Life Book can make their life easier. Written by Sherri Goss, a financial advisor who works with caregivers, My Life Book is a way to organize your personal information, wishes, and desires in a way that your family can access them.
My Life Book is a binder with tabs to separate the sections. The binder provides space to document personal information such as passwords and e-mail addresses; the location of legal, financial, and personal documents; a long-term care plan; and burial and final wishes. It also includes space for documenting life stories as well as questions to help you get started. Each section also includes brief explanations and examples of what information should be included and why.
While the binder doesn't provide a lot of details about estate planning, funeral arrangements, or long-term care, it is a good tool to help you get organized and make sure your important information in one location. |
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Temporary Capital Gains Tax Break Can Help Seniors
 Over the next two years, seniors can take advantage of a capital gains tax break. From 2008 to 2010, taxpayers in the 10 and 15 percent tax brackets will pay zero percent in capital gains taxes. This means individuals in those tax brackets (the lowest two brackets) will be able to sell stocks, bonds, real estate and other assets without paying any capital gains taxes. With some proper tax planning, this can be useful for retirees and low-income seniors. 26 U.S.C. Sec. 1(h);1(d) 1(g) 112.
Who can benefit?
This capital gains tax cut can primarily benefit the following people:
- Adult children who support low-income parents, or seniors helping out adult children who fall into the 10 or 15 percent tax brackets. Instead of giving cash, you can give stocks and bonds instead. You can give away $12,000 a year tax free, and if the parents or adult children sell the stocks and bonds between 2008 and 2010, they will not pay a capital gains tax on the proceeds.
- Retirees with investments in taxable accounts. Tax-deferred retirement savings plans are not affected by capital gains. But if you are a retiree with stocks or mutual funds in a taxable account, you can sell without incurring a capital gains tax. If you are planning on retiring this year, you may want to sell taxable investments and delay Social Security payments or distributions from a tax-deferred plan.
Be Careful
There are some potential downsides to selling off investments, so you need to be sure it is the right step for you. Before you take any action, consult a tax professional. The proceeds from the sale of the investments will be added to your income, which can have some unintended consequences. For example, it could push you into a higher tax bracket, thereby losing some of the benefit of the zero-percent tax rate. It could also affect eligibility for Medicaid or cause previously non-taxed Social Security benefits to be taxed.
While the capital gains tax break also applies to the sale of real estate, you shouldn't sell your house solely to get the tax break. Because the sale of a house would most likely put you over the income cap for the zero percent tax rate, only a portion of the sale would qualify for the zero percent rate. Click here for a San Francisco Chronicle article that explains how the sale of a house can be affected by the zero percent tax rate. |
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Is It Better to Remarry or Just Live Together?
 Finding love later in life may be unexpected and exciting, but should it lead to marriage? The considerations are much different for an older couple with adult children and retirement plans than for a young couple just starting out. Before deciding whether to get married or just live together, you need to look at your estate plan, your Social Security benefits, and your potential long-term care needs, among other things. Whatever you decide to do, you may want to consult a lawyer to make sure your wishes will be carried out.
Here are some things to think about:
- Estate Planning. Getting married can have a big effect on your estate plan. Even if you don't include a new spouse in your will, in most states spouses are automatically entitled to a share of your estate (usually one-third to one-half). One way to prevent a spouse from taking his or her share is to enter into a prenuptial agreement in which both spouses agree not to take anything from the other's estate. If you want to leave something to your spouse and ensure your heirs receive their inheritance, a trust may be the best option.
- Long-Term Care. Trusts and prenuptial agreements, however, won't keep a spouse from being responsible for your long-term care costs or vice versa. In addition, getting married can have an effect on your or your spouse's Medicaid eligibility. If you can afford it, a long-term care insurance policy may be a good investment once you remarry. For more information on long-term care insurance, click here.
- The Family Home. Whether you are getting married or just living together, before combining households you will need to think about what will happen to the house once the owner of the house dies. If the owner wants to keep the house within his or her family, putting the house in both spouse's names is not an option. On the other hand, the owner may also not want his or her heirs to evict the surviving spouse once the owner dies. One solution is for the owner of the house to give the surviving spouse a life estate. Once the surviving spouse dies, the house will pass to the original owner's heirs.
- Social Security. Many divorced or widowed seniors receive Social Security from their former spouses, and remarriage can affect benefits. If you are divorced after at least 10 years of marriage, you can collect retirement benefits on your former spouse's Social Security record if you are at least age 62 and if your former spouse is entitled to or receiving benefits. If you remarry, you generally cannot collect benefits on your former spouse's record unless your later marriage ends (whether by death, divorce, or annulment). However, if your are a widow, widower or surviving divorced spouse who remarries after age 60, you are entitled to benefits on your prior deceased spouse's Social Security earnings record.
- Alimony. If you are receiving alimony from a divorced spouse, it will likely end once you remarry. Depending on the laws in your state and your divorce settlement, alimony may end even if you simply live with someone else.
- Survivor's Annuities. Widows and widowers of public employees, such as police officers and firefighters, often receive survivor's annuities. Many of these annuities end if the surviving spouse remarries. In addition widows and widowers of military personnel may lose their annuities if they remarry before age 57. Before getting married, check your annuity policy to see what the affect will be.
- College Financial Aid. Single parents with children in college may want to reconsider before getting married. A new spouse's income could affect the amount of financial aid the college student receives. Some private colleges may even count the combined income of a couple that lives together if they commingle their expenses.
For an article from Forbes magazine on remarriage, click here. |
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Elder Law Associates PA is a boutique elder law firm that practices exclusively in Medicaid and long term care planning including long term care insurance, Medicaid applications, home and community-based Medicaid waiver services, diversion program benefits, nursing home benefits, spousal refusal applications, and Medicaid fair hearings and appeals; nursing home and assisted living facility residents' rights litigation; asset preservation planning with a special focus on planning in light of the Deficit Reduction Act of 2005, including personal service agreements, the purchase of life estates, income producing real estate and spenddown planning; disability planning, including special needs trusts and guardianship; estate planning, including wills and trusts and advance directives; and probate, which encompasses estate and trust administration as well as specialized litigation.
We assist clients in planning for the possibility of disability, incapacity, home health care, assisted living and/or nursing home placement. Our firm enables clients to avoid impoverishment caused by the escalating cost of long term care, to maintain their right to make health care decisions and to avoid unnecessary medical treatment.
We hope you have enjoyed The Elder Law Update. If you have questions about something you read, elder law matters or issues concerning persons with disabilities, we would be delighted to hear from you. We serve as an elder law resource to many professionals and organizations and want to become your elder law resource as well. You can reach us at Info@ElderLawAssociates.com.
Warm regards,
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Ellen S. Morris, Esq. & Howard S. Krooks, Esq., CELA
Elder Law Associates PA
phone: (561) 750-3850 / (800) 353-3752
fax: (561) 750-4069
This publication is intended for general information purposes only. It is not intended to constitute individual legal advice to any specific client. |
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