What Exactly am I Authorized to Do with a POA? (Part 1)
In my blog post this week I want to talk about the different types of powers of attorney and the confusion people sometimes have concerning what exactly each document allows them to do. Although different people may choose to use different names, I prefer to categorize the ability each of us has to choose someone to make decisions for us by way of executing a written document as, on the one hand financial/legal and on the other hand health care. When we prepare documents for clients in which they designate someone to make decisions for them we generally refer to these documents as a power of attorney and advance directives for health care. The power of attorney designates an agent to make decisions and take action on the principal’s behalf in the area of financial and legal matters. This typically includes dealing with bank accounts, retirement accounts, investment accounts, insurance policies, real estate etc. In our office we create a second document - an advance directive for health care which typically includes a health care power of attorney and a living will. As I have written in the past, a living will is a set of instructions concerning what
What If I Can’t Find the Original Will? Part 2
In my blog last week I discussed a question I have heard often enough in my practice. “What if I can’t find the original will”, meaning “can we probate a copy”? I explained last week that in the normal case in New Jersey there is no need for a judge to be involved unless there is a dispute or the original will cannot be located. As I said last week, the law presumes that if the original cannot be located then the testator (the person who executed the will) intentionally destroyed it because it no longer represented his/her wishes. But, what if that isn’t what really happened? What if the will was simply misplaced? In that case a copy of the will can be admitted to probate but not in the simple administrative way of scheduling an appointment at the Surrogate’s office. A judge must review the circumstances and decide whether it is likely that the testator destroyed the will or that it was simply lost. The Executor named in the will must file a complaint asking the probate judge to issue an order permitting the probate of a copy. In support of the application, the proposed Executor must
Gift or Theft? – Part 3
In this week’s post I give you the conclusion to John’s saga with Medicaid. As you will recall, we have applied for Medicaid for John’s sister, Mary. In reviewing the 5 years of records which we must submit to the State, we found that John’s brother, Jerry took $200,000 of Mary’s money for his own use while he was carng for Mary and handling her finances. I had John prepare for the likelihood that New Jersey Medicaid would impose a Medicaid penalty – a period of ineligibility – as a result of these transfers for which Mary did not receive anything of equal value in product or service. John filed a criminal complaint for theft as well as a civil complaint in an attempt to recoup the funds. Sure enough, the state focused on the transfers. I was ready with copies of both the criminal and civil complaints. But, then we got a surprise. Based on what John told me about Jerry’s financial troubles, I never thought we would ever recover a dime from Jerry. We only filed the legal actions because that is what Medicaid requires us to do. Except that not
Gift or Theft ? (Part 2)
In last week’s post I told you about John’s call about Medicaid for his sister, Mary. During our review of her 5 years of financial records we discovered transfers of funds while their brother, Jerry was handling her finances. Jerry admitted that he took the money without Mary’s knowledge so we have to contend with a transfer of $200,000. The question then is “how will Medicaid treat these transfers when we apply for Medicaid?” The State will assume that Mary gave the money to Jerry. We can’t simply tell them that Jerry took it – what amounts to theft. If it truly is theft, I explained to John, then he needs to file a criminal complaint. He should also file a civil complaint against his brother, Jerry to try to recover the funds. Why? Because we must show that we are trying to recover the funds. It does not matter whether we succeed or not. We just need to support our contention that the funds were not a gift – not a transfer for less than fair value – so we can avoid a Medicaid penalty. John complied with my request.
Gift or Theft (Part 1)
The call from John involved another crisis planning case. His sister, Mary was already in a nursing home and had a minimal amount of assets remaining to be spent down. Before entering the facility she had lived for many years with her other brother, Jerry. Although she was able to attend to her activities of daily living, Mary is mentally challenged to the extent that she could not handle her own finances, although she was legally competent. Jerry had been handling her finances which in large part included funds left to Mary by their mom. Now, however, Jerry was experiencing his own health issues and asked John to step in. We immediately asked John to gather 5 years of records for every account Mary owned as well as the trust accounts established to hold and manage Mary’s inheritance from her mom, of which Jerry had been the trustee. It would only be a matter of months before we would be spent down and I needed to know quickly if there would be any potential Medicaid penalties to address. Sure enough there were. We encountered numerous withdrawals from Mary’s accounts. We also found many checks payable to Jerry. Some were signed
An RMD and Tax Waiver Problem (Part 2)
In my blog post last week I laid out Mary’s problem trying to draw out the required minimum distribution for 2018 from her deceased aunt’s IRA. June died in November and had not yet taken the minimum necessary (RMD) to avoid a 50% penalty. The bank holding the IRA, however, has refused to allow Mary to withdraw the balance of the RMD, insisting that a tax waiver from the State of New Jersey is necessary before it can do so. It has frozen 100% of the account. As I explained last week, Mary’s aunt did not have any children and has left her estate to Mary and Mary’s cousins. They are all nieces and nephews in relation to her aunt and are classified as Class D beneficiaries for inheritance tax purposes. The tax on the distributions amounts to 15% of the first $700,000 received by each beneficiary and 16% on anything above that. While the tax is calculated as of the date of death the return and the tax are due 8 months after death because the State recognizes that it takes time for the estate representative to figure out if there is any tax due and if so,