The Problem with Out of State Documents – Part 2
In last week’s post I was telling you about a situation with a client who has a North Carolina power of attorney that his wife needed to use here in New Jersey where they currently live. The document is a springing power of attorney, meaning it does not have effect until the principal is incompetent or incapacitated. The client’s wife presented the POA and a statement from his doctor expressing the opinion that he lacks the capacity to make financial decisions to the financial institution where his account was held for the purpose of liquidating and spending down the balance to achieve Medicaid eligibility. The institution still refused to honor the POA. Why? It turns out that North Carolina has a provision in it’s statute covering springing powers of attorney that requires the document to be registered with the Office of the Register of Deeds. A POA is not valid when the principal is under a disability or incapacity until the document has been recorded. We argued that since the client is now a New Jersey resident and no such requirement exists under New Jersey law, therefore, the registering process should be unnecessary.
The Problem with Out of State Documents – Part 1
I am often asked whether moving from one state to another requires someone to redo their legal documents. While I obviously don’t have knowledge of the laws in every state, my general answer is that I am not aware of any state that invalidates a will, power of attorney or health care directive prepared and executed in accordance with a second state. Still, I am not entirely comfortable with that answer. I always tell my clients who are moving out of state that they should at least consult with an attorney in their new state to review the documents I prepared to insure they comply with that state’s law. If the local attorney believes it is necessary, then I tell my clients they should execute new legal documents that are state specific. I recent situation with one of my clients reinforced this belief. My client had executed a North Carolina power of attorney while living there. It was a springing power of attorney which as I explained in my blog post of 12/18/17 I do not like because of the added hurdles we need to clear. Unfortunately, my client did not have the
What the New Tax Law Means for Seniors – Part 2
In last week’s blog I told you about some of the changes in the new tax bill. This week I’ll cover some more as well as some changes that were discussed but didn’t happen. The mortgage interest deduction has been reduced. Now taxpayers can deduct the interest on mortgage debt up to $750,000 for the purchase of a first or second home. Anyone who has a current loan is grandfathered so that interest on existing loans of up to $1,000,000 is deductible. Also, any refinance of a loan that was incurred before December 15, 2017 can qualify for the deduction up to the old $1,000,000 limit with certain restrictions. Finally, interest on home equity loans and lines of credit – whether taken before or after the new law – is no longer deductible. 529 plans have been expanded. Now the funds in these plans may be used to pay tuition for public, private and religious elementary and secondary schools. Previously, 529s could only be used to pay higher education tuition. The elimination of the medical deduction was something that was seriously discussed but did not make the final version. For 2017 and 2018 medical
What the New Tax Bill Means for Seniors
Ok, now that the new tax bill has been passed by Congress and signed into law by President Trump how will it affect us? Will it mean paying more or less in income tax? The answer depends on many variables but one thing is for sure. These changes don’t apply until 2018, meaning that you won’t have to worry about the new law when filing your 2017 income tax returns this coming spring. We will be experiencing the greatest overhaul of the tax laws in more than 30 years, the last major changes having been made under President Reagan in 1986. If you have followed the many reports in the media as the bill made its way through both Houses of Congress, you know that both corporate tax rates and personal income tax rates will drop. There are also other changes which limit or eliminate personal deductions. However, while the changes that affect corporate tax rates are permanent, the changes that affect individual tax rates and deductions are not. There is a “sunset” provision in the law, meaning that the new law – as it applies to individuals – will expire on December
The Problem with Springing Powers of Attorney
We rarely use springing powers of attorney in our office. A recent case with a client who has one reminds me why. George’s son, Jim came to us because his dad is in a nursing home. He will need to stay there on a long term basis. George has some money in several accounts but within 6 months the money will run out and we’ll need to apply for Medicaid. George has a power of attorney which designates Jim as his agent. It was prepared by another attorney several years ago, however, until now George handled his own finances so Jim never needed to use it. When I examined it, I discovered that it is not an immediate power of attorney but instead is a springing power of attorney. The difference between the two is important. An immediate power of attorney is one that allows the agent to act for the principal as soon as the document is signed. That doesn’t necessarily mean the principal wants the agent to act for him right away. The principal can continue to act for himself after signing the power of attorney until such time as he no longer has capacity. A springing
New Medicaid and VA Figures for 2018 #2018Medicaidnumbers
The cost of living adjustment for 2018 for many of the government programs that affect our clients’ lives has been announced so let’s go over those numbers. For 2018, the Social Security Administration announced that Social Security recipients will receive an increase of 2%, after receiving a small increase of .0.3% last year. Because Medicaid and the VA Aid and Attendance program adjustments are tied to the same percentage increase, this means that those benefits will also increase by 2%. So here are the numbers you need to know for 2018. The Medicaid income cap will go up to $2250 per month. This number is the limit on income per month needed to qualify for most Medicaid programs. For Medicaid recipients whose income exceeds this limit a Qualified Income Trust (commonly known as a Miller Trust) must be used to achieve and maintain eligibility. The Community Spouse Resource Allowance (CSRA) will increase to $123,600. That is the maximum amount a healthy spouse may keep in countable assets (provided the married couple have at least that amount times 2 at the time the “snapshot of assets” is taken). The minimum CSRA is