Living Wills

Got aging parents?  It can be very important to have a conversation about end of life care. So few people understand the implications of their living will.  They know they should have one, but very few understand why.  Take a look at this article by Amy Florian.

Make sure to talk to your parents and ask for a copy.  This topic has become so important that Medicare is now reimbursing doctors for talking with their clients about living wills.

A sample of the Five Wishes document that she references can be found here.

Credit Union’s taking your money when you die?

I heard an interesting case from an estate planning attorney this week.  A client passed away and had both a credit card and checking account at the credit union.  The checking account was joint with his wife (joint tenants with rights of survivorship) meaning that the moment the client died the cash in the account become the wife’s.  With unsecured credit card’s, historically credit issues could only get their hands on money in your probate estate (meaning anything that is not owned JTWROS or does not have a beneficiary designation), but this credit union had written in the unsecured credit card agreement that they had the right to take any assets held by their institution.

So the client had $10k of credit card debt and $8k at the same credit union in a checking account.  The credit union took the $8k in the checking account to pay down the credit card.  So moral of the story…read your credit card agreement carefully or keep your bank accounts and credit accounts at different institutions.

Agent Under a Power of Attorney: Ten Tips

Here are some great tips for anyone holding the Power of Attorney over another person.  They were published in Carlile, Patchen, & Murphy, LLP’s The Wealth Planner.  Their website is :

Most of us (hopefully) have executed our own Powers of Attorney, with the understanding that, if we cannot act for ourselves, then the person we appoint in the Power of Attorney (the “POA”), our “agent,” can act on our behalf.  Many of us have also been appointed as the agent or successor agent of another person’s POA, whether executed by a family member or by a close friend.  We gladly accepted appointment as agent for our loved one or close friend (the “principal”), thinking in the back of our mind that we would never actually have to use the document.  But, what happens when the principal does become incapacitated and cannot act for herself?  What do you (the agent) need to know?
     We have assembled the following “Top Ten” list to help agents in exercising the authority granted in a POA.  This list is in no way meant to be exhaustive of all circumstances that could arise — it is intended to address some of the more common situations that an agent may encounter.

1.     The “Golden Rule” –  it is your absolute duty to always act in best interest of the principal.  As an agent under a POA, you have a fiduciary duty to act in the best interests of the principal.  Failure to do so could result in personal liability.

 2.     Sign properly on behalf of the principal to avoid personal liability.  If signing a document on behalf of the principal, be sure not to sign only your own name.  Doing so could cause you to incur personal liability.  Instead, sign the document as follows:  “[Principal’s Name], by [Your Name], POA.”

 3.     Give copies and not originals.  If a bank, financial institution or other party requests the POA to keep on file, do not give them the original document.  Instead, only permit them to retain a copy of the POA.  You can allow them to make a copy of the original, but make sure that they only keep the copy and return the original to you.

 4.     Don’t record the POA unless selling real estate.  The only time that you need to record an original POA is if you are selling or transferring real estate on behalf of the principal.  Otherwise, the document does not need to be a matter of public record.

 5.     Don’t set up a joint account.  When setting up an account on behalf of the principal, don’t make it a joint account with you as a joint owner.  Setting up a joint account is tantamount to gifting the assets to yourself, as you would be the sole owner of the account on the death of the principal.  Self-dealing is a big “no-no” as an agent. Instead, set up the account in the principal’s name alone with you (the agent) listed as “POA.” 

 6.     Don’t alter the principal’s estate plan to name yourself as beneficiary (including life insurance and retirement plans).  An agent should be careful not to alter the principal’s estate plan (for example by changing beneficiary designations) unless the POA provides authority to do so.  And in any event, the agent should not alter a principal’s estate plan in order to benefit him or herself.  Both instances could lead to personal liability for the agent.  An agent cannot write a Will for the principal.

 7.     Keep good records.  Remember, as an agent under a POA, you have a fiduciary duty to act in the best interests of the principal.  In order to defend any claims of a breach of fiduciary duty, it is important that you document and keep good records of your actions.  Retain all financial statements, canceled checks, and check registers.  If the principal is somewhat competent, regularly review your actions with the principal.  Meet regularly with the principal’s financial advisor, CPA, insurance agent, and banker and take notes at those meetings.

 8.     Don’t make gifts unless authorized in POA.  Agents under a POA are only authorized to perform acts that are authorized in the document or, if the document incorporates powers provided under state law, then those powers provided under state law.  The law in the State of Ohio does not explicitly authorize an agent to make gifts on the principal’s behalf, so, if the document does not give the agent the authority to make gifts, then an agent could be subject to personal liability for making unauthorized gifts.

 9.     Be sure to file the principal’s income tax returns (including estimated payments).  Incapacity is no defense for failure to file income tax returns.  As agent for the principal, you have a fiduciary duty to act in their best interests and on their behalf.  Failure to file an income tax return on behalf of a principal could lead to personal liability for an agent.

 10.     Stop acting if a guardian of the principal’s estate is appointed.  A guardian of the estate takes precedent over an agent under a POA.  If one is appointed, you should immediately cease acting under a POA.

2010 Tax News

If you turn on the news tonight, no doubt the top national story will be the year-end tax deal that the Obama Administration and Republican leaders have negotiated.  While it is not yet final, the deal would extend the current tax rates (they were scheduled to go up next year) for another two years and extend unemployment benefits.  Most importantly for many middle American families, the bill would increase the Alternative Minimum Tax (AMT) patch.  This will keep millions of families from having to pay additional taxes.

This finally gives us more direction from an income tax standpoint and could potentially make the next couple of years great for Roth IRA conversions.  If you have questions about if you should convert, please email me.

Finally, the tax bill would give us clear direction on the Federal Estate Tax (a tax that must be paid at ones death to transfer money to their heirs).  It would increase the exemption amount to $5 million that could go to the next generation free of federal estate tax.

for more complete tax details, check out :

and for estate tax details: