Course: TAX 6405-Gift, Estate, and Trust Taxation
Table of Contents
* Power of attorney
* Joint ownership of assets
* Lifetime gifts
* Long term care insurance
You may have heard a phrase like, “70 is the new 50.” There are large numbers of seniors living into their 80s and 90s. Estate taxation and planning has become a bigger concern, especially for baby boomers. There is a wide range of laws regarding the elderly and disabled. The law of the elderly and disabled has become more complex in recent years. Lawyers and financial planners who specialize in elder law assist with matters affecting the autonomy of elderly people, personal and financial matters, matters regarding wills, trusts, healthcare directives, power of attorney, to name a few. As with most problems in the areas of estate and financial planning, advance planning can help resolve many of the financial and tax problems that the elderly and disabled may be faced with. Estate is everything that is involved with one’s money and property. Estate planning will differ according to a person’s family needs and personal goals. There are several “tools” the elderly could use to address issues like: protecting assets; limiting estate taxes; making sure wishes of who will inherit the property and money are fulfilled; leaving an inheritance without giving up control and minimizing estate taxes; becoming incapacitated or seriously ill. Example: After Elvis Presley died, his estate was worth over 10 million dollars but after probate, all that was left for the family was a little over 2 million which shows that no estate planning took place and the estate was taxed heavily. This paper will discuss some of the “tools” that help in planning estate for the elderly in order to minimize estate taxation. Some of the “tools” discussed in this paper are: Power of Attorney; Trusts, Wills; Joint Ownership of Assets; Lifetime Gifts; Long-Term Care Insurance. Power of Attorney
Power of Attorney can be used as a tool in estate planning. "Power of Attorney" is a legal instrument which grants another person or entity the authority to act as one’s legal representative, thus binding together legal and financial decisions on one’s behalf. The two basic types of powers of attorney are: "general" power of attorney, which is unlimited in scope and duration, and allows the named individual to act as one’s legal representative in dealing with financial matters until such time as it is revoked. A general power of attorney is usually used to allow your agent to handle all affairs during a period of time when the person is unable to do so. For example, if someone is traveling out of the country. It might be advisable to include a general power of attorney as part of an estate planning to protect the person in case the need to handle his financial affairs arises. “Specific" power of attorney sets limits upon the representative, and can restrict the scope of that person's powers. For example, the person could be given the power to perform financial transactions from a specific checking account. Either type of power of attorney can specify a date after which the power of attorney will no longer be valid. Health Care Power of Attorney - allows the person to appoint a person or an agent to make health care decisions on their behalf if they become incapacitated. This is a document that gives the designated person or agent the authority to make health care decisions on behalf of the elderly person if they become unconscious, mentally incompetent, or otherwise unable to make decisions. In many states wishes regarding whether to receive "life-sustaining procedures" if the person becomes permanently comatose or terminally ill can be addressed in the Health Care Power of Attorney document. This will help the agent to know the person’s wishes as he or she makes...