Ruggiero Law Blog

Monday, July 27, 2020

A General Durable Power of Attorney is a key document to have during these challenging times

 

Married couples will often have legal estate documents prepared together.  Such documents may include a will, leaving all property to the surviving spouse and/or the couple’s children, and a heath care proxy (sometimes known as a living will) to direct the spouse how to handle medical issues if one spouse becomes incapacitated.   However, another estate document may be beneficial for spouses -- a durable power of attorney.  

Now, more than ever, granting a durable power of attorney to your spouse is critical. With cases of the novel coronavirus on the rise, we are reminded that it is no ordinary disease. It can potentially ravage the body and leave one incapacitated and unable to make crucial financial and business decisions. However, this is where a durable power of attorney comes into play and ensures that you are prepared for this reality.

What is a durable power of attorney?

A durable power of attorney (POA) is a power of attorney given in the event of disability (whether mental or physical) by one spouse and directs the other spouse how to handle certain business or monetary activities detailed in the agreement.  Some instances of disability could include mental illness, physical illness, advanced age, drug use, alcoholism, confinement or disappearance.  

While state law may grant spouses certain rights to act for the other spouse, some activities may or may not be covered.  A power of attorney also helps spouses who may have separate ownership of property by giving the spouse the right to act on behalf of the incapacitated spouse. 

Some examples of business decisions in real estate matters where the well spouse is not a co-owner (perhaps because the real estate was a premarital asset or for other tax reasons) and can act for the incapacitated spouse are:

  • If the incapacitated spouse owns rental property, the other spouse can collect rent
  • To pay real estate taxes for properties that may not be in both spouses’ ownership
  • To handle issues related to any mortgages
  • To take out property insurance

Some other general business-related functions a durable power of attorney can include are: 

  • To sue on the collect of a debt
  • To file for bankruptcy
  • To write checks and do banking transactions
  • To sell stock or other securities
  • To file tax returns
  • To manage retirement accounts
  • To borrow money
  • To make loans
  • To make charitable donations
  • To hire attorneys, accountants or other professionals

In the event state law did not allow a spouse to do any of the functions described above for its incapacitated spouse, a durable power of attorney signed by the incapacitated spouse before the disability (and notarized for validity) can come in handy in a family emergency. 

 


Friday, July 10, 2020

New SECURE Supplemental Needs Trusts


Unique Planning Opportunity for Disabled or Chronically Ill Beneficiaries 

There is great news for clients with certain family members or other beneficiaries – this year brought with it a huge change in the law that benefits beneficiaries who are disabled or chronically ill. The Setting Every Community Up for Retirement Enhancement (SECURE) Act was integrated into the Further Consolidated Appropriations Act of 2020.  The SECURE Act has been big new in the special needs planning community, as it carved out special considerations with regard to inheriting retirement accounts for those beneficiaries who are classified as disabled or chronically ill. 

Before the change in the law, almost any individual could inherit a retirement account and stretch the distributions from that account over their life expectancy.  That would allow the funds to be able to sit in that tax-deferred account and accumulate wealth, with the exception of a required amount that must be distributed each year.
Read more . . .


Friday, June 26, 2020

Starting a Home-Based Business?

Operating a home-based business can result in reduced stress and lower expenses. By combining your home and office into a single location, you can roll out of bed, make breakfast and a cup of coffee, and then walk across the hall to your office to get on with the day – no more commuting to and from work. If you have a family, a home-based business can mean more time with your kids and significant other. In addition to lower stress and more family time, a home-based business can also provide a financial benefit. By combining your home and your office, you’re eliminating the additional cost of leasing office space. Despite the many benefits, home-based businesses aren’t for everyone. For those who believe they will benefit from a home-based business, this post will provide an overview of what you need to know.

What is a home-based business?

A home-based business is any business in which the primary office is located in the owner’s home, regardless of whether the owner owns or rents the home. For many startups and family businesses, the home-based business model is ideal.

Who can have a home-based business?

Anyone! Home-based businesses aren’t just for startups and family businesses – they’re for everyone who earns money from their own enterprise. Some examples of professionals ideally suited for a home-based business are photographers, freelance journalists, travel agents, real estate agents, graphic designers, and any other profession where you are the owner of the enterprise.

However, some municipalities and neighborhoods have restrictions against home-based businesses. Similarly, some leases prevent the leased residence from being used as a home-office. Before jumping into a home-based business, make sure to consult a knowledgeable attorney to determine whether your plans would violate applicable law.

What are the benefits of having a home-based business?

As identified above, a home-based business can reduce stress and alleviate financial expenditure. By essentially eliminating your commute, you can free up extra time during the day for other activities. Many professionals face commute times in excess of 30 minutes each way. By eliminating that commute, you can get back an hour each day to exercise, read, relax, and spend time with your family. Similarly, by merging your home and work, you’re able to reduce the amount you spend as you no longer have to pay for office space outside of your home.

Another benefit of a home-based business that attracts many professionals is the tax advantage. By utilizing a home-based business, you can deduct a portion of your home’s expenses, such as mortgage interest, utilities, repairs and maintenance, and property taxes, against your business income. By utilizing this deduction, you can significantly reduce your taxable income which can result in thousands in tax savings.

What are the concerns with a home-based business?

As identified above, a home-based business can cause issues depending on local laws and any applicable leases. However, the issue that most business owners struggle with is the isolation of always being at home, or the commingling of home life and work life causing unexpected stress.

If you’re interested in operating a home-based business, it’s essential to speak with an experienced business attorney to help guide you through the process.

 


Tuesday, June 9, 2020

Do I just need a Will?

Important Issues to Consider When Setting Up Your Estate Plan

Often estate planning focuses on the “big picture” issues, such as who gets what, whether a living trust should be created to avoid probate and tax planning to minimize gift and estate taxes. However, there are many smaller issues, which are just as critical to the success of your overall estate plan. Below are some of the issues that are often overlooked by clients and sometimes their attorneys.

Cash Flow
Is there sufficient cash? Estates incur operating expenses throughout the administration phase. The estate often has to pay state or federal estate taxes, filing fees, living expenses for a surviving spouse or other dependents, cover regular expenses to maintain assets held in the estate, and various legal expenses associated with settling the estate.

Taxes
How will taxes be paid? Although the estate may be small enough to avoid federal estate taxes, there are other taxes which must be paid. Depending on jurisdiction, the state may impose an estate tax. If the estate is earning income, it must pay income taxes until the estate is fully settled. Income taxes are paid from the liquid assets held in the estate, however estate taxes could be paid by either the estate or from each beneficiary’s inheritance if the underlying assets are liquid.

Assets
What, exactly, is held in the estate? The owner of the estate certainly knows this information, but estate administrators, successor trustees and executors may not have certain information readily available. A notebook or list documenting what major items are owned by the estate should be left for the estate administrator. It should also include locations and identifying information, including serial numbers and account numbers.

Creditors
Your estate can’t be settled until all creditors have been paid. As with your assets, be sure to leave your estate administrator a document listing all creditors and account numbers. Be sure to also include information regarding where your records are kept, in the event there are disputes regarding the amount the creditor claims is owed.

Beneficiary Designations
Some assets are not subject to the terms of a will. Instead, they are transferred directly to a beneficiary according to the instruction made on a beneficiary designation form. Bank accounts, life insurance policies, annuities, retirement plans, IRAs and most motor vehicles departments allow you to designate a beneficiary to inherit the asset upon your death. By doing so, the asset is not included in the probate estate and simply passes to your designated beneficiary by operation of law.

Fund Your Living Trust
Your probate-avoidance living trust will not keep your estate out of the probate court unless you formally transfer your assets into the trust. Only assets which are legally owned by the trust are subject to its terms. Title to your real property, vehicles, investments and other financial accounts should be transferred into the name of your living trust.
 


Wednesday, May 13, 2020

Why Advance Directives are Important Now - Webinar today 5.13@1:30


 

As a result of the COVID- 19 pandemic, you may be reflecting on your health and the health of your family, especially that of an elderly family member. By having a healthcare power of attorney in place, you have an agent designated to make healthcare decisions for you in the event of incapacity due to illness or accident. Jim Ruggiero, Esq. will discuss advance directives, the recent law changes in PA, how to make the best decisions in selecting an agent, and when to provide legal documents to medical professionals.

Library: Phoenixville Public Library Zoom video
Registration Ends: 5/13/2020 at 12:00 PM

Other Information:
This event is free and open to the public, and will take place online via Zoom.
Read more . . .


Tuesday, April 28, 2020

Preparing for a virtual conference with an Estate Planning Attorney


Preparing to Meet With an Estate Planning Attorney

A thorough and complete estate plan must take into account a significant amount of information about your assets, your family, your property, and your wishes during and after your life.  When you make your first appointment with an estate planning attorney, ask the attorney or the paralegal if they can provide a written list of important information and documents that you should bring to the meeting.  

Generally speaking, you should gather the following information before your first appointment with your estate planning lawyer.

Family Information
List the names, birth dates, death dates, and ages of all immediate family members, specifically current and former spouses, all children and stepchildren, and all grandchildren.

If you have any young or adult children with special needs, gather all information you have about their lifetime financial needs.
Read more . . .


Wednesday, April 15, 2020

National Healthcare Decisions Day - April 16

National Healthcare Decisions Day exists to inspire, educate and empower the public and providers about the importance of advance care planning. During the Covid-19 heath crisis - now more than ever having a Healthcare Power of Attorney is critical.  At Ruggiero Law we encourage you take the following actions:

  • Select a healthcare decision maker
  • Have a HIPPA Release and Healthcare Power of Attorney prepared
  • Share your wishes with your family and encourage them to prepare
  • Submit a copy of your documents to your doctor(s) especially if you have a chronic health condition
  • Have a hospital 'go bag' prepared
  • Update or utilize our Legal Vault service

 

 

 


Read more . . .


Friday, March 27, 2020

Information for Businesses - Covid-19

Business owners face many challenges during the coronavirus pandemic.

Chester County PA has comprised a comprehensive resource directory on their website.


Read more . . .


Wednesday, January 8, 2020

Costs Associated with Dying without a Will


Costs Associated with Dying Without a Will

When someone dies without a will, it is known as dying intestate.  In such cases, state law (of the state in which the person resides) governs how the person's estate is administered. In most states, the individual's assets are split -- with one third of the estate going to the spouse and all surviving children splitting the rest. For people who leave behind large estates, unless they have established trusts or other tax avoidance protections, there may be a tremendous tax liability, including both estate and inheritance tax.

For just about everyone, the cost of having a will prepared by a skilled and knowledgeable attorney is negligible when compared to the cost of dying intestate,  since there are a number of serious consequences involved in dying without a proper will in place.
Read more . . .


Friday, September 13, 2019

What is a Revocable Living Trust?

There are many benefits to a revocable living trust that are not available in a will.  An individual can choose to have one or both, and an attorney can best clarify the advantages of each.  If the person engaged in planning his or her estate wants to retain the ability to change or rescind the document, the living trust is probably the best option since it is revocable. 

The document is called a “living” trust because it is applicable throughout one's lifetime.  Another individual or entity, such as a bank, can be appointed as trustee to manage and protect assets and to distribute assets to beneficiaries upon one's death. 

A living trust will also protect assets if and when a person becomes sick or disabled.  The designated trustee will hold “legal title” of the assets in the trust.  If an individual wants to maintain full control over his or her property, he or she may also choose to remain the holder of the title as trustee. 

It should be noted, however, that the revocable power that comes with the trust may involve taxation. Usually, a trust is considered a part of the decedent’s estate, and therefore, an estate tax applies.  One cannot escape liability via a trust because the assets are still subject to debts upon death.  On the upside, the trust may not need to go through probate, which could save months of time and attorneys' fees. 

The revocable living trust is contrary to the irrevocable living trust, in that the latter cannot be rescinded or altered during one's lifetime.  It does, however, avoid the tax consequences of a revocable trust.  An attorney can explain the intricacies of other protections an irrevocable living trust provides. 

Anyone who wants to keep certain information or assets private, will likely want to create a living trust.  A trust is not normally made public, whereas a will is put into the public record once it passes through probate.   Consulting with an attorney can help determine the best methods to ensure protection of assets in individual cases.   


Wednesday, August 14, 2019

What is a Power of Attorney?

A power of attorney is an estate planning document that has a variety of uses. There are several types of these documents available, and each one performs a slightly different function. One or more of these plans may be a good idea to include as part of your estate plan.

What is a Power of Attorney?

A power of attorney gives another person permission and authority to make decisions regarding various aspects of your life if you can’t make those decisions yourself or if you just want to hand over control to a friend or loved one for any other reason.

A power of attorney gives someone else, who does not have to be an attorney, the ability to make decisions for you. You are essentially authorizing this other person to act on your behalf either generally or if certain conditions are met.

You must complete a document to give this power to someone else. This document may need to be notarized or go through another type of authentication process.

Types of Powers of Attorney

Several kinds of powers of attorney may be useful for your estate plan. These often overlap in many circumstances.

  • General Power of Attorney. This power of attorney is the most extensive option available. It gives the agent broad authority to make decisions and take action on your behalf. These are often used in situations where you become incapacitated or you are unavailable for any other reason. It is crucial that you trust the person you are granting this power to because this type of document can be prone to abuse.
  • Limited or Special Power of Attorney. This document applies to only very specific aspects of your life. For example, you may want to grant someone control over a property to maintain and manage it while you are out of the country. A document that fulfills this purpose may be limited in both timeframe and scope.
  • Durable Power of Attorney. Powers of attorney are generally only valid as long as you have mental capacity. However, a durable power of attorney will still be active if you lose your mental capacity. These can either remain in effect, or they can become active when you can no longer manage your own affairs.
  • Springing Power of Attorney. This type document only “kicks in” if certain conditions are met. The most common example is one where you lose mental capacity, and you have arranged for a loved one to take care of your affairs if this happens.
  • Healthcare Power of Attorney. A healthcare power of attorney gives someone the authority to make your healthcare decisions if you are disabled due to illness or an accident. This person will provide doctors with permission to operate, for example, and they may even make the decision of whether to “pull the plug” as well. It is critical that you let this person know your expectations regarding how you want your healthcare to move forward in these situations.

Someone who creates a power of attorney must be competent at the time to do so. That means that planning ahead is vital to creating a valid, legal power of attorney document.  

 


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