Transcript Document

Presenters:
Marsha Goetting
Joel Schumacher
• Extension Economics
Specialists
• Department of
Agricultural
Economics & Economics
2
Sponsors
This program is made possible by a grant from the FINRA
Investor Education Foundation through a partnership with
United Way Worldwide.
3
Solid Finances
Web site
www.msuextension.org/
solidfinances
4
Future Sessions
Date
Time
Title
April 3
Marsha
Noon
April 17
Marsha
Noon
Wills, Living Wills,
End-of-Life
Registry, Advance
Directives &
POLST
Estate Planning
Tools & Tips:
Avoiding Probate
with Beneficiary
Deeds, PODs,
TODs, and other
Beneficiary
Designations
Location
5
Power of
Attorney, Trusts
and more about
estate planning
March 22, 2012
6
Question A: Have you granted
someone power of attorney?
1.Yes
2.No
7
Question
•
What percent of
Americans age
55 – 64 have a
Durable Power of
Attorney?
8
Question B: % with Durable
Power Attorney age 55 - 64
1.73%
2.38%
3.60%
4.55%
5.29%
9
Durable Power of Attorney
• Age 50 – 54
•
•
•
•
•
Age
Age
Age
Age
Age
55
65
70
75
80
– 64
- 69
- 74
– 79
+
29%
38%
41%
64%
60%
73%
10
Who needs POA?
•Anyone who has
assets that would
need to be managed if
they should become
incapacitated.
11
Incapacitated
•Motorcycle accident
•Car accident
•Alzheimer’s/Dementia
•Alcoholism
•Drug Dependency
12
What is a Power
of Attorney?
•Written, notarized
document in which one
person gives another
power to conduct
certain acts on his/her
behalf
13
Principal:
•Person
granting
the power
14
Attorney in Fact or
Agent:
•Person to whom
the power
is granted
15
Montana Uniform
Power of Attorney Act
• Effective October 1,
2011
•Provisions for
Creation
•Provides Safeguards
16
Forms
• Montana Statutory Power
of Attorney
• Agent’s Certification as to
the Validity of Power of
Attorney and Agent’s
Authority
17
Naming an agent?
• Only the principal can
decide who should
serve as agent
 Must be trustworthy
to fulfill the
responsibilities of POA
18
Avoid Naming an Agent
who
• Ill
• Difficulty managing
money
• Inexperienced with
financial matters
19
Responsibilities of Agent
 Principal should inform
agent what authority
(power) has been
given in the POA form
20
Important Information for
Agent
 Agent’s Duties &
Circumstances
 Potential liability for
any losses caused by
agent’s violations
21
The Montana Uniform Act
provides:
• List of transaction
categories that can be
included in the agent’s
general authority
• Page 2 of MontGuide
22
List of Transaction Categories
• Real property
• Tangible personal property
• Stocks & bonds
• Commodities & options
• Banks & other financial
institutions
23
List of Transaction Categories,
cont’d.
•Operation of entity or
business
•Insurance & annuities
•Estates, trusts & other
beneficial interests
•Claims & litigation
24
List of Transaction Categories,
cont’d.
• Personal & family
maintenance
• Benefits from government
programs
Civil or Military Service
• Retirement Plans
• Taxes
25
Additional Powers
• Create, amend, revoke, or
terminate a revocable
living trust
• Make a gift
• Create or change right of
survivorship
26
Additional powers con’d.
• Waive the principal’s right
to be a beneficiary of a
joint and survivor annuity
 Including survivor benefit
from retirement plan
• Disclaim property
27
Question C: Can an agent
write a will or have a will
written for the principal?
1.Yes
2.No
28
Agent is not permitted to:
• Write a will--no
• Represent the
principal in
court
29
Authority to more than
one person?
• Principal may
designate two or more
persons to act as:
 Coagents
 Use authority
independently
30
Consequences of giving
authority to coagents
• Disagree about
action
• Potential results
• Attorney’s fees
• Court costs
31
Successor Agent
• Principal may designate a
Successor Agent, if the
original agent:
•
•
•
•
•
Resigns
Dies
Becomes incapacitated
Is not qualified to serve
Declines to serve
32
Successor Agent
Authority
• Has same
authority that
was given to the
original POA
agent
33
What makes a POA valid?
• Signed by:
 Principal or
 By another individual
within the principal’s
presence who is directed
to sign the principal’s
name
34
Notarized Form
• Genuine signature
• Acknowledged
signature before
notary public
35
When is a POA effective?
• When it is signed
 Unless the principal
provides instruction
otherwise in special
instructions section
36
Springing Power
• “Springs into”
existence upon the
conditions stated
by principal
37
Question D: Can an agent continue
to make financial decision after the
principal has died?
1.Yes
2.No
38
Can agent make decisions
after principal’s death?
• No! Authority ends at
principal’s death
• Responsibility falls
to personal
representative
39
Does an agent get paid?
• Yes, unless the POA
states otherwise
 Reimbursement of
expenses
 Reasonable
compensation
40
District Court Review
• Agent who is found liable
for breaching duties is
responsible for:
 Restoring its value
 Repayment of attorney’s
fees & court costs
41
Durable Power of
Attorney
• POA in Montana is
considered durable
unless the document
specifically states
otherwise
42
Revoke a POA
• Signing a document
that indicates that
POA is revoked
 “I hereby revoke my Power of
Attorney dated January 12,
2012, naming John Jones as
my agent”
43
Prior POAs
• Should be destroyed
because signing a
new POA does
not automatically
revoke a previous
one
44
Revocation
• Revocation statement
could be added to:
• Special Instruction
Section of POA
45
Financial Entities
• Unless notified of the
POA revocation
• Principal may be
legally bound by
agent’s actions
46
What if a POA was signed before
the Montana Uniform POA Act
became effective on Oct. 1, 2011?
• Still effective if:
 Met requirements
of previous law
47
Question E: Is a POA written in
another state valid in Montana?
1.Yes
2.No
48
Is a POA written in
another state valid in
Montana?
• Yes if,
• Complied with
laws of the other
state
49
Method for Agent to
Prove Authority
• Form
 Agent Certification as
to the Validity of
Power of Attorney &
Agent’s Authority
50
What if Entity Refuses to
Honor POA?
• After presented by
agent, entity is
required to accept the
POA:
• No later than 7
business days
51
Question F: Does Social
Security recognize POAs?
1.Yes
2.No
52
Social
Security
•Does not recognize
power of attorney
for managing a
beneficiary’s funds!
53
Representative
Payee
• Social Security
• Veteran’s Pension
• Railroad Retirement
• Public Benefits
54
Representative
Payee • Contact
appropriate
agency for
application
form &
instructions
55
Representative
Payee
• Social Security
–Report use of benefits
•Form SSA-623
•Form SSA-6230
•Form SSA-6233
56
Representative
Payee Wording
•
Bank Account Title
–(Beneficiary’s name) by
(Your Name), representative
payee
–(Your Name), representative
payee for (Beneficiary’s
Name)
57
Representative
Payee
• Receive & Disburse
funds
• Medical confirmation
that person is unable to
manage benefit
payments required
58
Representative
Payee
• Do not mix
beneficiary’s funds
with your own or
other funds
59
Social Security Booklet
• “A Guide for
Representative Payees”
• Call:
 1-800-772-1213
• Online:
• www.ssa.gov
60
Caregiver Task
• Does a power of
attorney
exist?
–Who has been
given the power?
61
Question G: Do you believe
a power of attorney would
be useful in your situation?
1.Yes
2.No
62
Question H: Do you have a
revocable living trust?
1.Yes
2.No
63
Question I: What percent of
Americans age 50–64 have a
revocable living trust?
1.
2.
3.
4.
5.
6.
7.
72%
63%
57%
46%
33%
25%
19%
64
Living Trusts
• Age 50 – 64
• Age 65 – 74
• Age 75+
19%
25%
29%
65
Why have a trust?
•Avoid probate
•Keep up with the
Jones—every one has
one
•Bad experience
with a will
66
What is a Trust??
•A trust is a legal
entity that holds
title to property for
the benefit of one or
more persons or
entities
67
Types of Trusts
• Revocable
• Irrevocable
• Special Needs
• Testamentary
• A/B
• QTIP
• QDOT
• QPRT
68
Trust name
•Identify
trust by
– name &
– date
69
Naming the trust
•James A. Sims &
Lois R. Sims as
trustees of the
Sims Family
Trust, Dated
October 20, 2011
70
Trustor
•Person who
establishes the
trust
71
Trustee
•Named in trust
agreement
•Manages assets for
designated beneficiaries
72
Beneficiary
•Person to whom
trustee distributes
trust principal or
income during
life or at death
73
Trust Agreement
•
Written document
containing
instructions to
trustee
74
Funding the trust
• Life insurance proceeds
• Checking & savings
accounts
• Stocks & bonds
• Home
• Land
75
Revocable Trust
•
Can change
your mind
about
provisions
76
Assets must be retitled
in name of trust
•Worthless
if do not
transfer
assets to it
77
Irrevocable
Trust
• Can’t
change
anything
78
Testamentary Trust
•Established
by a written
will
79
Why Testamentary
Trust?
•Incapacitated Spouse
–Alzheimer’s
–Dementia
80
Why testamentary
trust?
• Age 18
• Child has right to
his/her
inheritance without
regard to financial
competency
81
Why Testamentary
Trust?
•Minor Children
–Manage assets
until they reach
certain age
82
Why Testamentary
Trust?
•Financially
incapacitated/
incompetent heir
–Can’t manage money
–Addiction problem
83
Distribution of Trust
Income or Principal
•Use percentages
instead of dollar
amount in case
values of assets
change
84
Percentages
•75% to my son,
John Jones
•25% to MSU
Extension
85
Authority given
to trustee
•Distribute annual
income & trust
principal by:
–Discretionary Standard
–Mandatory Standard
86
Discretionary
Standard
Trustee judgment
•Health
•Education
•Maintenance
•Support
87
Trustee Decision
• Chris wants to take
a trip during the
summer to Europe
–“It would be a very
educational
experience,” says
Chris
88
Question J: You are the trustee…will
you provide funds for a trip to
Europe for Chris from the Trust?
1. Yes
2. No
89
Mandatory Standard
•Dictated by
trust instrument
–Distribute at
predetermined date
or occurrence
90
Occurrence
•Upon reaching
certain age
–25 or 30 or ??
•At intervals
•Ages 25, 30, 35?
91
Inheritance?????
•Child who inherits
assets of more
than $2,000
–becomes ineligible
for SSI & other
benefits
92
Special Needs Trust
•For special needs
children who
receive or may
later be entitled to
receive public
benefits
93
Montana
Parents Let’s
Unite for Children
•Montana's Self
Sufficiency Trust
Guide
www.pluk.org
94
Question
•
What is the $$ amount
of equity in your home
that a Montana
Homestead Declaration
(if recorded) protects
against most creditor
claims while you are
alive?
Question K: Amount of home
equity Montana Homestead
Declaration protects?
1.
2.
3.
4.
5.
$250,000
$100,000
$ 60,000
$ 40,000
$ 20,000
96
Question
•
What is the $$ amount the
homestead allowance
protects against creditor
claims after you die under
the Montana Uniform
Probate Code?
97
Question L: Amount of homestead
allowance after death?
1.
2.
3.
4.
5.
$250,000
$100,000
$ 60,000
$ 40,000
$ 20,000
98
Summary
•Homestead Declaration
–$250,000 (living)
•Homestead Allowance
–$ 20,000 (after death)
Question M: What % of
Montanans paid an inheritance
tax 2010?
1. 100%
2. 75%
3. 50%
4. 25%
5. 10%
6.
0%
100
Heirs who paid Montana
inheritance tax in 2011
0%
There is no longer
an inheritance tax in
Montana
101
Question N: What % of a Montanans
deceased person’s estate paid federal
estate tax? (2009)
1. 100%
2. 75%
3. 50%
4. 25%
5. 10%
6.
1%
102
Federal Estate Tax
• 2009 less than
1%,
–8,704 deaths
44 paid
0.005
103
Federal Estate Tax
Exclusions
Year
2009
Applicable
Exclusion
$3,500,000
2010
No estate tax
2011
$5,000,000
2012
$5,120,000
104
Evaluation
•
•
•
•
Usefulness
Sound Quality
Knowledge gain
Pace
Opinion
• Length
• Quality of
Visuals
• Polls
106
Best wishes
as you
proceed with
your estate
planning!
Marsha