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October 9, 2003 Saugus Advertiser
A FEW SIMPLE THINGS FOR SENIORS
This week I’d like to talk about a couple of legal documents that every person should have and how you or someone you know can get FREE MONEY, up to $810!
The first of the two basic estate-planning documents that you should seriously consider adding is the durable power of attorney (DPOA). The agent under a DPOA is given certain powers to handle your financial affairs. Generally, these are needed when a person can no longer handle their financial affairs. If someone becomes incapacitated the agent would have the power to transfer assets pursuant to a sound estate plan.
Many people think that because their assets are held jointly that they do not need a DPOA, “because there is another name on the account”. But this in fact is not true. If you own real estate, both owners must sign the deed (or an agent under a DPOA). A power of attorney is also needed to transfer life insurance policies, sell stock or mutual funds and obtain medical records.
Power of attorney forms come in many types. There are LIMITED DPOA’s that are specifically for one certain financial transaction. GENERAL DPOA’s cover most everything. SPRINGING DPOA’s take effect only upon the person becoming incompetent. You should seek legal advice to determine which is the right one or ones for you.
Another strong consideration of why you should have a properly drafted DPOA is that in the event you were incapacitated it would eliminate the need for a court appointed guardian to transfer any assets. This is a costly and time consuming process. Without a DPOA, a guardian would have to be appointed and seek the approval of the court to transfer assets, even if to the spouse! This ability to avoid guardianship also applies to HEALTH CARE PROXIES.
Health Care Proxies are documents that allow you to name another to make your medical decisions for you if you are unable to do so yourself. There is something else called a Living Will. A Living Will is a statement of what your medical wishes are in the event you become ill.
In 1990, Massachusetts established its preference for the Health Care Proxy over the Living Will when it codified the Health Care Proxy Law. There is no comparable law in Massachusetts for the Living Will so we always recommend a Health Care Proxy and never prepare a Living Will. Even though Massachusetts does not require notarization of the signatures, we notarize our health care proxies in case they are used in another state that might require it.
To summarize, you need both a health care proxy and a durable power of attorney. If you are on a budget, you can get a health care proxy for free at any hospital and most doctor offices. They are simple to complete and require only 2 witnesses. For those with very little assets a DPOA may not be necessary. For those with real estate and other assets that would require the principal’s signature to transfer, a DPOA is highly recommended.
Now, about that FREE MONEY. If you or someone you know hasn’t filed Massachusetts income taxes because they did not make enough to file they might be entitled to the “Circuit Breaker Credit”. This started in 2001 and if you qualify you could even now file for 2001, 2002 and soon, 2003.
This is a tax credit for taxpayers age 65 or older prior to the end of the tax year. For 2003 your total income must be below $43,000, if single or $64,000 if married. If you own a home its assessed value must be below $432,000. This credit is also available if you rent.
Renter’s Credit – The credit is equal to the amount by which 25% of the rent exceeds 10% of your total income. Maximum credit is $810.
Homeowner’s Credit – The credit is equal to the amount by which the real estate tax payments plus one-half of the water and sewer exceeds 10% of the total income. The maximum credit is $810.
If the only reason that you are filing income tax returns is to claim the credit, we will prepare the return for you at no charge.