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What is a Statutory Gifts Rider & Why is it Needed?

The Statutory Gifts Rider or SGR, is a modification to a power of attorney that allows the agent to give gifts.  Without the Statutory Gifts Rider the agent under a power of attorney is only allowed to give gifts totaling $500 for the year for personal and family maintenance. The Statutory Gifts Rider may be used by an agent for both Medicaid and Estate tax planning purposes. Your agent must act at the instruction of the principal or act in the principal’s best interest. Due to the financial impact a Statutory Gifts Rider can have, it needs to be witnessed by two disinterested witnesses.

The Different Parts of the Statutory Gifts Rider (SGR)

Part A of the Statutory Gifts Rider allows the agent to give gifts up to the federal gift tax exclusion ($14,000) to the principal’s spouse, children, more remote descendants, and parents.   Double the gift tax exclusion ($28,000) can be given as gifts if a spouse agrees to the split gift treatment.

Part B is a modifications section to the SGR.  It allows for the principal to specify if they would allow gifts to be larger or small than the gifts tax exclusion.  In the SGR that Ira K. Miller & Associates prepares, we often give the agent discretion to make gifts for the purpose of gift, estate tax, or Medicaid planning for the principal.

Part C of the SGR allows for the agent to give gifts to himself or herself and specifies what gifts may be given.

Part D is acceptance by third parties and Part E is the signature of the Principal and Acknowledgement.

Daredevil Dan Example

Daredevil Dan over the course of his daredevil career experienced many concussions. Due to this, he has become forgetful and can no longer take care of his finances. He also has begun wandering the neighborhood at night and can no longer find his way home. His son, Joseph, has lived with Daredevil Dan in his house for the last 3 years and helps his father get to doctors appointments and helps him with all aspects of daily living. Eventually it becomes too hard for Joseph and Joseph decides to put Daredevil Dan in a nursing home.

Daredevil Dan owns a home in his name alone and bank accounts less than the Medicaid limit.  Joseph is the agent under Daredevil Dan’s power of attorney. Daredevil Dan receives Medicaid while in the nursing home. What can be done to preserve Daredevil Dan’s home from a Medicaid lien being placed on it?

Example 1-  There is a Statutory Gifts Rider to the Power of Attorney

Joseph will be able to gift himself the house as caretaker child. No lien would be placed on the house and the transfer would be considered a Medicaid Exempt transfer and Daredevil Dan would continue on Medicaid.

Example 2- There is No Statutory Gifts Rider

Joseph could not gift the house to himself. He does not have authority under the power of attorney as the house is a gift of more than $500. In order to transfer the house to himself as caretaker child, a costly guardianship proceeding would need to be commenced.

Example 3- Joseph does nothing

If Joseph does nothing a Medicaid lien will be placed on the home. When the house is sold Medicaid will recover from the sale of the house the money they expended on behalf of Daredevil Dan.

To learn more powers of attorney, statutory gifts rider, or Medicaid planning contact Ira K. Miller & Associates.

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What does the New York Jets all time sack leader have to do with Elder Law?

Recently Mark Gastineau, the New York Jets all time sack leader, told the public that he was diagnosed with dementia, Alzheimer’s disease, and Parkinson’s disease. Alzheimer’s disease is an awful disease that affects the brain and destroys memories and other important mental functions.  He may not be able to recall family members or how to get dressed. It is an absolutely awful and debilitating disease.  Alzheimer’s disease is a progressive disease and will eventually render Mark Gastineau incapacitated. There are two ways of dealing with incapacity. First planning in advance through advanced directives and second through a guardianship.

Due to this incapacity, Mark will have trouble taking care of his financial affairs and issues giving the doctor direction as to his treatment.  With some basic estate planning, Mark could plan for this eventual incapacity.  By executing a power of attorney and health care proxy a full guardianship can be avoided. These documents are called advanced directives.  A power of attorney will allow an agent of your choice to take care of your financial matters.  A health care proxy allows an agent to make medical decisions for a person if they are unable to give a doctor direction.

If there are no advanced directives in place, a court hearing called a guardianship may need to be commenced to help Mark with his financial affairs and medical decisions.   A guardianship may be commenced by a loved one or a friend.  The person commencing the hearing is called the petitioner. The petitioner must prove by clear and convincing evidence that a person alleged to be incapacitated (AIP) has functional limitations and is in fact incapacitated and in need of a guardian.   To learn more about guardianships or have any questions, contact Ira K. Miller & Associates.

The Power of the Power of Attorney

A power of attorney is a very interesting and possibly powerful document. The document gives a person you choose, your agent, the power to act for you.  The powers given to the agent can be incredibly broad or very specific. For instance, you can narrowly tailor an agent’s power to act only for real estate transactions. You can go as broad as to give an agent power to gift away all a person’s assets for Medicaid planning.   That person may even be given authority to make gifts to themselves.   Your agent should be a person that you trust implicitly.  A power of attorney is a very important estate planning tool and can possibly prevent the need for a guardianship.

Powers of attorney can be durable or springing. A durable power of attorney will continue through a person’s incapacity.  A springing power of attorney, ‘springs’, into action when a person becomes incapacitated.  The problem with a springing power of attorney is, who decides that you are incapacitated? Many springing power of attorneys require that two or more certified doctors declare you to be incapacitated. This can become an issue due to HIPAA violations and can result in costly court hearings.  A durable power of attorney is recommended.

Your agent is under a fiduciary responsibility to act in your best interest.  The agent should also keep records and receipts of all payments through the power of attorney and needs to keep the property separate and distinct from their own assets. Ira K. Miller & Associates has over 35 years of experience within estate planning & power of attorneys. For further questions or to request a consultation please feel free to give us a call at (718) 875-2191 or fill out an online contact form.