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August 23, 2007
A FEW SIMPLE THINGS
For seniors on a fixed income, going to a high priced lawyer to get their affairs in order may not be affordable, but here are three important things you can do without breaking the bank.
The first two things are the Durable Power of Attorney and the Health Care Proxy. They are important because they could eliminate the need for a guardian if you were ever to become incompetent. These two documents will allow your family to make decisions concerning your health, and assets, instead of some judge at your local probate court during a guardianship hearing.
DURABLE POWER OF ATTORNEY - 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 that are needed when a person can no longer handle their financial affairs. If someone becomes incapacitated, the agent will have the power to transfer assets pursuant to a sound estate plan.
Many people think that because their assets are held jointly they do not need a DPOA, “because there is another name on the account”. But this 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.
HEALTH CARE PROXIES - These are documents that allow you to name another person to make your medical decisions 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. It is for this reason that 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.
MASSACHUSETTS HOMESTEAD - There is absolutely no reason for anyone that owns their own home not to have a homestead. The homestead protects your home for up to $500,000 in the event you are ever sued. For married couples who are over age 62 or disabled, the law allows you to stack your homesteads. This means that you are able to both protect up to $500 thousand for a total of $1 million.
The homestead may only be filed on your residence. It does not protect vacation homes and is not a replacement for homeowners insurance. You should also be aware that it does not provide any protection against nursing home costs.
If you are adventuresome, you could take a trip to your local registry of deeds, fill out and file your own homestead, and only have to pay a $35 filing fee. Or, you could have your local attorney handle this simple matter. The fee should be nominal.
This article gives general information and not specific advice on individual matters. Persons wanting individualized advice on matters discussed should contact an advisor experienced in those matters. To the extent this article provides information on legal matters, it is based on law in effect in Massachusetts on the date of posting (laws in effect in other states are often quite different).
Ronald H. Surabian is a CPA and attorney who works at the Elder Law Center in Saugus, Massachusetts. He also holds Masters in accounting and a Masters in tax law. He currently serves on the board of directors of the Massachusetts Chapter of the National Academy of Elder Law Attorneys. If you have any questions please call me at the Elder Law Center, One Essex Street, Saugus, MA 01906 (781)233-4444. To view this or any prior article, please visit our web site at www.elderlawcenter.org