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By wswendson, on December 16th, 2011
As of December 9, 2011, parents can name agents in a power of attorney who will have custody of their children if something happens to them. Good news. It addresses a long-standing gap in the tools available to help parents plan for their children.
What are we talking about? Say you and your spouse go out for dinner. You leave your children with a thirteen old babysitter. You told her that you will be back at 10, but you don’t return because you were in a car accident and are unconscious. What happens next? The sheriff goes to you to your home, tells the babysitter what happened, sends her home, and takes the children to put them in the foster care system. Ugh! Who wants their children in the foster care system if that can be avoided.
Until the adoption of the new law, we prepared Powers of Attorney Loco Parenti designating other family or friends as agents to take care of the children in situations like these. Whether sheriffs would honor them was an open question because there was no statutory authority. We were hoping that the official looking document along with a sheriffs hesitancy of putting children in foster care and some advance planning for having the agents on site to discuss the issues with the sheriff would achieve the desired result. Now we have statutory authority
The new law allows parents to draft a power of attorney (POA) delegating full or partial parental authority to a third person without court or social services involvement. The parents will maintain full control over the arrangement. They can revoke or change it any time.
There are limits to the use of a Parental Power of Attorney under this bill:
- The POA delegation may not exceed one year.
- The POA must be properly executed. The bill does not specify what constitutes proper execution, but it does provide a POA form, which, if substantially conformed to, is considered properly executed.
- The parent executing the POA document must have legal custody and both parents must sign if both parents have legal custody.
There are some cautions:
- With or without a facilitating organization, children may in some situations be legally placed with willing but underprepared or incapable caregivers under a Parental POA document. Of course, you chose them. The caution is to choose agents wisely.
- At a minimum, it would be wise to run independent CCAP and sex offender registry checks on proposed caregivers.
- While the power of attorney form in the law may permit the parental agent to obtain medical care for the child, the form does not include a release giving the caregiver access to medical records. In order to avoid potential problems, consents for release of medical information should be considered in tandem with the parental POA document.
- Like all POAs, the agent ceases to have authority when the parents die. Then guardian will have to be appointed by a court. Your Wills should nominate guardians.
By wswendson, on December 15th, 2011
Anyone who has recently applied for a mortgage knows that lenders are already looking much more closely at your financial affairs. But soon, they’ll be able to easily delve into the deepest recesses of your financial life, accessing information that never before appeared on your credit report.
A company called CoreLogic introduced a new type of credit file, which is based on the giant repository of consumer data it maintains on just about everything that most of the traditional credit bureaus do not: missed rental payments that have gone into collection, any evictions or child support judgments, as well as any applications for payday loans, along with your repayment history.
The new report also includes any property tax liens and whether you’ve fallen behind on your homeowner’s association dues. It may reflect that you now owe more than your house is worth or if you own any other real estate properties outright. It also is supposed to catch mortgages made by smaller lenders that the big credit bureaus may have missed. Next year, it will begin to evaluate whether to include even more data, including your payment history on utility and cellphone bills.
The idea, CoreLogic says, is to provide lenders with more details about prospective borrowers, supplementing what they already know through the more traditional credit reports furnished by the big three credit bureaus, Equifax, Experian and TransUnion. Moreover, CoreLogic has formed a partnership with FICO — the provider of one of the most popular credit scores used by lenders — which will formulate a new consumer score based on the new data.
While the CoreScore credit report became available to all types of lenders, the actual score, which will not be ready until March, 2012. An estimated 100 million American consumers will have a CoreScore credit report as compared to more than 200 million people have traditional reports from the big three bureaus.
All of this worries consumer advocates like Chi Chi Wu, a staff lawyer at the National Consumer Law Center, who questioned the type of information being fed into the new files. When it comes to utilities, she said “there is evidence that all it could do for a substantial portion of low- and moderate-income consumers is make their credit files worse.” That’s because some consumers tend to fall behind on their bills during the more expensive winter months, but typically catch up later in the year. And sometimes, she said, people don’t pay their rent for very good (and legal) reasons; perhaps their landlord failed to correct a vermin or hot water problem. Will that be fully and fairly reflected on the report?
Since CoreLogic is now subject to the Fair Credit Reporting Act, which governs consumer reporting agencies, you will be able to dispute any information that you believe is incorrect. But if the data is accurate, albeit unflattering, it will trail you for a long time. Information culled from public records stays on your report for about seven years (or 10 years for bankruptcies).
If you do find any inaccuracies — and the big three bureaus have been known to make their fair share of mistakes, including confusing the records of people with similar names — CoreLogic said that you can file a dispute (instructions are on its Web site). “Data dispute and correction processes are in place to ensure that any errors can be quickly and accurately resolved,” said Tim Grace, senior vice president of product management for CoreLogic. “In fact, one of the significant consumer benefits of the report is the availability of formerly disparate credit behavior data on a unified report that consumers can access, validate and correct.”
You should probably check the new credit report for any errors, so you’ll want to get a copy to review. Within a year, the new report will be available at AnnualCreditReport.com, where consumers are entitled to one free copy annually. That same rule applies to each of the big bureau’s reports on the site currently. Until the new report can be requested online, you can call 877-532-8778 to get a copy.
So while the credit bureaus may not yet know every last detail about your financial life, you should assume that they are watching.
By wswendson, on December 13th, 2011
Effective January 1, 2012, the standard mileage rates for the use of a car (including vans, pickups, and panel trucks) will be:
- 55.5 cents per mile for business miles driven (same rate for second half of 2011);
- 23 cents per mile for medical or moving purposes (currently, 23.5 cents per mile); and
- 14 cents per mile driven in service to a charitable organization (same rate as 2011).
An employer can reimburse employees for the use of their car at a rate that doesn’t exceed 55.5 cents per mile for employment-connected business mileage during 2012. The reimbursement will be treated as a tax-free. The employee must substantiate the time, place, business purpose, and mileage of each trip.
By wswendson, on December 12th, 2011
Code Sec. 170(f)(3) bars an income tax deduction for a charitable contribution of an interest in property of less than the taxpayer’s entire interest in the property. There is an exception for the donation of a qualified conservation easement on real property to a qualified organization exclusively for conservation purposes.
The Audit Technique Guide identifies a number of issues frequently associated with the determination of whether a donation of a conservation easement is “qualified”:
- Failure to meet charitable contribution rules;
- Noncompliance with substantiation requirements;
- Inadequate documentation or lack of conservation purpose;
- Failure to provide the donee organization with a right to proceeds in the event of termination;
- Use of improper appraisal methodologies and overvalued conservation easements; and
- Failure to report income from the sale of state tax credits.
Examiners are told to look for a number of red flags, including:
- Incomplete or missing information;
- Missing appraiser or donee acknowledgments;
- Inconsistent dates when compared to other documents;
- A short time period between the acquisition of the property and the donation date;
- High valuation of the easement in relation to the basis of the underlying property or the total acreage of the underlying land;
- Use of an appraiser who does not generally perform appraisals where the easement is located; and
- Existence of any pre-existing restrictions on the property such that granting the easement did not impose any new restrictions causing any loss in value.
Examiners are also to look for the following omissions each of which may be a basis for disallowing the charitable contribution:
- Lack of the appraiser’s or donee’s signature on the gift tax return and required attachments; and
- Failure to attach a qualified appraisal to the gift tax return.
By wswendson, on December 5th, 2011
Last week, Wisconsin announced the 2012 Cost of Living Adjustments, which are vital for anyone who is doing Title 19 Planning:
Community Spouse Asset Share (CSAS) Maximum: Increased to $113,640
Income Allocation: Increased to $2,841
Community Spouse Allocation: The maximum allocation is the Lesser of $2,841 or $2,451.67 plus excess shelter allowance (excess shelter allowance means shelter expenses above . . . → Read More: Cost of Living Adjustment – Effective January 1, 2012
By wswendson, on November 29th, 2011
Market volatility may be tough on the nerves, but it could be a boon for families looking to shelter assets from estate and gift taxes. This is especially true when combined with two other factors: (1) Interest rates are very low; and (2) Congress has increased the federal gift tax exemption to $5 million through 2012.
Here . . . → Read More: Volatility and Estate Planning
By wswendson, on November 23rd, 2011
Upon the death of their spouse, widows and widowers are needlessly losing money. Here are some of the most common mistakes that widows and widowers make while sorting out their inheritance:
Paying unnecessary penalties.
IRAs and retirement plans often represent a large portion of people’s estates. The estate and income tax rules are tricky and the financial markets . . . → Read More: Survivors’ Biggest Mistakes
By wswendson, on November 11th, 2011
On November 4, 2011, Governor Scott Walker signed legislation that conforms Wisconsin’s income tax treatment with the federal income tax treatment of employer-provided health benefits to adult children of employees. This welcomed change is retroactive to January 1, 2011. Now, for federal and Wisconsin income tax purposes, health benefits provided to an adult child of an . . . → Read More: Wisconsin Adopts Federal Income Tax Treatment Providing Tax-Free Health Benefits To Certain Adult Children
By wswendson, on June 23rd, 2011
You should not trust your instincts, but check things out with an attorney before acting. Sometimes, it just takes a phone call.
A recent Wisconsin Law Journal article gives a good example. A mother got a loan from a bank which was guaranteed by her son. Later, in contemplation of bankruptcy, she stopped . . . → Read More: Who said the law is intuitive?
By wswendson, on May 3rd, 2011
Trust protectors (aka Trust Advisers) have long been used in British Commonwealth countries, originating with offshore asset protection trusts. With these trusts, their role was limited mostly to overseeing the foreign trustee and to make sure the trust maker’s intent was fulfilled.
Today, trust protectors are increasingly being used with trusts that are located here in . . . → Read More: Provide Flexibility by Adding Trust Protectors to Your Estate Planning
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