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Things to Think About When Granting Someone Power of Attorney

Even if it’s just to prepare for a certain eventuality, granting someone power of attorney is a decision that shouldn’t be taken lightly. Because of this, we thought it would be important to share a few things that you should think long and hard about when you’re granting someone power of attorney.

Think About Yourself

Granting someone else power of attorney is an important matter. Before you enter into such an agreement, you should think long and hard about whether or not it’s necessary. If you judge that it is, then you should also consider the extent to which you will need someone to act on your behalf. What are you capable of doing for yourself, and what are you not capable of doing for yourself? Only after you’ve asked yourself these questions will you be able to determine the best course of action for giving another individual the power to act on your behalf.

Think About the Person Taking Power of Attorney

When you grant someone else power of attorney over yourself, you are vesting them with a great deal of power, no matter how limited the power of attorney agreement is. Before you give anyone the right to act on your behalf, make sure that you have full confidence in their ability (and desire) to keep your best interests at heart. Anyone that has shown a propensity for mishandling financial matters or generally has a track record of making poor decisions is not a good person to grant power of attorney to, even if you feel close to that person. Instead, select someone whose trustworthiness is unimpeachable, understands your interests and situation, and who will act objectively and reasonably on your behalf.

Think About the Limitations

When you grant someone general power of attorney, you are essentially allowing them to act on your behalf in all legal situations. Depending upon your circumstance, this may or may not be what you need. If that’s in excess of what you’re looking for, you can grant someone special power of attorney, which narrowly defines the capacities in which that person is able to act on your behalf. Among the various kinds of special power of attorney, there is healthcare power of attorney, which allows the person acting on your behalf to make important medical decisions for you.

Also, bear in mind that there are two forms of power of attorney: springing and durable. Springing power of attorney goes into effect when certain criteria are met (if you fall into a coma, for example), whereas durable power of attorney goes into effect upon the signing of the agreement.

Think About Your Lawyer

No matter how broad or narrow the power of attorney you’re granting is, there’s a lot to consider. That’s why it’s always advisable that such agreements be reached under the supervision of a qualified lawyer. They’ll be able to understand the particular laws in question and best advise you as to how the power of attorney should be set up. They can help to ensure that your rights are protected and that your needs are tended to.

How Inherited IRAs are Affected by the Supreme Court’s Decision

This past summer in Clark v. Rameker, the Supreme Court ruled unanimously that inherited IRAs are not retirement funds and thus are not protected during bankruptcy proceedings. This decision will have a clear impact on estate planning because IRAs passed onto heirs are no longer protected like they once were, and spouses who receive IRAs after death must now make a decision regarding IRA rollover.

In Clark v. Rameker, Heidi Heffron-Clark inherited an IRA after her mother passed away in 2001. In 2010, she and her husband filed for bankruptcy and intended to shield this inherited IRA from creditors by counting it as retirement funds. In the past, courts have allowed heirs to do this, but in a stunning reversal, the Seventh Circuit Court of Appeals and the Supreme Court ruled that inherited IRAs cannot be counted as retirement funds and cannot be shielded during bankruptcy.

In its decision, the Supreme Court asserted that inherited IRAs do not function the same way as IRAs that you set up yourself, and so they should not have the same legal protections. The Court explained that inheritors cannot add funds to inherited IRAs, inheritors must begin to withdraw from the IRA even if they are not close to retirement, and inheritors can take large distributions from the IRA at any time and without penalty. Because of these three differences, the Supreme Court argued that inherited IRAs are not like normal IRAs and do not function as retirement funds, so they will not be afforded the same protections. Individuals should now adjust their estate plans accordingly because transferring IRAs to heirs will no longer be as beneficial as in the past.

Spouses Who Inherit IRAs

Unlike other individuals who inherit IRAs, spouses have the option to roll over the IRA into their own existing IRA. In the past, surviving spouses often had no reason to roll over because they could just maintain both IRAs and be confident that both would be protected during bankruptcy. With the new Supreme Court decision, surviving spouses should seriously consider rolling over their inherited IRAs. According to Investment News, the spouses may have to pay 10% early withdrawal penalty if the funds are transferred before they turn 59.5 years of age. However, in many cases this penalty is worth it in order to protect those funds in the case of bankruptcy.

Protecting IRAs for Non-Spouse Heirs

Although the Supreme Court has taken away the primary protection for inherited IRAs, there is still a way for estate planners to make sure that these IRAs are protected from bankruptcy proceedings. According to Forbes, by naming trusts as the beneficiaries of IRAs instead of naming people, these funds can still be available to your loved ones after you pass away and can still retain their prior protections. Of course, establishing trusts is a much more complex process, so individuals should make sure they want to take this route and should seek the advice of estate planning experts.

Clark v. Rameker has changed the rules regarding inherited IRAs and made them a less attractive asset to pass on to your spouse or children, but it’s important to remember that with rollovers and trusts you can still protect these assets and make them available to your loved ones.

Bankruptcy / Estate Planning / General Interest - 02/18/2015

Elder Financial Abuse – What You Need to Know

One of the most serious problems confronting our growing elderly population is the risk of elder financial abuse. Elder financial abuse is defined as the use of unfair or deceptive practices that financially exploit and rob the elderly of the money that they spent their whole lives saving. In fact, it is already a widespread problem affecting people across the country. According to Consumer Reports, only 1 in 44 acts of abuse is ever reported, and the rate of elder abuse continues to grow.

Who Commits Elderly Financial Abuse?

One of the scariest things about this crime is that it can be perpetrated by almost anyone who is in direct contact with the victim. Most frequently, this abuse is committed by close friends and family, but caregivers and other helpers also have the ability to steal from their elderly patients. According to the National Adult Protective Services Association, elderly financial abuse can be committed by:

Caregivers
Family
Friends
Attorneys
Neighbors
Bank employees
Priests
Medical professionals

How Can You Prevent It?

The financial exploitation of the elderly is a serious problem, but fortunately there are steps you can take to make sure that you do not become a victim. Firstly, you should make sure you have trustworthy professionals who will help you manage your estate. CPAs and certified financial planners can help you manage your retirement accounts, but you also want to hire a reliable estate planning attorney such as one of the many at Clear Counsel. A good estate planning attorney will help you write power of attorney documents, as well as will documents. With their help, you can also establish trusts and structure them so that your relatives’ access to the money is controlled or limited.

When your attorney is helping you craft your power of attorney, you want to give a lot of thought to who you should give that power. That person is legally obligated to act in your best interests, but with the power of attorney, he or she will have the ability to manage your money without your supervision. That is why it is critically important that you assign power of attorney to a family member who is very trustworthy. Consumer Reports recommends that you give that power to a family member who is financially secure and more detached from you instead of the family members who are closest to you. That may reduce the risk of abuse, but it always depends on the situation. It is also possible to assign a separate relative or friend to monitor the person who has power of attorney and that will give you greater protection and control over the situation.

It is also a good idea to set up most of your recurring payments as direct deposit. Payments such as those that come from pensions, Social Security, and tax refunds should go directly to your bank account. That will reduce the risk that someone close to you, such as a caregiver, will have access to your money. Finally, you can work with your bank so that recurring payments such as mortgage payments and utility bills are paid out automatically from your account. This will further reduce the risk that someone close you can exploit you financially.

Call the experienced staff at Clear Counsel today to set up a consultation about your legal rights and set up the documents that will help to protect you from elder financial abuse.

Estate Planning / General Interest - 12/15/2014

The Litigation Privilege Against Defamation is not Absolute in Nevada

Generally, when parties are involved in litigation, statements made about other parties cannot form the basis of a defamation claim, no matter how much harm they may cause to someone’s reputation. However, the Nevada Courts have recently decided that statements made to the media during litigation are not protected and can form the basis for a defamation claim.[1]

Steven Jacobs filed a wrongful termination suit against Sheldon Adelson, owner of the Sands Corporation. Mr. Jacobs’s Complaint made many comments about Mr. Adelson that were insulting and potentially harmful to his reputation. When the Wall Street Journal published an article about the case, Mr. Adelson felt compelled to respond to the newspaper saying that Mr. Jacobs’s Complaint was built on lies, fabrications, and delusions. After Ms. Adelson made the statement, Ms. Jacobs amended his Complaint to sue Mr. Adelson for defamation.

Mr. Adelson argued that he could not be sued for defamation because what he had said was protected by the litigation privilege as he only commented on an ongoing lawsuit. Mr. Jacobs argued the statements were not protected by any privilege.

The Nevada Supreme Court noted that the purpose of the litigation privilege is to allow parties to speak freely and openly during litigation without the threat of being sued. The privilege, however, only applies during judicial proceedings to statements that relate to the litigation. The party on the receiving end of the communication must also be interested in the proceeding and not an unrelated third party.

This case was unique because the statements were made to the media. The Supreme Court found that the privilege did not apply to statements made to the media because these statements did not foster open and honest communication during the lawsuit nor was the media a party who was significantly interested in the lawsuit. The Supreme Court found that free speech during litigation concerns did not warrant allowing defamatory communications to be made to the media outside of actual litigation proceedings.

Accordingly, defamatory comments made to outside observers of a lawsuit can potentially form the basis for defamation claims so it’s always best to be careful what you say. Attorneys rarely recommend that their client speak to the media and this case is just one more reason why. If you are involved in a civil litigation matter or think you have a civil litigation claim to make, our attorneys are the clear choice for effective representation.

[1] Jacobs v. Adelson, 130 Nev. Adv. Op 44 (May 30, 2014)

General Interest - 08/01/2014

In Nevada, Legal Cases Can Take Years, and Then Years Again.

Here's an article about the Nevada Court system that we hope you will read, and share, because it's important.

Nevada Supreme Court Bogged Down.

NPR reports today that the Nevada Supreme Court is the busiest in the nation, and that's a very bad thing. Why? Because Nevada is one of just 10 states with no intermediate appeals court, our judges are simply overwhelmed by cases. It means that any time a case is appealed, whether divorce, probate, personal injury, civil rights, or whatever, it has to go to the state supreme court rather than first passing through a mid-appellate court.

What does this mean for the citizens of Nevada? It means that results can take years to go through court, then even more years to go through appeals. The Nevada Supreme Court is just flooded by cases. Nevada has more than 330 cases filed per Supreme Court justice per year. To get a sense of how bad that is, Arizona, with a population three times that of Nevada, has around only 200, and Utah, with a very similar population to that of Nevada, has only about 100. Both of those states have appellate courts that help resolve many of the appellate cases.

Nevada Chief Justice James Hardesty asks "Do you want us working on precedential-setting cases, the most important cases... or do you want us to resolve drivers' license revocations or inmate disputes?" (source)

Why don't we have an appeals court?

Many states created appeals courts in the 60s and 70s, as state populations grew and court systems were re-worked. However, Nevada experienced most of its growth in the past 30 years, so we missed that wave of reform. Additionally, establishing an appeals court here requires a constitutional amendment to be approved by voters. Nevada voters have been suspicious of changes to the court system, and wary of the expense.

What do we need to do?

Nevada needs an appellate court. Our court system deserves to be free to face tough issues, and our population deserves quick justice for their legal issues. Right now we've got neither.

This election cycle, both political parties and the entire legal community are behind this change to the Nevada legal system. But there's no money to make people aware of how important this is. That's why it's important you share this information.

The cost of an appeals court is only about 1.5 million dollars. That's less than one hundredth of one percent of our state budget, and it would mean years of relief for countless Nevada citizens, and it would take financial pressure off of programs such as the Legal Aid Center of Southern Nevada.

It's time Nevada moved forward on this important issue.

Bankruptcy / General Interest / Personal Injury - 03/19/2014

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