Can I Prepare Estate Planning Documents for My Relative with Dementia?
Video Summary
I have a question from one of our clients who has inquired as to whether or not they can do estate planning for one of their loved ones that’s suffering from dementia. Unfortunately, you can’t do estate planning for someone else. That’s something that they must do. Depending on what stage of dementia they’re suffering from, they may or may not still have the mental capacity to sign the estate planning documents. The test is whether they understand who their natural beneficiaries would be, such as children. Also, they must be able to have some idea of the extent of their assets.
So if they understand who they would ordinarily leave their money to or who it would go to under the laws of the state of Florida if they don’t have a will, and also, the extent of their money, it may be advisable to complete all estate planning before that person’s capacity diminishes further and it’s too late. If someone’s in the early stages of dementia, they still may have the mental capacity to make a will, but you can’t make a will for someone suffering from dementia or someone that’s not. It’s something that that person must do.
If you have any questions about that, please give us a call at (727) 847-2288. Thank you.
- Published in Estate Planning, Videos
How Will a Short Sale Affect My Income Taxes?
Video Sumamry
How will a short sale affect my income tax? Well, there’s any number of questions that have to be answered before I can give you an answer to that question. The first question is: Is this your primary residence? If it’s your primary residence, there’s federal legislation involved that may excuse you from having to pay any taxes on the sale of your home. If you have the original mortgage and you’re short selling, then the lender will not send you what they call a “1099-C”, which is a report to the Internal Revenue Service that you’ve experienced gain from the sale of your house and therefore, you may be obligated to pay income tax on the long-term capital gains.
If you do receive a 1099 for the sale of your residence, then you may not have to pay taxes. You have to file a tax return and show the sale. However, if you’ve lived in your home two out of the past five years and own the home during that period of time, then you could exempt up to $250,000.00 of gain and that usually eliminates the problem.
Now, let’s say that this is not your primary residence and this is investment property. Well, then if you have a short sale and the lender sends a 1099 to you, then you will have to pay long-term capital gains. You may also have to recapture the deductions for your depreciation that you’ve taken on your rental property. So the best thing to hope for on all these situations if it’s not your primary residence is they don’t send you a 1099 and you take that up with your accountant on how you should report the transaction.
Also, another problem that I’ve been seeing some of my clients experience is a 1099-A and that says the property’s been abandoned and I’m really not sure just how the accountants are treating it because your debt may not be forgiven and they still send this 1099-A to you.
So if you have any more questions about it, give me a call. I’d be glad to talk to you about it. My phone number is (727) 847-2288. Thank you.
How WIll a Foreclosure Affect My Income Taxes?
Video Summary
How does a mortgage foreclosure affect your income taxes? Well, it should not affect your income taxes because the lender has not forgiven any of the debt on your loan after they conclude a mortgage foreclosure, so you should not receive a 1099-C, which is a report to the Internal Revenue of how much debt has been forgiven. So therefore, you should not have any tax consequences as a result of a foreclosure action.
I have seen lenders send out what they call a 1099-A and that is a report to the Internal Revenue Service that the property has been abandoned. That doesn’t mean that the debt has been forgiven and therefore, I am uncertain as to how the accountants are dealing with 1099-A’s whenever your property has merely been foreclosed.
So if you have any other questions about a 1099-C or a 1099-A, please give me a call at (727) 847-2288 and we can discuss it. Thank you.
How Often Should I Update My Will?
Video Summary
Hi. I’m Chip Waller. How often should you update your will? Well, the question is answered by saying when there’s been a change in circumstances: in the event that you have a death in your family, in the event that you relocate, in the event that there’s a birth in the family, grandchildren, or when you have sold property that you had left to someone in particular. So anytime there is a change in your circumstances, that’s the time to update your will.
I suggest that you review your will at least once a year in order to look at it to see if that’s what you wanted to say, and whether or not there have been any changes in circumstances since you’ve made out your will. If so, then give us a call and we’ll be glad to update your will.
In addition to your will, you might want to check in on whether or not you have a living will ,which says that you don’t want your life prolonged artificially; a healthcare surrogate, which is a healthcare power of attorney; a HIPAA waiver, which authorizes someone to make medical decisions for you if you’re unable to do so; and also a Durable Power of Attorney, which could be executed to help you in the event that you would lose your mental or physical capacity, and authorize someone else to transact business for you.
So if you have any questions about your will or any of your estate planning documents, give me a call at (727) 847-2288. Thank you.