TURNING 18? GOT YOUR POA’S LINED UP?

TURNING 18? GOT YOUR POA’S LINED UP?

By Kim K. Steffan, Attorney

 

High school graduations make me think about kids becoming adults, leaving the nest, or making their way in the world. You may not have thought about why a financial power of attorney (POA) and a health care power of attorney (HCPOA) are important for young adults upon turning 18.

As our teenagers happily remind us, turning 18 makes one legally an adult.  If you are a parent of a 17 year old, you’ve been used to making decisions for him or her, giving permission for activities, maybe opening and managing a savings account for him or her, and receiving medical information.  All of a sudden, once your child turns 18, you as a parent no longer have the automatic authority to do those things, even if your child still resides at home.  A doctor may refuse to provide you medical information about your adult child because doing so would violate HIPAA.  Banks may refuse to allow you to move money from your child’s savings account to his checking account when he is in college, even if you used to do that for him.  How can we avoid these problems?

Young adults, like any other adults, should consider having a financial power of attorney (POA) and a health care power of attorney (HCPOA).  The financial power of attorney appoints someone else to handle their financial matters.  This includes getting their bills paid, moving money from one account to another, and signing contracts.  The POA can be set to appoint someone to act only if the young adult is physically or mentally incapacitated (e.g., due to accident or illness) or it can be set to allow someone he/she trusts to do these things anytime for his/her convenience (e.g., when he/she is away at college, traveling before starting a job, etc.).  A POA should be made effective anytime only if the person being appointed is someone the young adult fully and completely trusts, because it means that person can take actions about his/her finances, credit, and bank account even when the young adult is perfectly capable of handling these things for himself/herself.

A health care power of attorney (HCPOA) appoints someone to make medical decisions only if the person making the document cannot make those decisions for himself/herself.  If a young adult appoints a parent on her HCPOA, it means that if she has an injury or illness making her unable to make medical care decisions, the parent would be authorized to receive information from the doctor or hospital, and to make decisions based on that information.

Young adults most commonly appoint one or both parents (or, if raised by someone else, that person) to serve on their financial and health care powers of attorney.  Over time, the young person may develop other relationships making it logical to change the person appointed, like when he/she marries or has a long-term relationship.  The documents can always be updated later.

Many attorneys will prepare financial and health care powers of attorney for young people who have recently turned18 at a courtesy (inexpensive) fee that doesn’t cover the lawyer’s time.  Lawyers often do this just to help out, because they know it lets the family rest easier.  It is always acceptable to ask for fee information from a lawyer’s office either before scheduling an appointment or before the lawyer begins work for which you could be charged.

 

Kim K. Steffan is an attorney with Steffan & Associates, P.C. in Hillsborough.  She can be reached at 919-732-7300 or kim.steffan@steffanlaw.com.

 

STANDBY GUARDIAN LAW

          Suppose you have been appointed by a Clerk of Court as the guardian (meaning either a general guardian or a guardian of the person) of an adult relative who is incompetent because of dementia, intellectual disabilities, or developmental disabilities. What if you then develop progressive or debilitating health problems of your own? How can you protect your loved one if your health problems at some point make you unable to serve, or even cause your death? A section of Chapter 35A of the NC General Statutes added in 2015 allows you to name a “standby guardian” to take your place if necessary.  It expands upon an existing statute allowing seriously ill parents of minor children to name a standby guardian for their children, to serve in the event of the parent’s death or disability.

          The standby guardian is someone who acts as a back-up guardian, ready to assume the responsibilities of a guardian of the person or a general guardian upon a triggering event, including the current guardian’s death, mental incapacity (as determined by the Clerk), or sooner upon the current guardian’s written consent (which may be a decline in physical health).  Without naming a standby guardian, if the current guardian died or became incapacitated, there would be a gap leaving no one serving as guardian until the Clerk is able to hold a hearing to appoint a new guardian.  Also, in that situation, the Clerk would not have the advantage of knowing whom the original guardian thinks would do a good job next.

          However, the standby guardian process is only available when the current guardian suffers from a progressive chronic or irreversible fatal illness.  It is not available when the current guardian is healthy.  You may be thinking that it should be available to any guardian since even a healthy guardian can be “hit by a bus” and killed – and you’d have a good point.  At some point in the future, a further expansion may permit this for any guardian, but not yet.

          If you are a guardian with a progressive chronic or irreversible fatal illness, you have two options to appoint a standby guardian.  One is by petition.  Until more specific forms are developed, use AOC Form E-209, which is the form for guardians of minor children.  The Clerk will hold a hearing to confirm both the guardian’s progressive illness and the suitability of the person nominated as the standby guardian.  Then the Clerk will enter an order appointing the standby guardian and issue him/her letters of appointment that list the conditions upon which the power becomes effective. When the standby guardian receives documentation of the triggering event (like a death certificate for the original guardian), he/she must file it with the Clerk.

           The other way to name a standby guardian is by a written designation witnessed by two adults.  When the standby guardian receives any of the documents listed in the statute for a triggering event, his authority begins.  However, he still must file a petition with the Clerk within 90 days of receiving documentation of the triggering event. If the Clerk finds the statutory requirements have been met, the Clerk will enter an order appointing the person and issuing guardianship letters to him/her.

          While the statute does not address all problems involved in managing guardianships of adults, it does solve one.  For more information on standby guardianships, contact the Clerk of Court’s office or consult an attorney.

 

 

WHEN IS THE BEST TIME TO START SOCIAL SECURITY RETIREMENT BENEFITS?

WHEN IS THE BEST TIME TO START SOCIAL SECURITY RETIREMENT BENEFITS?

As more baby boomers approach retirement, they will need to decide when to begin receiving Social Security retirement benefits. The earliest date you can claim Social Security retirement benefits is age 62. You will receive a reduced monthly benefit at age 62 because (if you live to full life expectancy) you will be receiving checks for a longer time. If you wait until full retirement age (age 66 for those born 1943-1954, age 67 for those born 1960 and later, and 66 and some months on a graduated scale for those born between 1955 and 1959), you will receive a higher monthly benefit, but based on life expectancy, you will not receive it for as long as if you had begun to receive it at age 62. You can wait until age 70 to start benefits, for a higher yet monthly benefit (since you won’t receive it as long, based upon life expectancy).
If you start receiving benefits before your full retirement age, your monthly benefit may be reduced if you continue to work. If you take benefits early, as of 2012 you can earn up to $14,640 per year from work without reducing your benefits. In general, above $14,640 per year, you will lose $1 in benefits for each $2 you earn from working. Your benefit will not be reduced because of income from sources other than working (like interest or dividends). If you wait until full retirement age to take Social Security, you can keep working and earn as much as you like without losing benefits.
So, how do you decide? Here are some factors:
1. How long do you expect to live? The “breakeven” point for all 3 scenarios where they work out the same (claiming at 62, claiming at full retirement age, and claiming at age 70) is 85 years according to the Social Security Administration (SSA). Based on your health and family history, if you do not think you will live to be 85, you may do better to take Social Security as early as possible. If you think you will likely live beyond age 85, and if you can wait until age 70, you may collect the most in benefits over your lifetime.
2. As of 2012, if you want to keep working and you are fortunate to earn substantially more than $14,640 per year, your monthly benefit at age 62 may be quite small. For example, if you earn $30,000 per year, you will lose about $640 a month off your monthly benefit.
3. What about health insurance? You will not qualify for Medicare until age 65. For cost reasons, you may want or need to keep health insurance through your job until you reach age 65. Alternatively, if you can be added to a spouse’s employer policy, that may bridge the gap.
4. What will your retirement financial needs be? SSA and many financial planners advise having about 70% of your pre-retirement income for a comfortable retirement. Depending on your Social Security benefit, your other savings, and your living expenses, you may need to work past age 62.
To compare different options, visit your local Social Security Office (in Durham or Burlington), or go to www.socialsecurity.gov/estimator. There are many other issues to consider with Social Security and Medicare. We will address these topics in separate articles.

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