Powers of Attorney: Always Read The Fine Print!

Powers of attorney are a lot like medical insurance. Many people don’t pay very close attention to the written document until we need to use the power of attorney or the insurance. It is when you begin have to use them that you discover what you don’t have. Then it may be too late.

When a power of attorney is executed, the agent automatically thinks that the agent can handle all affairs under the sun for the principal.  This is not always a good assumption to make.

First of all, here are different types of written powers of attorney. There are powers of attorney for making decision over the person such as health care decisions, housing, and therapy decisions. There are other powers of attorney for the agent to make financial decisions regarding the estate. An agent may have a financial power of attorney and not a healthcare power of attorney.

Secondly, powers of attorney should be written very general to include any and all possible decisions. However, many powers of attorney are not general. Some give very limited authority for the agent to act on behalf of the principal. This can be very problematic for an agent to find out that they possess the right to make certain decisions and not other necessary decisions.

The best time to read the fine print is long before the power of attorney is used so that corrective action can be taken. Otherwise, time, money and effort may be required to file an interdiction legal proceeding to allow the agent to make all decisions.

If you have any questions about powers of attorney, you should contact an experienced estate attorney. Kent S. DeJean


Key Tax Tips on the Tax Effects of Divorce or Separation

Income tax may be the last thing on your mind after a divorce or separation. However, these events can have a big impact on your taxes. Alimony and a name change are just a few items you may need to consider. Here are some key tax tips to keep in mind if you get divorced or separated.
• Child Support. If you pay child support, you can’t deduct it on your tax return. If you receive child support, the amount you receive is not taxable.
• Alimony Paid. If you make payments under a divorce or separate maintenance decree or written separation agreement you may be able to deduct them as alimony. This applies only if the payments qualify as alimony for federal tax purposes. If the decree or agreement does not require the payments, they do not qualify as alimony.
• Alimony Received. If you get alimony from your spouse or former spouse, it is taxable in the year you get it. Alimony is not subject to tax withholding so you may need to increase the tax you pay during the year to avoid a penalty. To do this, you can make estimated tax payments or increase the amount of tax withheld from your wages.
• Spousal IRA. If you get a final decree of divorce or separate maintenance by the end of your tax year, you can’t deduct contributions you make to your former spouse’s traditional IRA. You may be able to deduct contributions you make to your own traditional IRA.
• Name Changes. If you change your name after your divorce, notify the Social Security Administration of the change. File Form SS-5, Application for a Social Security Card. You can get the form on SSA.gov or call 800-772-1213 to order it. The name on your tax return must match SSA records. A name mismatch can delay your refund.
Health Care Law Considerations
• Special Marketplace Enrollment Period. If you lose your health insurance coverage due to divorce, you are still required to have coverage for every month of the year for yourself and the dependents you can claim on your tax return. Losing coverage through a divorce is considered a qualifying life event that allows you to enroll in health coverage through the Health Insurance Marketplace during a Special Enrollment Period.
• Changes in Circumstances. If you purchase health insurance coverage through the Health Insurance Marketplace you may get advance payments of the premium tax credit in 2015. If you do, you should report changes in circumstances to your Marketplace throughout the year. Changes to report include a change in marital status, a name change and a change in your income or family size. By reporting changes, you will help make sure that you get the proper type and amount of financial assistance. This will also help you avoid getting too much or too little credit in advance.
• Shared Policy Allocation. If you divorced or are legally separated during the tax year and are enrolled in the same qualified health plan, you and your former spouse must allocate policy amounts on your separate tax returns to figure your premium tax credit and reconcile any advance payments made on your behalf. Publication 974, Premium Tax Credit, has more information about the Shared Policy Allocation.
For more on this topic, see Publication 504, Divorced or Separated Individuals. You can get it on IRS.gov/forms at any time.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
Additional IRS Resources:
• Publications 590-A, Contributions to Individual Retirement Arrangements (IRAs)
• Publication 555, Community Property
• Publication 974, Premium Tax Credit
• Publication 5152: Report changes to the Marketplace as they happen English | Spanish

Divorce: Beware of the Internet!!

In today’s social media internet world, people open up their private lives to family, friends and the public. People can post private photographs and post private information about themselves and their personal lives. People also use the internet to write letters or text messages to others.

These internet activities should be stopped during a divorce and during the estrangement of any marriage. Private information posted on social media can never be deleted and may be subject to discovery by the opposing spouse. This can have serious consequences since evidence from social media may be used as evidence against you. This can have adverse effects on proving fault, alimony child custody and child support.

Further, parties should avoid using texting , email and other forms of written internet communication with spouses and others during a divorce. Again, these communications can never be totally deleted and can be used as evidence in divorce issues.

It is important to remember that when you go on the internet, the right to privacy that you thought you have, may not exist.

If you have any questions about divorce, you should consult an experienced divorce attorney. Kent S. DeJean

Divorce: I Put My Name on It. Does That Make It Mine?

It is not uncommon for spouses to move assets and put their own names on titles or accounts. There is a myth that simply changing the name on a title or account magically changes the ownership of the account or asset from a community asset to a separate asset.

Under Louisiana law, is important to remember that the name on the title of the asset is not a silver bullet in determining whether it is separate or community between spouses. The name of the title is important as to third parties. Third parties may rely on the title to determine whether the spouse has authority to sell it alone.

However, the name of the title does not determine whether an asset is community or separate as between the spouses. Many different facts and evidence including the name of the title can be used to determine whether an asset is community or separate property between spouses.

Therefore, a spouse that puts their name on a title or account to attempt to make it their own separate property may not bring about the desired results they intended.

If you have any questions concerning divorce, you should consult an experienced divorce attorney. Kent S. DeJean

Divorce: Be Careful What You Ask For In Property Settlement With Your Spouse If You Are An SSI/Medicaid Recipient!!!!

If a spouse is receiving Social Security Income benefits and Medicaid, they should be extremely careful in settling and litigating their partition (division) of community property under Louisiana law. SSI and Medicaid are needs based programs. Generally, a recipient is only allowed one car, one house, furniture, clothing, and less than $ 2,000.00 in any other assets.

The assets that a spouse received from the division of community property may not be exempt assets for eligibility purposes. This can have serious consequences by rendering you ineligible for SSI and Medicaid benefits.

The SSI/ Medicaid recipient should make sure that:

1. The assets they are receiving from a partition of community property are exempt assets for SSI and Medicaid eligibility purposes, or

2. They must have a specific plan to immediate convert assets or spend down assets within the month that you receive the settlement to maintain your eligibility for SSI and Medicaid benefits.

If you are an SSI and/or Medicaid recipient that is involved in divorce litigation regarding division of property, you should consult a Medicaid planning attorney as soon as possible. Losavio & DeJean

Education Tax Credits: Two Benefits to Help You Pay for College

Did you pay for college in 2014? If you did it can mean tax savings on your federal tax return. There are two education credits that can help you with the cost of higher education. The credits may reduce the amount of tax you owe on your tax return. Here are some important facts you should know about education tax credits.

American Opportunity Tax Credit:

  • You may be able to claim up to $2,500 per eligible student.
  • The credit applies to the first four years at an eligible college or vocational school.
  • It reduces the amount of tax you owe. If the credit reduces your tax to less than zero, you may receive up to $1,000 as a refund.
  • It is available for students earning a degree or other recognized credential.
  • The credit applies to students going to school at least half-time for at least one academic period that started during the tax year
  • Costs that apply to the credit include the cost of tuition, books and required fees and supplies.
  • Lifetime Learning Credit:
  • The credit is limited to $2,000 per tax return, per year.
  • The credit applies to all years of higher education. This includes classes for learning or improving job skills.
  • The credit is limited to the amount of your taxes.
  • Costs that apply to the credit include the cost of tuition, required fees, books, supplies and equipment that you must buy from the school.

For both credits:

  • The credits apply to an eligible student. Eligible students include yourself, your spouse or a dependent that you list on your tax return.
  • You must file Form 1040A or Form 1040 and complete Form 8863, Education Credits, to claim these credits on your tax return.
  • Your school should give you a Form 1098-T, Tuition Statement, showing expenses for the year. This form contains helpful information needed to complete Form 8863. The amounts shown in Boxes 1 and 2 of the form may be different than what you actually paid. For example, the form may not include the cost of books that qualify for the credit.
  • You can’t claim either credit if someone else claims you as a dependent.
  • You can’t claim both credits for the same student or for the same expense, in the same year.
  • The credits are subject to income limits that could reduce the amount you can claim on your return.
  • Visit IRS.gov and use the Interactive Tax Assistant tool to see if you’re eligible to claim these credits. Also visit the IRS Education Credits Web page to learn more. If you can’t claim a tax credit, check the other tax benefits you might be able to claim.

If you found this Tax Tip helpful, please share it through your social media platforms. A great way to get tax information is to use IRS Social Media. You can also subscribe to IRS Tax Tips or any of our e-news subscriptions.

Five Key Facts about Unemployment Benefits

If you lose your job, you may qualify for unemployment benefits. The payments may serve as much needed relief. But did you know unemployment benefits are taxable? Here are five key facts about unemployment compensation:

1. Unemployment is taxable.  You must include all unemployment compensation as income for the year. You should receive a Form 1099-G, Certain Government Payments by Jan. 31 of the following year. This form will show the amount paid to you and the amount of any federal income tax withheld.

2. Paid under U.S. or state law.  There are various types of unemployment compensation. Unemployment includes amounts paid under U.S. or state unemployment compensation laws. For more information, see Publication 525, Taxable and Nontaxable Income.

3. Union benefits may be taxable.  You must include benefits paid to you from regular union dues in your income. Other rules may apply if you contributed to a special union fund and those contributions are not deductible. In that case, you only include as income any amount that you got that was more than the contributions you made.

4. You may have tax withheld.  You can choose to have federal income tax withheld from your unemployment. You can have this done using Form W-4V, Voluntary Withholding Request. If you choose not to have tax withheld, you may need to make estimated tax payments during the year.

5. Visit IRS.gov for help.  If you’re facing financial difficulties, you should visit the IRS.gov page: “What Ifs” for Struggling Taxpayers. This page explains the tax effect of events such as job loss. For example, if your income decreased, you may be eligible for certain tax credits, like the Earned Income Tax Credit. If you owe federal taxes and can’t pay your bill, contact the IRS. In many cases, the IRS can take steps to help ease your financial burden.

For more details visit IRS.gov and check Publication 525. You can view, download and print Form W-4V at IRS.gov/forms anytime.

If you found this Tax Tip helpful, please share it through your social media platforms. A great way to get tax information is to use IRS Social Media. You can also subscribe to IRS Tax Tips or any of our e-news subscriptions.

Divorce Checklist: Prevent Adding Insult To Injury!

Divorce is emotionally traumatic. There are many loose ends that must be tied during a divorce. It is very easy to be overwhelmed by it. However, it is important that you remember to clean up some loose details that will give your spouse an unintended windfall.

Change Your Will!

When they have a will, most spouses wish to provide for the other spouse in the event of their death. Wills do not become null and void during marital difficulties or divorce. It is necessary to update and change them. Otherwise, the other spouse could inherit what you provide for them in your will.

Change Beneficiary On Life Insurance!

Most spouses provide for the other spouse as beneficiaries of life insurance or other insurance. There is no law that automatically voids this declaration. You must go to each insurance company and fill out required forms to change this designation. Otherwise, your spouse will end up getting the insurance proceeds upon your death.

If you have any questions about divorce, wills or successions, you should consult an experienced divorce or estate planning attorneys. Kent S. DeJean

Will My Spouse Get My Inheritance In The Divorce?

Under Louisiana law, the answer to the question is maybe.

The general rule under Louisiana law, is that inherited property is considered to be the separate property of that spouse and the other spouse is not entitled. In fact, the other spouse is not even entitled to it even if the inheritance was obtained during the marriage.

The problem is that assets change. Assets are liquidated, sold, and co-mingled with other community property. Also, income may be made on a separate asset which is community property and could be mixed back in with the separate property. Over time, an asset may start out as a separate asset only to slowly become mixed up with community property. This is particularly true of investments.

If you want your inheritance to remain your separate property, there are several things that can be done to protect your rights:

1. Have the spouses execute a Community Property Partition or an Act of Acknowledgment declaring the asset to be the separate property of a particular spouse;

2. Keep very accurate and complete records of separate assets; and/or

3. Enter into a Post Nuptial Agreement with court approval.

Should you have any questions on divorce, contact an experienced divorce attorney. Kent S. DeJean

Wills Are Not Secrets

One of the popular public myths is that wills are a big secret. From a practical stand point, this is not entirely accurate.

The fact that you have a will should not be a secret.

What is contained in the will can be a secret.

You should be very public about the fact that you have a will and where the will is located to those persons, who are named in the will.

You can be so secretive to the point that no one can find it. That defeats the whole purpose of having a will.

If you have any questions about wills, you should consult an experienced estate planning attorney. Kent S. DeJean