Safe Harbor Trusts vs Other Trusts

Posted on December 8, 2009 by Rajiv Nagaich

What is the difference between a safe harbor trust and other trusts?

That is one of the basic fundamental things we discuss. A typical trust is a revocable living trust. One of the ways to plan your affairs is to use a revocable living trust. What this trust does is, it allows you to put away the assets you own from your name into the name of the trust, for the purposes of avoiding probate.

The second type of a trust is called a tax trust, or a credit shelter trust. This says that in any community property state, like Washington, between a married couple, the husband and wife will generally own 50% of the assets each.  This type of trust basically says, that when the first spouse dies, instead of leaving the money down for the surviving spouse, their one half, or a portion of it, will go into the credit shelter trust, allowing avoidance of estate sales taxes. This is also a type of a safe harbor trust.

The safe harbor trust that I talk about is much like the credit shelter trust, but it has a different code, title 19. This basically follows the same husband and wife scheme. This money will no longer will be visible for programs such as Medicaid, VA, housing, and food.

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Power of Attorney with Financial Institutions

Posted on December 3, 2009 by Rajiv Nagaich

My sister-in-law has power of attorney over her mom, who has advanced Alzheimer’s disease.  She wants to move some stocks out of a mutual fund into a different one because it is doing poorly, and the investment company does not recognize power of attorney.  How can this be?

 

It cannot be.  This is also not the first time I have heard about it.  If the power of attorney was written over three or four years ago, they do not know if it has been changed or revised, and they consider it a big risk for them.  But the fact of the matter is, even if a person creates a power of attorney in 1901, it would still be valid today.  The way to overcome that is two things. First, whoever is trying to use the power of attorney, can prepare something called an affidavit in support of power of attorney, whereby, under penalty of perjury, you swear that this is the power of attorney that was created and no other power of attorney to your knowledge has been created since, and I am in good faith using my power of attorney to further the benefits of the person who gave me this power. If you can present that document to the financial company and they still refuse to honor it, you will have to go to court and get an order from a judge requiring the institution to accept the power of attorney, and the penalty is they may have to pay all the fees and costs associated with obtaining this order. 

 

So generally, what we do is to write the letter to the institution telling them that this is the valid power of attorney, based on the specific rules and requirements, and attached they will find a copy of the affidavit in support of power of attorney.  If they still choose not to honor it, we will take them to court. 

 

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Medicare Advantage vs. Medicare Traditional

Posted on December 1, 2009 by Rajiv Nagaich

What is the difference between the Medicare Advantage Plan, which is open enrollment right now, and the Medicare Traditional Plan, in terms of the current Health Care Bill?


The traditional plan is Medicare Part A and Part B, which has been the original plan. It has been around since 1965.


Medicare Part C, which is an HMO-type plan, much like group health. It is all under a managed care program. So they extended that to foster some competition. It went directly to the providers and stated that if they accept this advantage plan, they will receive a higher amount of reimbursement than with the traditional plan. This caused some practitioners to only accept the advantage plans.


However, under the new bill, starting 2011, the payments will be made the same. I believe this will be a change for the better. It will allow people to honestly judge which is the better system for them.
 

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