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healthcare power of attorney

What is a healthcare POA?

A healthcare power of attorney (“POA”) is a legal instrument that allows you to select the person that you want to make healthcare decisions for you if and when you become unable to make them for yourself. The person you choose is your agent/representative for purposes of healthcare decision-making.

What types of healthcare decisions can be covered by a healthcare POA?

healthcare power of attorney hands

A healthcare POA can govern any kind of decision that is related to your health that you want to address. A healthcare POA may include decisions related to organ donation, hospitalization, treatment in a nursing home, home health care, psychiatric treatment, and more.

For example, if you don’t want to be kept alive with machines, you can make this clear in your POA for healthcare. But keep in mind your POA for healthcare isn’t just about end-of-life decisions – again, it can cover any medical situation.

When would I use a healthcare POA?

A healthcare POA is used when you become unable to make healthcare decisions for yourself. Your agent will then be able to make decisions for you based on the information you provided in your healthcare POA. Equally important, your agent will be access your medical records, communicate with your healthcare providers, and so on.

What happens if I don’t have a healthcare POA?

doctors in operating room

If don’t have a healthcare POA, and you should become disabled to the point where you are unable to make healthcare decisions for yourself, your doctor(s) will ask your family and friends what to do.

You might disagree with the decision your family makes, or your family members may not be able to agree on how to handle your medical care.

Ultimately, if your loved ones can’t agree on a course of action, they would have to go to an Iowa Court and have a conservator/guardian appointed for you. It may, or may not, be someone you would have chosen. Further, the conservator/guardian may make decisions you wouldn’t have made.

This is all very complicated, time consuming, and expensive, especially compared with the convenience of simply having a healthcare POA in place. A healthcare POA gives you control over how decisions are made for you, and the agent you choose will carry out your wishes.

Is there a “one-size-fits-all” POA for healthcare?

No! All Iowans are special and unique and have special and unique issues and concerns. Consequently, this article is presented for informational purposes only, not as legal advice. Consult your lawyer for personal advice.

Do I need other estate planning documents in addition to a healthcare POA?

Yes, definitely! There are six “must have” estate planning documents most Iowans need; healthcare POA is just one of those documents.


Do you have a healthcare POA? Do you have an overall estate plan? Why or why not? Want to get started on crafting your healthcare POA (and other essential estate planning documents) let’s talk. Email me anytime at gordon@gordonfischerlawfirm.com or give me a call at 515-371-6077.

Gordon Fischer at desk with client

I’ve previously written about the six “must have” documents of everyone’s estate plan. These documents include some key people that are essential. But, the terms for some of these roles can be confusing. Let’s review the main ones today.

What is a Beneficiary?

Let’s talk first about beneficiaries. This is a basic term you’ve probably heard before or seen while filling out documents. Your beneficiary is the person to whom you leave your belongings, assets, money, land, etc. Of course you can leave your stuff to more than one person, in which case there would be multiple beneficiaries. With multiple beneficiaries, you’ll have to clearly designate who gets what. This can be done in a number of ways; for example, percentages of total value of the estate, or it can be done with specifics.

An example of percentages:  “I want Beth to inherit 20% of my estate.”

An example of a specific bequest:  “I want my son John to inherit the country house and I want my daughter Suzie Q to inherit the lake house.”

You don’t have to be related to your beneficiaries, and you’re under no obligation to leave anything to family members whom you wish not to receive your assets (no matter how hard that may be or how guilty you might feel). It truly is your choice as to who should benefit under your estate plan.

Beneficiary cartoon

There’s a lot more to say about beneficiaries, but for now, just remember to make sure all documents are up-to-date. Keeping your estate plan up-to-date ensures you avoid nightmares like your ex-husband from 10 years ago cashing in on your retirement funds.

How about an Executor?

Let’s talk about the executor of the will. An executor is the person who is in charge of your estate plan. They make sure the will is carried out as it is written. It’s not an awful job, but it is an awful lot of responsibility. Most folks, having never had to deal with the execution of a will, might not know how arduous it can actually be. Additionally, your executor might be close to you and grieving your passing while trying to make sure everything is taken care of properly. It can be stressful, to say the least.

will you be my executor on paper

When picking an executor, you want to make sure it’s someone you trust. Obvious, right? But, it’s so much more than that. We all have people in our lives we love and trust on a personal level, but we know they’re not responsible with things like finances and details. Those people would not a good executor choice, generally speaking. Look for someone in your life who is detail-oriented and can handle the part-time job of dispensing an estate.

If there’s no such person in your life, or even if there is and you simply don’t want to burden them with the task, there’s another great option: “corporate executors or trustees”, which can be found at a bank or a credit union. The corporate executor offers the bonus of being completely neutral in all things, which can be helpful if you have sticky family dynamics that might make life difficult for the executor. The corporate executor does come at a cost, which is usually based on the size of the estate. I tend to think you get what you pay for, and this could be an excellent option to consider.

If you do go with an executor you know personally, you’ll want to sit down and talk with them about it. You want them to know that you’ve assigned them the task and why you chose them specifically. And, if you’re choosing one child out of many, you’ll want everyone to be on the same page so there’s no unexpected turbulence after you’re gone.

How about Legal Guardians?

Legal guardians are the folks who will take care of your minor children should something happen to you before they reach the age of 18. Like your executor, this job requires a lot of trust in the person you choose.

Mom and daughter

Clearly, this is not a job that ends after the estate is closed. Who you decide to choose should be a matter of closeness of relationship (as in bond, not necessarily family ties), mutual values, and ability to handle the responsibility. Have an in-depth conversation with the person or people you choose. You want to confirm that you’re comfortable with their parenting style, make sure they feel they’re up to the job, and let them know why you chose them.

Important Trait in Common: Trust

trust in blue marker

What’s the key theme in all of these roles from beneficiaries to executors to legal guardians? Trust. The level of trust you have in the people who are involved in and benefit from your estate plan should be strong to be successful. If you ever have any questions about selecting the key players in your estate plan, don’t hesitate to reach out.

See? That wasn’t so bad!

There it is in a nutshell. Those are the basics of the key people in your estate plan.

Whether your estate plan is simple or complicated, it does require some thought and time, but it’s worth the investment. A proper estate plan can save you and your estate costs, taxes, and fees; help your family and friends; and provide you peace of mind.

Perhaps most importantly, through proper estate planning, you can help your favorite charities in ways large and small. Really, without estate planning, it’s not possible, at your death, to help nonprofits you care about.

No Day Like Today

Why not start right now with my Estate Planning Questionnaire? It’s provided to you free, without any obligation.

Do you have an estate plan? Why or why not? I’d love to hear from you. You can reach me any time at gordon@gordonfischerlawfirm.com or by phone at 515-371-6077.

 

 

Federal Income Tax

I say, it’s better to give and receive. You can both give and receive by using the federal income tax charitable deduction.

A gift to a qualified charitable organization may entitle you to a charitable contribution deduction against your income tax if you itemize deductions. Assuming the gifts are deductible, the actual cost of your gift is reduced by your tax savings.

Charitable Deduction Tax Savings

For a discussion of tax brackets, see my post called bracketology. In short, as of this writing (April 2017), there are seven federal income tax brackets: 10%, 15%, 25%, 28%, 33%, 35% and 39.6%.

The charitable deduction can result in significant tax savings regardless of which bracket you’re in, although the bracket does change the savings. For example, assume a donor in the 33% tax bracket gives a donation of $100 to her favorite qualified charitable organization. The charity receives the full gift of $100, but, for the donor, the actual out-of-pocket cost of the gift is only $67, and the donor saves $33.

Let’s make these assumptions for all tax brackets and see the savings which result:

Bracket of Gift Donation Savings Actual Cost
10% $100 $10 $90
15% $100 $15 $80
25% $100 $25 $75
28% $100 $28 $72
33% $100 $33 $67
35% $100 $35 $65
39.6% $100 $39.6 $60.40

This is a good deal for you and a good deal for your favorite causes. So why not consider using the charitable deduction?

One common is excuse is that the charitable deduction requires you to be extremely organized in maintaining records. Generally speaking, the greater the deduction, the more detailed the records you are required to keep. Yet, this organization is made a little bit easier when fully understanding the deduction.

Charitable Deduction: Basics of Substantiation

Here’s a simple explanation of IRS record keeping rules for the charitable deduction:

  • Gifts of less than $250 per donee — you need a cancelled check or receipt
  • $250 or more per donee — you need a timely written acknowledgement from the donee
  • Total deductions for all property exceeds $500 — you need to file IRS Form 8283
  • Deductions exceeding $5,000 per item — you need a qualified appraisal completed by a qualified appraiser

Wait, you ask, is it really that simple? Actually, no, not really. Let’s go through these categories and dig deeper.

Substantiation Requirements for Monetary Gifts less than $250

A federal income tax deduction for a charitable contribution in the form of cash, check, or other monetary gift is not allowed unless the donor substantiates the deduction with a bank record or a written communication from the donee showing the name of the donee, the date of the contribution, and the amount of the contribution.

Meaning of “Monetary Gift”

For this purpose, the term “monetary gift” includes the common ones you think of when thinking of the term–gifts of cash or by check. But monetary gift also includes gifts by use of:

  • credit card;
  • electronic fund transfer;
  • online payment service;
  • payroll deduction; or
  • transfer of a gift card redeemable for cash.

Definition: Bank Record

Again, to claim the charitable deduction for any monetary gift, you need a bank record or written communication from the donee. The term “bank record” includes a statement from a financial institution, an electronic fund transfer receipt, a cancelled check, a scanned image of both sides of a cancelled check obtained from a bank website, or a credit card statement.

Definition: Written Communication

The term “written communication” includes email. Presumably it also includes text messages. But, again, the written communication, whether paper or electronic, it must show the name of the donee, the date of the contribution, and the amount of the contribution.

Substantiation of Gifts of $250 or more

For any contribution of either cash or property of $250 or more, a donor must receive contemporaneous written acknowledgment from the donee. Two keys here: “contemporaneous” and “written acknowledgement” both have very specific meanings in this context.

Requirements of written acknowledgment

The written acknowledgment must include:

  1. The date of the gift and the charity’s name and location.
  2. Whether the gift was cash or a description of the non-cash gift.
  3. A statement that no goods or services were provided by the organization in return for the contribution, if that was the case.
  4. A description and good faith estimate of the value of goods or services, if any, that an organization provided in return for the contribution.
  5. A statement that goods or services, if any, that an organization provided in return for the contribution consisted entirely of intangible religious benefits, if that was the case.

“Contemporaneous”

For a written acknowledgment to be considered contemporaneous with the contribution, a donor must receive the acknowledgment by the earlier of: the date on which the donor actually files his or her individual federal income tax return for the year of the contribution or the due date (including extensions) of the return.

Non-Cash Gifts of more than $500

If you make a total of more than $500 worth of non-cash gifts in a calendar year, you must file Form 8283, Noncash Charitable Contributions, with your income tax return.

You’ll only have to fill out Section A of Form 8283 if:

  • the gifts are worth less than $5,000, or
  • you’re giving publicly traded securities (even if they’re worth more than $5,000).

Otherwise, you’ll be required to fill out Section B of Form 8283 and all that entails.

Non-Cash Gifts of more than $5,000

If you donate property worth more than $5,000 ($10,000 for stock in a closely held business), you’ll need to get an appraisal. The information goes in Section B of Form 8283, Noncash Charitable Contributions.

An appraisal is required whether you donate one big item or several similar items which have a total value of more than $5,000. For example, if you give away a hundred valuable old books, and their total value is more than $5,000, you’ll need an appraisal even though you might think you’re really making a lot of small gifts. The rule applies even if you give the items to different charities.

Requirements for “qualified appraisal” and “qualified appraiser”

Again, non-cash gifts of more than $5,000 in value, with limited exceptions, require a qualified appraisal completed by a qualified appraiser. The terms “qualified appraisal” and “qualified appraiser” are very specific and have detailed definitions according to the IRS.

Qualified appraisal

A qualified appraisal is a document which is:

  1. Made, signed, and dated by a qualified appraiser in accordance with generally accepted appraisal standards;
  2. timely;
  3. does not involve prohibited appraisal fees; and
  4. includes certain and specific information.

Let’s further examine each of these four requirements.

“Qualified Appraiser”

Appraiser Education and Experience Requirements

An appraiser is treated as having met the minimum education and experience requirements if she is licensed or certified for the type of property being appraised in the state in which the property is located. In Iowa, for a gift of real estate, this means certification by the Iowa Professional Licensing Bureau, Real Estate Appraisers.

Further requirements for a qualified appraiser include that they:

  1. Regularly performs appraisals for compensation;
  2. demonstrates verifiable education and experience in valuing the type of property subject to the appraisal;
  3. understands they may be subject to penalties for aiding and abetting the understatement of tax; and
  4. not have been prohibited from practicing before the IRS at any time during three years preceding the appraisal.

Also, a qualified appraiser must be sufficiently independent. This means a qualified appraiser cannot be any of the following:

  1. The donor;
  2. the donee;
  3. the person from whom the donor acquired the property [with limited exceptions];
  4. any person employed by, or related to, any of the above; and/or
  5. an appraiser who is otherwise qualified, but who has some incentive to overstate the value of the property.

Timing of Appraisal

The appraisal must be made not earlier than 60 days prior to the gift and not later than the date the return is due (with extensions).

Prohibited Appraisal Fees

The appraiser’s fee for a qualified appraisal cannot be based on a percentage of the value of the property, nor can the fee be based on the amount allowed as a charitable deduction.

Specific Information Required in an Appraisal

Specific information must be included in an appraisal, including:

  1. A description of the property;
  2. the physical condition of any tangible property;
  3. the date (or expected date) of the gift;
  4. any restrictions relating to the charity’s use or disposition of the property;
  5. the name, address, and taxpayer identification number of the qualified appraiser;
  6. the appraiser’s qualifications, including background, experience, education, certification, and any membership in professional appraisal associations;
  7. a statement that the appraisal was prepared for income tax purposes;
  8. the date (or dates) on which the property was valued;
  9. the appraised FMV on the date (or expected date) of contribution;
  10. the method of valuation used to determine FMV;
  11. the specific basis for the valuation, such as any specific comparable sales transaction; and
  12. an admission if the appraiser is acting as a partner in a partnership, an employee of any person, or an independent contractor engaged by a person, other than the donor, with such a person’s name, address, and taxpayer identification number.

Appraiser’s Dated Signature and Declaration

Again, a qualified appraisal must be signed and dated by the appraiser.  Also, there must be a written declaration from the appraiser she is aware of the penalties for substantial or gross valuation

The charitable deduction can result in significant tax savings. But, substantiation rules, as you’ve seen, can be complicated. Almost all Iowans have a unique estate plan, so be sure to contact the appropriate professional for personal advice and counsel.

gordon fischer looking in book

Feel free to contact me any time to discuss how to maximize your charitable gift. I offer a one-hour free consultation, without any obligation. I can be reached any time at my email, gordon@gordonfischerlawfirm.com, or on my cell, 515-371-6077.

EstatePlanningSeminar-3

Monday, April 25, 2:00 – 3:30 p.m.

Iowa City Senior Center

28 S. Linn Street

FREE AND OPEN TO THE PUBLIC 


– Why you need a will

– 7 most common estate planning mistakes

– 5 easy ways to super charge charitable giving

Please register by emailing gordon@gordonfischerlawfirm.com
or calling 319-356-5220


Thank you to sponsors:

Community Foundation of Johnson County

Elder Services, Inc.

Friends of the Animal Center Foundation

Friends of The Center

Gordon Fischer is an Iowa lawyer with more than 20 years experience.
The mission of his law firm is to promote and maximize charitable giving.

Reach out any time — Gordon’s email is
gordon@gordonfischerlawfirm.com and his cell phone is 515-371-6077.

Come one, come all! 🙂

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Pull up a bar stool. Let’s talk about the craft beer movement and what it can teach your fave charity.

Back in the day, there were, like, three kinds of beers. In fact, one of the most famous advertising campaigns of all times – “tastes great, less filling!” – itself implied there were really just two types of beers.

Then came the craft beer movement. I’m not sure whether craft beers were a response to consumers, or whether craft beers created a demand; presumably both. In any case, now a place like, say, Exile Brewing in Des Moines, itself has more than twenty-five beers (this based on an informal count from Exile’s robust website).

Now any retail establishment which sells beer must offer lots and lots of different kinds of beer. Any retail establishment which isn’t able to offer its customers wide variety risks irrelevance, or worse.

Nonprofits depend on the generosity of donors. Donors’ views have changed, however. Donors expect – indeed, demand – the opportunity to use many different options to assist their favorite charities. No longer can nonprofits simply ask folks to pony up cash, or just accept credit cards. Now, donors want to be able to converse with their fave charity and discuss using their whole portfolio.

Nonprofits need to be able to accept, and intelligently discuss, gifting of many different types of noncash assets, including:

  1. Securities
  2. Real estate
  3. Tangible personal property
  4. Gifts of grain
  5. Life insurance
  6. Retirement benefits

Charities also need to be able to discuss different tools and techniques, including wills, trusts, and estates and estate planning, as well as charitable gift annuities and charitable remainder trusts.

A nonprofit which doesn’t offer its supporters a wide variety of giving options risks irrelevance. Or even worse fates!

So, how does your fave nonprofit stack up with charitable giving tools and techniques? What questions do you have or what issues do you face?

Email me anytime at gordon@gordonfischerlawfirm.com. I’d love to hear from you.

 

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