How a guardian is appointed

Many older people who are concerned that they will someday be incapacitated protect themselves with a power of attorney. This document gives someone else the right to make decisions for you if you can’t make them yourself.

But what if a person who can no longer make decisions doesn’t have a power of attorney – or the power of attorney isn’t enough to protect them for some reason? [Read more…]

Providing for your pet with a trust

A dog or a cat can be a member of the family, but what happens to this family member after you’re gone? How can you ensure that your dog, cat or other pet will be cared for?

You can give directions in your will to leave your pet to a caretaker. But there is no guarantee that the caretaker will continue to care for the pet. [Read more…]

Retirement home can force resident to move to higher level of care

A retirement community can force one of its residents to move from a private apartment to a smaller assisted-living unit, a federal court has ruled.

Sally Herriot, 90, is a resident of Channing House, a continuing care retirement community in Palo Alto, California. Like many such communities, Channing House provides three levels of care – independent living, assisted living, and skilled nursing. After moving to the facility with her now-deceased husband in 1991, Ms. Herriot lived in a spacious independent living apartment. [Read more…]

Who should be your retirement plan beneficiary?

Picking a retirement plan beneficiary is a key step in estate planning.  Every year we hear about people who lost out on enormous tax savings by picking the wrong beneficiary.  So how do you decide whom to pick?

Most married people will choose their spouse.  This is usually a good idea because the spouse can take distributions from the plan if he or she needs the money.  The spouse can also roll the account over into his or her own retirement plan. [Read more…]

Uncertain market makes prepaid 529 plans more attractive

With the stock market down significantly, some parents are looking at safer ways to save for a child’s college education. Prepaid 529 plans offer parents (and other family members) the opportunity to lock in tuition at today’s rates.

Up until now, traditional 529 savings plans have been more popular. These traditional plans allow parents or other family members to invest money for a child’s education tax-free, usually in mutual funds. But prepaid plans are gaining ground now that the market has dramatically reduced the value of many investment-based savings plans. [Read more…]

Why now is a good time for sophisticated estate planning

All of us are affected by the economic recession, but you should know that certain estate planning techniques become must more valuable when asset prices plunge – so this is a good time to take advantage of them.

Some of the best estate planning ideas involve giving a partial interest in your assets to your heirs now, while retaining effective control over the assets.  The idea is to get these interests out of your estate now at today’s value, rather than later when they will presumably be worth more. [Read more…]

What happens if you die without a will?

We all know we’re supposed to do estate planning, but not all of us get around to it. So what happens if you don’t have a will when you die? Your estate will be distributed according to state laws, which may or may not conform to the way you want your assets and possessions to be distributed.

Each state has laws that determine what will happen if a person dies without a will. If you’re married, most states award one-third to one-half of your estate to your spouse, with the rest divided among your children or, if you have no children, to other relatives such as your parents or siblings. If you’re single, most states provide that your estate will go to your children, or to other relatives if you don’t have children. If you have no living relatives, then your property will go to the state. [Read more…]

Smart ways to help adult children through troubled financial times

Many older people are watching their grown children struggling through difficult times, facing unemployment, investment losses, difficulty in keeping up with a mortgage and other issues.  These parents want to help their children financially – but they want to do so in a tax-smart way that’s consistent with their overall estate plan.  Here are some ideas to consider:

 Annual gifts to children’s spouses:

Suppose your daughter is doing well financially, but your son has lost his job and is struggling.  If you make annual gifts to your children, you could make an additional gift to your son’s wife.  You can give up to $13,000 a year to the son and an additional $13,000 to his wife without incurring any gift tax consequences. One thing to consider is your daughter’s reaction.  Will she be understanding, or will she think this is unfair?  If you want to be completely fair to your daughter, you could increase the amount you leave to her in your will, in order to equalize the amount the children will ultimately receive.  You could create a formula in your will explaining your lifetime gifts and taking them into account in your bequests. [Read more…]

What the recession will mean for long-term care

The current economic downturn isn’t going to change the needs of seniors for help with the activities of daily living. However, it could have a big effect on how and where that help is provided – at home, in an assisted living facility, or in a nursing home. And it could affect who provides the care – family members or hired staff. [Read more…]

Grooming policy for employees may be illegal

Can an employer adopt a grooming policy that requires male workers who have contact with customers to be clean-shaven and have trimmed hair? Maybe … but this might amount to religious discrimination, according to the Massachusetts Supreme Judicial Court. The worker in this case was a technician at a Jiffy Lube service station. He was a Rastafarian and his religion did not permit him to shave or cut his hair. The company told him that if he refused to abide by the grooming policy, he could only work in the lower bay and would not be allowed to have contact with customers.

 In the resulting lawsuit, the company argued that it shouldn’t be forced to make an exception for the worker because the company had a right to control its public image.  But the court ordered the case to go to trial. To win, the court said, Jiffy Lube would have to show that all conceivable accommodations of the employee’s religion would impose an “undue hardship” on its business.

Nursing home employees could be sued – despite contract

The family of a patient who died in a nursing home could sue the nurses who took care of her – even though the patient’s contract with the home said that the home couldn’t be sued and any complaints had to go to arbitration instead. The family claimed that three nurses ignored warning signs of the patient’s heart problem, and she died as a result. The contract said that the family couldn’t sue the home. However, it did not say that the family couldn’t sue the nurses individually, and therefore the suit against them is okay, the Massachusetts Superior Court decided.

Why a recession is a good time for estate planning

All of us are affected by the economic recession, but you should know that certain estate planning techniques become much more valuable when asset prices plunge – so this is a good time to take advantage of them. Some of the best estate planning strategies involve giving a partial interest in your assets to your heirs now, while retaining effective control over the assets. The idea is to get these partial interests out of your estate at today’s value, rather than later when they will presumably be worth more. And if you can get these interests out of your estate in a period when asset prices are temporarily depressed, the savings can be even greater.

So now might be a good time to pass on to your heirs an interest in a family business, real estate investments, a vacation home, or other assets. Some of the techniques that might be worth considering are a family limited partnership, a retained-interest trust, and a qualified personal residence trust.

Binding mediation: a new alternative to going to court

“Binding mediation” – a hybrid of mediation and arbitration – is catching on as an alternative to a full-blown court trial. In arbitration, a private arbitrator acts as a judge and issues a binding decision. In mediation, a mediator or “go-between” tries to resolve the dispute by working with both sides, but can’t force an outcome. Binding mediation is a combination of the two: A mediator brings the parties together and tries to negotiate a compromise, but if that doesn’t work, the mediator can issue a binding decision.

In some cases, binding mediation can achieve many of the benefits of both mediation and arbitration. Like mediation, it is relatively quick and inexpensive and may help preserve existing relationships between the parties. But it also provides the finality offered by arbitration. [Read more…]

Here’s a second chance if you elected early Social Security benefits

Did you elect to take Social Security benefits before your full retirement age? If you did and are now looking for extra income, there may be an answer. Once you reach full retirement age, you can pay back the money you have received and reapply for full retirement benefits.

Although you can collect Social Security benefits between age 62 and your full retirement age, if you do, your benefits will be lower. For example, if you were born in 1944 and decided to retire at age 62, four years before your full retirement age of 66, your total benefit reduction is 25 percent. If your full benefit was to be $1,000 a month, your reduced benefit is $750. A little-known provision of the Social Security laws allows you to withdraw your application for early benefits and reapply for your full benefits. The catch is that you must be able to pay back all the money you received so far. However, because you don’t have to pay any interest on the benefits you received, if you can find the money to repay the benefits, it may be worth it. You could think of it as an interest-free loan.

New law makes it easier to sue for wage discrimination

A new federal law signed by President Obama will make it easier to sue an employer for wage discrimination. The Lilly Ledbetter Fair Pay Act is named after Lilly Ledbetter, who worked as a plant manager for Goodyear Tire but realized only after some years had passed that she was getting paid less than her male counterparts. When she sued for wage discrimination, the U.S. Supreme Court threw the case out, saying she had filed it too late – after the 180-day limit that began when the pay decision was first made.

The law overturns the Supreme Court decision. Now, employees alleging pay discrimination will be able to file a claim within 180 days of the issuance of any discriminatory paycheck … as opposed to 180 days from the first paycheck.

Many die each year from hospital and nursing home infections

A large Boston jury verdict in the case of a woman who died from an infection while undergoing cancer treatment illustrates a growing trend across the country toward lawsuits against health-care providers for causing (or not preventing) such infections.

Nationally, more than 2 million people each year develop serious infections while they’re in the hospital being treated for something else. And about 90,000 of them die as a result. In addition, another 1.4 million people each year develop infections while in nursing homes and other long-term care facilities. [Read more…]

Limo company sued for dropping off drunk passenger

A limousine company can be sued where it dropped off a drunk passenger at his car and the passenger then drove drunk and killed someone. The limo had been hired by six men attending a bachelor party. It picked them up at a Boston sports bar, drove them to a Rhode Island club, and then returned them to the sports bar. Sadly, one of the men drove off and had an accident. He killed an off-duty police officer and injured two other people.

The injured people and officer’s family sued the limo company. The court said the limo company could be sued for negligence. It said the limo driver knew the passenger was drunk and could have foreseen that he would drive, since when he dropped him off after 2:00 a.m., the bar was closed and the MBTA had stopped running. On the other hand, it’s not clear what the limo company could have done – it didn’t have a right to restrain the passenger against his will or take him someplace he didn’t want to go. [Read more…]

Child support guidelines change in Massachusetts

The Massachusetts child support guidelines have been thoroughly revised for 2009. That means that anyone who gets divorced in 2009 or after will have the amount of their child support payments calculated under new rules. If you have a child support order from a divorce that occurred before 2009, your payments won’t change. And you can’t go to court and get a new order just because there are new guidelines.

However, if you have a significant change in your circumstances and you go to court in 2009 or after and modify your award because of the change, your new award will be based on the new guidelines. One major change in the guidelines is that they now consider all income from both parties. Previously, the first $20,000 of the recipient’s income wasn’t taken into account. [Read more…]

Real estate slump may help with estate planning

Real estate prices are in a slump in most places, but this can be good news if you want to transfer real estate assets to your children as a means of estate planning. Often, a good way to reduce estate taxes is to give your heirs an interest in your assets now, while retaining control of the assets. That way, you get the interests out of your estate at today’s values, rather than later when they will presumably be worth more and trigger a higher tax. And when asset values are low, it’s an even better idea to transfer a partial interest. You can give these interests outright, but there are other techniques that can magnify the savings. For instance, you could consider putting a vacation home into a trust or a limited-liability company, putting investment real estate into a family limited partnership, or putting your home into a qualified personal residence trust.

Average rents for offices and apartments decline

The average rent for a residential apartment fell in the fourth quarter of 2008. Although the average decline was small – only 0.4 percent – the drop was significant because this was the first time rents have fallen overall since 2003. The average vacancy rate was 6.6 percent, up from 5.7 percent a year earlier, according to research firm Reis Inc. The average office rent fell 1.2 percent in the fourth quarter. This marks the end of a surge in office rents that saw the average increase by 10.6 percent in 2007. [Read more…]

Can a city be sued for rezoning a property?

Can a landowner who planned to build a shopping plaza sue a city for changing the land’s zoning to “residential”? Maybe … but only if the rezoning almost totally destroyed the land’s value. That’s the result of a decision by a New York appeals court. Parviz Noghrey wanted to build a shopping center in Brookhaven, N.Y., but before he could do so the town adopted a moratorium on commercial development, and then changed the land’s zoning so it could be used only for houses. Noghrey sued, claiming that the town violated the U.S. Constitution by “taking” his land without paying him compensation.

The court didn’t throw out the suit, but it made it very difficult. Noghrey doesn’t have to prove that the town made his land worthless, the court said. But he can’t claim that the town “took” his land from him unless he can show that he was left with only a “bare residue” of value. According to the court, Noghrey must show that the value of his land was reduced by around 95% in order to win in court.

Shopping mall must allow protest against tenant

A shopping mall cannot prevent a union from leafleting in front of a tenant’s store to urge a boycott of the store, according to the California Supreme Court. The union in this case represented employees of a San Diego newspaper. Union members wanted to protest outside a department store in the mall, urging shoppers not to patronize the store because it bought ads in the newspaper.

The mall objected. While the mall allowed protests and other political activities inside, it required protesters to obtain a permit, and it had a policy of denying permits to anyone who wanted to protest against one of its tenants. By a 4-3 vote, the court sided with the union. [Read more…]

Fannie Mae stops evicting tenants of foreclosed homes

Fannie Mae has announced a national policy under which it will no longer immediately evict tenants from homes on which it forecloses. Under the policy, the mortgage giant will in effect become a landlord or property manager for many homes where there is a foreclosure. Renters often face a difficult situation when a property is foreclosed upon, and this move will help those in Fannie-backed properties by providing some breathing room while they figure out what to do next.

New rules for mortgage appraisals

Starting May 1, 2009, new rules will apply to most appraisals of single-family homes requested by banks as part of the mortgage process. Lenders will have to comply with these rules in order to have their mortgages purchased by Fannie Mae or Freddie Mac. The new rules are part of an effort to keep appraisals honest. In the past, some lenders had allegedly pressured appraisers to provide certain valuations for properties in order to allow a mortgage deal to go through. The rules were agreed to by Fannie and Freddie; the Federal Housing Finance Authority, which regulates them; and New York Attorney General Andrew Cuomo.

Originally, the rules required lenders to use outside appraisers rather than appraisers who worked for the lender. But industry officials complained that this would require them either to use less-qualified appraisers or to pay more for appraisals and pass the increased cost on to the consumer. Under a compromise, lenders will be able to use in-house appraisers, but a variety of “firewalls” must be created to ensure the appraisers’ independence. In addition, a lender may not give an appraiser a “target” value for a property or tell an appraiser how much the customer wants to borrow.

Get an $8,000 tax bonus if you buy a home by November 30, 2009

The recent economic stimulus law contains a big tax break for first-time homebuyers: If you buy a home by November 30, 2009, you can claim an $8,000 tax credit.

Congress had previously approved a similar credit, but it had required homebuyers to pay back the money over time. In effect, it was an interest-free loan. Under the new law, however, the credit doesn’t have to be paid back – it’s free money. [Read more…]

USDA program helps many people afford a home

A little-known mortgage program operated by the U.S. Department of Agriculture – that’s right, the same agency that inspects and approves the meat in grocery stores – is enabling many people to afford a home even if they can’t come up with a traditional down payment because of the economic downturn.

The program is designed to help people buy homes in rural areas – but “rural” is loosely defined and in some cases can mean a town of up to 25,000 people. As a result, many people can qualify if they are living in a small town or are willing to move to a smaller suburb that is 10 or 15 miles outside a major city. [Read more…]

New law makes it easier to sue for wage discrimination

The first law signed by President Obama will make it easier to sue an employer for wage discrimination. The law will restart the statute of limitations for a pay bias claim with each new paycheck that is issued. The Lilly Ledbetter Fair Pay Act is named after Lilly Ledbetter, who worked as a plant manager for Goodyear Tire but realized only after some years had passed that she was getting paid less than her male counterparts. When she sued for wage discrimination, the U.S. Supreme Court threw the case out, saying she had filed it too late – after the 180-day limit which began when the pay decision was first made.

The law overturns the Supreme Court decision. Now, employees alleging pay discrimination will have 180 days from the issuance of any discriminatory paycheck to file a claim. A number of business groups, including the U.S. Chamber of Commerce, opposed the bill and said it would lead to increased litigation costs and force companies to defend decades-old pay-scale decisions.

Employers spy on workers suspected of lying about family leave

Some employers are hiring private investigators to spy on workers and find out if they are abusing their time off under the Family and Medical Leave Act. There has been an increase recently in requests for time off under the Act, and a number of employers suspect that some workers are taking time off without a valid reason.

Two federal courts have sided with employers in these cases. [Read more…]

Worker who answered questions about harassment can sue for harassment

A worker who claims she was retaliated against after participating in an internal sex harassment inquiry about a co-worker can sue her employer for sex harassment, the U.S. Supreme Court recently decided. The employee was interviewed as part of the company’s investigation of allegations that a company director had committed sexual harassment. During the interview, the employee described incidents of egregious harassment against her and other employees. The director was verbally reprimanded but not terminated.

The employee was later placed on administrative leave and ultimately fired. The company claimed it was for irregularities in the payroll office which she oversaw.  But she sued for sex harassment, claiming she was fired in retaliation for participating in the harassment inquiry. [Read more…]

Independent contractor can sue for injury on the job

An independent contractor can sue for injuries on the job – even though the workers’ compensation law generally bars lawsuits for workplace injuries, an appeals court in California has decided.

The worker was hired by a subcontractor to install a canopy at a gas station. He fell into a hole at the construction site and was injured.  He sued the general contractor and the subcontractor. The defendants argued that the suit should be thrown out because of the workers’ comp law. But the court said the suit could go forward because the worker was a contractor, not an employee. An independent contractor isn’t eligible for workers’ comp benefits, so the ban on lawsuits doesn’t apply, the court said.

Grooming policy for employees may be illegal

Can an employer adopt a grooming policy that requires male workers who have contact with customers to be clean-shaven and have trimmed hair? Maybe … but this might amount to religious discrimination, according to a Massachusetts Supreme Court decision. The worker in this case was a technician at a Jiffy Lube service station. He was a Rastafarian and his religion did not permit him to shave or cut his hair. The company told him that if he refused to abide by the grooming policy, he could only work in the lower bay and would not be allowed to have contact with customers.

In the religious discrimination lawsuit, the company argued that it shouldn’t be forced to make an exception for the worker because the company had a right to control its public image. The court sent the case for trial, but it suggested that the employer might have to give in. To win, the court said, Jiffy Lube would have to show that all conceivable accommodations of the employee’s religion would impose an “undue hardship” on its business.

Employees can be forced to forfeit their stock

A company can force departing employees to forfeit their stock in the company in certain circumstances, according to the Connecticut Supreme Court. The company allowed employees to elect to receive restricted stock in lieu of bonuses or through voluntary payroll deductions. However, employees who quit or were fired for cause were required to forfeit the stock as well as the right to the amounts paid for the stock.

The employees in this case argued that the forfeiture requirement violated state wage laws, because the company could in effect withhold accrued wages from workers. But the court decided that the bonuses didn’t constitute “wages” under to the state wage law. That’s because they were awarded on a discretionary basis and weren’t directly linked to the efforts of the particular employee. [Read more…]

Company didn’t have to give 60 days’ notice of layoffs

A company didn’t have to give 60 days’ notice of layoffs where it was forced to shut down operations due to the sudden loss of a major customer, according to a recent federal court ruling.  Normally, under the federal “WARN Act,” companies with 100 or more workers must provide 60 days’ notice of a plant closing or a mass layoff.  However, there is an exception for “unforeseeable business circumstances.”

 The company’s financing problems resulted in its largest customer, which accounted for 40 percent of its orders, suddenly switching to another supplier. Even though the workers argued that the company had been going through financial difficulties for months and knew in advance about the possibility of layoffs, the court said that employers shouldn’t be burdened with having to notify workers of the possibility of layoffs every time there is a financial problem that might prove temporary.  The loss of the company’s main customer in the midst of all of its other problems was unforeseeable, and it was enough that the company gave its employees written notice six days after it learned of the loss of the customer.

New family and medical leave rules go into effect

New rules apply to workers requesting time off under the federal Family and Medical Leave Act, or FMLA. Generally, FMLA allows workers to take up to 12 workweeks of unpaid leave per year due to a serious health condition, a family member’s serious health condition, or a birth or adoption. The Act also allows leave due to a relative’s military deployment. Employees are eligible in most cases if they have worked at least 12 months for an employer that has 50 or more employees.

Here are some of the major changes in the Labor Department’s new rules: [Read more…]