DECEMBER 4, 1995 VOLUME 3, NUMBER 23
Many elders have been advised to execute Durable Powers of Attorney, both for financial and health-care decisions. The use of such powers (DPOAs, in lawyers’ shorthand) has become widespread. The opportunity for abuse has also grown.
Massachusetts resident Frank Gagnon, 85, gave a power of attorney to his daughter Joan Coombs in late 1990. Three months later he apparently reconsidered his decision and revoked the DPOA, though he did not tell his daughter he had done so.
Within a year Mr. Gagnon had found a buyer for a piece of property he owned in New Hampshire. He signed a sales contract for $750,000 and informed his family (including his daughter) of what he considered his good fortune.
Ms. Coombs did not agree. To prevent the sale of the property, and without discussing the matter with her father, she created a trust for her father’s benefit, naming herself as Trustee. Using her DPOA, she transferred the New Hampshire property into the trust’s name.
Mr. Gagnon demanded that his daughter terminate the trust and return the property to him. She refused, and Mr. Gagnon filed an action against her. At trial, the Court ruled that, since Ms. Coombs did not actually know her power of attorney had been revoked, the transfer would stand.
The Massachusetts Court of Appeals reversed the trial court’s finding. The higher court noted that Ms. Coombs had a fiduciary duty to her father, which was inconsistent with her actions in encumbering his property.
Furthermore, said the Court of Appeals, her DPOA was effectively revoked when she learned that her father had sold the New Hampshire property. She was ordered to return the property to her father. Gagnon v. Coombs, Mass. App. Ct., August 23, 1995).
Why Seniors May Be Slow To Marry
Most people who deal regularly with the elderly know that older couples often live together without getting married.Some may not realize how many legal encouragements there are for such a practice. A few of the common reasons for couples to remain unmarried:
- Income Taxes. Married couples (and not just the elderly) pay a marriage “penalty tax”; two wage earners filing as single individuals pay less in income taxes than they would as a married couple.
- Social Security Benefits. Upon death of a spouse who received higher benefits, the survivor’s Social Security payments will be increased to the same level. Upon remarriage, the higher benefits are returned to the lower level.
- Social Security Taxes. A married couple pays taxes when the total Social Security benefit exceeds $32,000. The same couple can earn $25,000 each before paying any taxes if they remain unmarried.
- Home Sales. If one member of a prospective couple has used the one-time over-55 tax exclusion for the gain from sale of a home, marriage will cause the other party to lose his or her exclusion.
- Medicaid Eligibility. Marriage may expose the healthy spouse’s separate assets to long-term care costs for the other spouse in the event of nursing home placement.
And those are just the federal rules discouraging marriage.