PSYC 114 - Planning for Incapacity

PSYC 114 - Planning for Incapacity - PSYCHOLOGY DEPARTMENT...

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PSYCHOLOGY DEPARTMENT Psychology of Aging Dr. Tina Camagna PLANNING FOR INCAPACITY Older adults with mental or physical disabilities may require another person to manage their affairs. Listed below are some of the planning devices available to address these issues. The particular circumstances of the individual’s situation will dictate which should be employed. JOINT TENANCY While joint tenancy may be a proper planning tool for married couples, it is generally not considered suitable in other instances. Under a joint tenancy, two (or more) individuals have equal interests in and control over property (e.g., stocks, bank accounts, home). When a non-spouse becomes a joint tenant, an immediate gift of one-half of the property is bestowed on him or her. An immediate disadvantage in this situation is that an older adult would have to pay a gift tax on any amount given in excess of $13,000.00 to the joint tenant. As of January 2010, the IRS allows any person to transfer up to $13,000.00 per individual per year, tax-free. Example: A widower owns a $500,000.00 home and signs a deed establishing that his home be placed in his and his girlfriend’s name as joint tenants. Perhaps without realizing it, the widower has just bestowed a gift of $250,000.00 to his girlfriend. The girlfriend can now sell or mortgage her one-half share. The home could also be seized by her creditors. Paradoxically, if the girlfriend predeceases the widower, he could lose up to 50% in tax benefits when he goes to sell the property. He would get a “stepped-up” tax basis for one- half of the property owned by her. The signature should be notarized. SOCIAL SERVICES A variety of services are offered through the County and non-profit agencies to help older adults remain in their own homes and “age in place.” They include: case management, in- home respite services, senior companionship, escorted transportation, bill paying, homemaker services, etc. REPRESENTATIVE PAYEE
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PSYC 114 - Planning for Incapacity - PSYCHOLOGY DEPARTMENT...

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