Terrible Flooding in Thailand: Pictures from my Wife's family

These are pictures from Taew's sister Ke (the interior photos are from her house). Photos from Bangbuathong (near Bangkok).
























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Location:Thailand

Steve Jobs Day

California has declared today Steve Jobs Day.  In this post I will discuss how I am concerned that we no longer have a great industrialist to lead us out of the Great Recession.  Where is our Henry Ford?

But first, this seems like an appropriate time to reflect on what a great industrialist Steve Jobs was.  He helped create the personal computer market with the Apple II (and I have fond memories of my Apple IIc and IIgs).  He led the creation of the first mouse based graphical computer system.  He helped make Pixar the great studio it is today.  He helped revolutionize music with the iPod.  Reinvented the phone with the iPhone (and gave what was one of the best presentations I have ever seen....the iPhone launch speech still gives me chills.....it completely changed smartphones).  He helped create a new product category with the iPad, a device I use all of the time in my practice (I realize that there were Windows tablets, but those were very different devices.....really just PCs with a little bit of touch interface).  I am just beginning to get the hang of iCloud, but I am certain that it is a giant leap forward in the post-pc age.  It will take many years, perhaps even a century, to fully appreciate how important these changes will be.

Now about Henry Ford.  No one can deny how much the automobile changed the American landscape, and how the automobile changed how America was perceived around the world (the Germans and others even used "Fordism" to describe American mass production).  Henry Ford was an essential part of this great industrialization.  He was also an essential part of the war effort, despite being both a pacifist as well as quite elderly.  This great industrialization led America to victory in World War II.  The Germans simply could not keep up with American production.  Moreover, this industrialization led America out of the Great Depression.

Before Steve Jobs and his amazing "second act" (taking over control of Apple for the second time, and leading to be the most valuable company on Earth), it seemed like the coolest tech products came from other countries, such as Sony in Japan.  Now, people around the world line up for these iconic products designed in Cupertino California.  Although I am convinced that Apple will be fine for awhile, who else in American industry will be able to so invigorate American ingenuity?  In other words, who will be our Henry Ford now, and help industrialize America, and lead us out of the Great Recession?
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I plan to post soon regarding a fellow Colby alum, Mike Daisey, and how he is completely wrong about Apple, and why you should never trust someone who hasn't run a company to comment on capitalism.

Very sad day....Steve Jobs has passed away....

I really didn't think it would come this quick since it wasn't that long ago that he did the iCloud announcement.

It's no secret that I am quite a fan of Apple products, and in this difficult economy its even more tragic to lose one of the greatest industrialists in US history.


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In the United States, are the rich paying enough taxes?

My answer on @Quora to: In the United States, are the rich paying enough taxes? http://qr.ae/7Ps9A

Yes, the rich are paying enough taxes.

There are many on here who talk about all of the great loopholes that the rich supposedly take to avoid tax. However, most of the great tax shelters have been shut down, and there are severe penalties (look at what happened to all the Swiss bank accounts.....look at the 2011 Offshore Voluntary Disclosure Initiative).

There is no such theory as "trickle down." If you Google trickle down, you get this:

"Economist Thomas Sowell has written that the actual path of money in a private enterprise economy is quite the opposite of that claimed by people who refer to the trickle-down theory. He noted that money invested in new business ventures is first paid out to employees, suppliers, and contractors. Only some time later, if the business is profitable, does money return to the business owners—but in the absence of a profit motive, which is reduced in the aggregate by a raise in marginal tax rates in the upper tiers, this activity does not occur. Sowell further has made the case that no economist has ever advocated a "trickle-down" theory of economics, which is rather a misnomer attributed to certain economic ideas by political critics."

Trust me, it is not much fun to run a business, pay all the bills and employees, and then have nothing left over to pay yourself, or worse to have to lend money to the business to make payroll. Happens all the time with businesses.

This is a competitive world. If we tax people disproportionately higher than in other countries, people will leave. We are already starting to see this in the US...

Warren Buffett is disingenuous with much of what he is saying. For example, when he talks about paying less than his secretary, he is failing to take into account the corporate taxes he pays. When you combine the corporate taxes with the individual taxes, the US pays one of the highest rates in the world. If we didn't, then why all the effort to shut down tax shelters? Why are so many companies holding their profits offshore? Moreover, Warren Buffett had already made his money, and he likes to hold his positions for a very long time. As such, he really doesn't have much income anyway.

WIth our current rate of spending, you would have to tax people who make over 10 million dollars a year at a 700% tax rate to close the budget gap. Massive increases in tax anyway were one of the causes of the great depression (the Revenue Act of 1932 was one of the largest tax increases in history and made the Great Depression much worse).

As for borrowing our way to prosperity, Japan tried this for a couple decades, and has a lot of debt and not much growth to show for it (Google the "lost decades").

As for solutions, we need to strongly encourage economic growth through attractive tax and regulatory policies and sensible government spending. We need to make sure that investment is still flowing to the US.

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Is the new Voluntary Settlement program for independent contractors a good idea?

Is the new Voluntary Settlement program for independent contractors a good idea?

An article at Forbes says no:

Where Section 530 of the Revenue Act of 1978 applies, reclassification of a worker from independent contractor to employee for tax purposes can only have prospective effect. There is no legal basis for assessing employment tax, penalties, or interest with respect to such worker for a prior period.
Why, then, would an employer voluntarily agree to pay any employment tax with respect to a worker classified as an independent contractor for a prior period for which the worker was classified as an independent contractor? Why, too, would the employer voluntarily agree to extend the assessment period for employment taxes with respect to such worker for each of the next three years?

Click here for the article: Employers Beware of IRS' Illusory Worker Classification Program

Moreover, such a reclassification could lead to negative actions from other government agencies, since the amnesty only applies to the IRS. Employees could also use entry into the program as evidence of wrongdoing by the employer and thus sue for benefits that weren't provided.

However, there are risks in not entering into the program:

Yet given the fact that the Labor Department has teamed up with the IRS and a growing number of states in a renewed effort to penalize businesses for wage theft, employers should weigh their options carefully. According to the Associated Press, the IRS collected $4 million in back wages on behalf of about 6,500 employees who were misclassified in 2010. With 300 new investigators in the agency this year – all of whom will focus exclusively on probing wage theft complaints – we will likely see a significant increase in those numbers, along with the fees and penalties that accompany them.

Click here for the article: Experts Weigh in on the IRS’s New Voluntary Classification Settlement Program

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IRS Announces New Voluntary Worker Classification Settlement Program; Past Payroll Tax Relief Provided to Employers Who Reclassify Their Workers

IRS Announces New Voluntary Worker Classification Settlement Program; Past Payroll Tax Relief Provided to Employers Who Reclassify Their Workers


IR-2011-95, Sept. 21, 2011

WASHINGTON – The Internal Revenue Service today launched a new program that will enable many employers to resolve past worker classification issues and achieve certainty under the tax law at a low cost by voluntarily reclassifying their workers.

This new program will allow employers the opportunity to get into compliance by making a minimal payment covering past payroll tax obligations rather than waiting for an IRS audit.

This is part of a larger “Fresh Start” initiative at the IRS to help taxpayers and businesses address their tax responsibilities.

“This settlement program provides certainty and relief to employers in an important area,” said IRS Commissioner Doug Shulman. “This is part of a wider effort to help taxpayers and businesses to help give them a fresh start with their tax obligations.”

The new Voluntary Classification Settlement Program (VCSP) is designed to increase tax compliance and reduce burden for employers by providing greater certainty for employers, workers and the government. Under the program, eligible employers can obtain substantial relief from federal payroll taxes they may have owed for the past, if they prospectively treat workers as employees. The VCSP is available to many businesses, tax-exempt organizations and government entities that currently erroneously treat their workers or a class or group of workers as nonemployees or independent contractors, and now want to correctly treat these workers as employees.

To be eligible, an applicant must:

Consistently have treated the workers in the past as nonemployees,
Have filed all required Forms 1099 for the workers for the previous three years
Not currently be under audit by the IRS
Not currently be under audit by the Department of Labor or a state agency concerning the classification of these workers
Interested employers can apply for the program by filing Form 8952, Application for Voluntary Classification Settlement Program, at least 60 days before they want to begin treating the workers as employees.

Employers accepted into the program will pay an amount effectively equaling just over one percent of the wages paid to the reclassified workers for the past year. No interest or penalties will be due, and the employers will not be audited on payroll taxes related to these workers for prior years. Participating employers will, for the first three years under the program, be subject to a special six-year statute of limitations, rather than the usual three years that generally applies to payroll taxes.

Full details, including FAQs, will be available on the Employment Tax pages of IRS.gov, and in Announcement 2011-64.



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Eat the Rich

Article from Roth & Company:
ONE TOO MANY TRIPS TO THE BUFFETT.

Anyone up for a 134% tax rate?

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Are You Considering Law School?

Then check out this rather controversial blog about law school and the misleading statistics regarding the percentage of graduates who get jobs.

http://insidethelawschoolscam.blogspot.com/

What percentage of the time is still quite obscure, because we don't have good stats. Although the Law School Transparency people are doing fantastic work with the data available to them, that data is quite bad. We don't know the answer within a tolerable degree of accuracy to such basic questions as "what percentage of graduates of ABA-accredited law schools, and of particular schools, have full-time salaried (aka. real) jobs that require a law degree (i.e., law jobs) nine months after graduation, and what do these jobs pay?" We have even less information about people further down the line, which is actually even more crucial.

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Cell Phone Tax Breaks

Where employers provide cell phones to their employees or where employers reimburse employees for business use of their personal cell phones in accordance with these new IRS guidelines, tax-free treatment is available without burdensome record-keeping requirements.

http://www.sjfpc.com/IRS_Tax_Deduction_Reimbursement_Cell_Phones_IRS_Notice_2011-72.html


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Off The Shelf Operating Agreements

The focus of the court’s analysis seemed to be on the “off-the-shelf” nature of the FLP. They apparently believed that if the FLP were intended for a business or other nontax purpose, more care would have been put into drafting it. Although the Turners provided a laundry list of nontax reasons for forming and funding the FLP, the structure of the partnership and the Clyde Sr.’s relationship with the FLP did not bear out those purposes.

http://www.advisorone.com/2011/09/17/how-to-build-a-foolproof-family-limited-partnershi

Cases like this aggravate me. How many legitimate businesses use off the shelf operating agreements? How many businesses actually use care in drafting their documents? For that matter, how many attorneys use any care at all? Most operating agreements I see have partnership tax language even if it is taxed as an S Corp or a disregarded entity. In the real world, many businesses forget to even pay their annual fee to the secretary of state....

Of course, it would be much better to draft documents with care. My argument is that this case uses a fictional measure of what actual businesses tend to actually do.....

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Mortgage Cancellation of Debt Tax Relief

The Mortgage Relief Act , which effects debts discharged on or after Jan 1, 2007 and before Jan. 1, 2013, generally allows taxpayers to exclude up to $2 million per married couple of mortgage debt forgiveness on their principal residence (does not include second homes or income property).

http://www.lodmell.com/protect-wealth/strategic-defaults-mortgages

Many people discover to their dismay that when a loan debt is forgiven by a lender, not only can this impact a credit report, it can result in additional taxes. This provision provides some relief.

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For those of you who have ever done tech support this is funny

Check out this article:
apple-tech-support-at-its-very-finest

This reminds me of when I worked in a Macintosh computer lab in the early to mid-1990s. I remember when a person came in and asked how to use the foot pedal (meaning the mouse). People would put all sorts of things through the laserwriters which messed them up, including one person who wanted to print what lunch they had packed on a paper bag.

When I worked at the Department of Justice as an intern, one of the attorneys there (this was 1995) asked me to install the Internet (the entire internet, not just a browser) onto his laptop so that he could connect to it when the computer was not connected to the network. He thought it was just another program.

However, I don't think anyone came to ask me how to lift up a computer. I wonder if this was put on there as a joke.....


Gizmodo via Engadget

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Interesting Forbes Article on Gifting

6 Ways To Give Family And Friends Financial Aid

The best part of this article is that you can pay directly for medical, dental or tuition expenses in addition to the 13k a year that you are allowed to gift to a person without having to file a gift tax return (or pay a gift tax). Payment must be made directly to the provider.

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Tips for iPad

I am a rather big Apple fan, and as such use my iPad all of the time.  Unlike many, though, I use it for more than just "consumption."  I frequently get asked what are the best Apps to install and the best way to use the device.  Some of these tips will work on the iPhone as well.  Here is my list:

Apps:

I like iTap RDP to use to connect with remote desktops.  My firm has virtual workspaces set up on our exchange server, and ITap RDP is the best way that I have found to access it.  One change I would suggest making in the settings to ITap RDP is to use the pointer instead of tapping to click.  The pointer is a bit more accurate,

Logmein is good choice for logging into specific computers.  Very well designed and easy setup on macs and PCs.

Simplenote: I use Simplenote on my Mac (using JustNotes) and PC (using ResophNotes) as well as on my iPhone 4 and iPad 2 (using the Simplenote App).  If find that this is a quick way to take notes, and syncs across all of my devices.  I use the tagging function to organize everything, generally by subject area and client name.  Much better than having stacks of yellow pads with my chicken scratch on them.

Reeder:  I use this app to keep track of all of my rss feeds from Google Reader.  This is a great way to keep track of all of your interests.  I have groups set up to monitor blogs relating to tax, estate planning, Apple products, and Thailand.

Omnifocus:  Simply the best todo list program I have ever used.  Organized using the Getting Things Done philosophy, I love how when I am sitting at the phone, it will list out all of the calls I need to make.

Dropbox:  A great file storage solution that works cross platform.  Free.  Best way to store your files.

AirPrint: this is built into the iPad, but unless you have an AirPrint compatible printer, then you will need software on either your Mac or PC.  For Macs, I definitely suggest Printopia.

Evernote: I love this program because whenever I see an article, pdf or something that I want to keep, say a great news article on an area of tax law, then this program makes it so easy to retrieve and sort and keep.  I subscribe to the premium, which is not expensive.  Works cross platform.  Allows you to email items to your account, and can be installed in browsers.

Fastcase, Black Law Dictionary (I love this for the Westlaw key number categories...a great way to search), Title 26 CFR and Title 26 USC, BNA Quicktax, 

iCatcher: A great way to keep track of podcasts.  There are many tax, estate planning, etc. podcasts, as well as some Apple related ones that I listen to....  Actually, I have a TomTom holder for my iPhone that goes into my car, and I plug it into my audio system.  That way, I can listen to these podcasts while driving.

Docs2Go:  My favorite editor for Microsoft Word on an iPad.

Keynote:  Great way to present from an iPad.  Don't forget to bring your adapters!  If you touch the slide when you have the iPad plugged into a projector, then your audience will see a laser pointer like dot on the screen.  Always seems to get some oooos and ahhhs....

Goodreader: great document viewer and organizer.  Cheap.

iAnnotate: great PDF annotator.

PowerOne:  Amazing calculator with many great downloads available.

Tips:

To use Westlaw on an iPad, I do the following: 1) go into the settings on Westlaw, and turn off link viewer, 2) Download iCab mobile (a web browser) from the App Store and set it to desktop Safari.  Use ICab to view Westlaw.  For some reason the normal mobile safari doesn't work well.  Remember to use two finger scrolling sometimes if the single finger doesn't work.  When you want to email an article to yourself, be sure to select rtf (rich text format) as the .doc version used by Westlaw doesn't seem to work well with the iPad.  These tips can save you from having to spend a lot of money on WestlawNext.

As stated above, sometimes you must use two fingers to scroll so that the entire page doesn't move.

Remember that if you have a web page you like, you can save it to your home screen.  I have BNA Tax Management Portfolios saved this way.

Remember that you can do a google search not only across the internet, but also right on the page as well.

If you are trying to make folder out of Apps, the easiest way is to drag right up under the App, otherwise the App might move to either side, and it can be frustrating then to make a folder.

If you tap at the top of the screen, you can scroll right back to the top...works in mobile Safari and in emails.

Remember in iTunes to check the box to encrypt your backup (I got this tip on Daring Fireball, my favorite Apple site).  By doing this, when you upgrade your iPad (or iPhone) software you won't have to reenter all of the passwords.

If you hold down some of the keys on the iPad, you will notice that some other characters pop up (such as a Section symbol, "§," if you hold down &).

  

American Express Yourbuzz is Amazing

American Express has a free new product, Yourbuzz, that monitors your business on all the major social networks and even the web, then delivers reports at intervals you specify. It has a dashboard from which to control everything. Great free way to monitor your web and social presence. It even rates you.

Sign up now on the ad to the right of this website and you will help support this website, even though Yourbuzz is free!

Foreign Bank Accounts

Very important for those with foreign bank accounts to do all of the reporting.  Very severe penalties if you fail to do so.  Remember that green card holders and citizens are subject to worldwide taxation.

What is a Self-Settled Spendthrift Trust?

Georgia doesn’t recognize self-settled spendthrift trusts (1), and it is uncertain as to how domestic and foreign asset protection trusts will be treated in Georgia.  A spendthrift clause is one in which the trust documents prohibit the trustee from distributing to a creditor of a beneficiary.  A self settled trust is a trust whereby a settler transfers property to a trustee with the settler as one of the beneficiaries (or the sole beneficiary).  The issue then becomes the treatment of a self-settled spendthrift trust.  Only a handful of states (but increasing) currently recognize self-settled spendthrift trusts, and it is unclear as to how self-settled spendthrift trusts will be treated in states like Georgia where they are prohibited. (2) In addition, some argue that the domestic asset protection trusts are not as useful as first thought because 1) the full faith and credit clause requires each states to enforce the judgments of other states (and there also may be some arguments as well regarding “minimum contacts” if the trustee has actively solicited business in the state where a lawsuit originated to subject that trustee to the court’s jurisdiction), 2) federal law pre-empts state law under the Supremacy Clause and it is unclear exactly how this will play out in bankruptcy, 3) a creditor could claim that the asset protection trust law impairs their rights under the Contracts Clause of the Constitution.

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(1) Speed v. Speed, 263 Ga. 166, 430 S.E.2d 348 (1993).

(2) O.C.G.A. §53-12-28 (“a spendthrift provision prohibiting involuntary transfers is not valid if the beneficiary is the settlor.”). 

Advantages of Trusts

The advantages of trusts are 1) their flexibility, 2) ability to control assets, 3) avoidance of probate court, 4) various asset protection options (for certain non-self settled irrevocable trusts), and 5) privacy (the trust document usually does not need to be recorded or filed in court).  The main disadvantages are 1) cost, 2) the trust does not control property that is not transferred into it, and 3) the lack of court supervision can sometimes be a disadvantage if the successor trustee is not trustworthy.

Please Fund Your Trusts!

It is important to note that trusts only have power over property that is put into them.  Anything put into the trust will then be controlled by the trustee.  In a revocable trust, the grantor typically will be the trustee while he/she has capacity and while he/she is alive.  The trust should set forth provisions that discuss what will happen during period of incapacity, which should be to have a successor trustee step in.  The trust document specifies how a determination of incapacity is made, such as by the opinion of two doctors.  The trust will not have any power over property outside of the trust, and therefore it is a good practice to prepare deeds and other documents to transfer property into the trust when the trust is prepared. 

Financial Power of Attorney

Financial Power of Attorney

The Georgia statute calls this form a Financial Power of Attorney, which differentiates it from the old Health Care Power of Attorney.  As its name suggests, it is a document that allows another person to make financial decisions.  The statutory form has many choices on it as to which powers to grant, and whether to make it durable or non-durable.  It may be advisable to modify this statutory form slightly particularly for elderly clients so that the most common elements do not require separate signatures, as that may be too burdens on for people with disabilities that impair their ability to sign. (1)  However, if such changes are made it is essential to thoroughly review the document with the client.

In a power of attorney the principal authorizes an agent to act on the principal’s behalf.  Powers of attorney may be general, granting broad powers over financial decisions, or may be more limited to specific transactions.  Powers of attorney are particularly helpful documents as they allow for another to make financial decisions for the principal, which can save the time, cost and expense of getting a conservatorship.  This is particularly true of people with large estates, as it may be difficult to get bonded, which is a necessary part of a conservatorship.  However, this lack of oversight is not without risk.  A power of attorney is a powerful document, allowing another to completely take control of the finances of a principal.  Although there are statutory and common law protections with breach of fiduciary duty and embezzlement claims, it may be impossible to recover the assets and money from a dishonorable agent who has wasted everything away.  If there truly is no one that a client can trust, other options than executing a financial power of attorney should be explored.  Possible solutions include professionally managed trusts or simply allowing for a conservatorship to later be sought, in order to ensure court oversight.  Another problem with powers of attorney is that they require the higher contractual standard of capacity, unlike the testamentary capacity of a will. (2)  Furthermore, a person with dementia, paranoia, etc. may revoke their power of attorney, making a conservatorship necessary anyway.

Under O.C.G.A. § 10-6-36 a power of attorney is considered “durable” unless it specifically states otherwise.  A “durable” power of attorney is one that continues to be effective even during a period of incapacity of the principal.  However, the power of attorney is still cancelled upon the death of the principal.  Under O.C.G.A. § 10-6-6 Georgia does allow powers of attorney to be “springing,” becoming effective upon incapacity.  A common misconception amongst clients is that since a springing power of attorney is only effective upon incapacity, that a less responsible or trustworthy person can be elected.  However, since there is no judicial oversight and typically no bond, the opposite is actually true, since an incapacitated person cannot properly defend themselves.

            Pursuant to O.C.G.A. § 10-6-142 a "notarized signature [is] required for [a] power of attorney [that] authoriz[es] real and personal property transactions." (3)

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(1) O.C.G.A. § 10-6-140 (“The Georgia Statutory Form for Financial Power of Attorney set out in Code Section 10-6-142 may be used to create a financial power of attorney, but is not the exclusive method for creating such an agency.”)
(2) SunTrust Bank, Middle Georgia N.A. v. Harper, 250 Ga.App. 300, 306, 551 S.E.2d 419, 425-26 (2001).
(3)  Sambor v. Kelley, 271 Ga. 133, 134, 518 S.E.2d 120, 121 FN6 (1999).

Advance Directive

The “Georgia Advance Directive for Health Care Act” is codified at O.C.G.A. § 31-32-1 et al.  O.C.G.A. § 31-32-2 defines an “Advance directive for health care” as “a written document voluntarily executed by a declarant in accordance with the requirements of Code Section 31-32-5.”  Prior to this advance directive law, Georgia had durable powers of attorney for health care and living wills.[1]  Those prior documents executed before June 30, 2007 are still valid, but it may be advisable to still update them as the current documents are more internally consistent and detailed.[2]

“Any person of sound mind who is emancipated or 18 years of age or older may execute” an advance directive.  The document must be “in writing, signed by the declarant or by some other person in the declarant's presence and at the declarant's express direction, and witnessed . . .”[3]  Declarants are free to use other documents which substantially comply with the code and can also use the documents of another state which was validly executed in accordance with the law of that other state.[4]  This “advance directive for health care shall be attested and subscribed in the presence of the declarant by two witnesses who are of sound mind and at least 18 years of age, but such witnesses do not have to be together or present when the declarant signs the advance directive for health care.”[5]  The witnesses cannot be a person “selected to serve as the declarant's health care agent” or who “[w]ill knowingly inherit anything from the declarant or otherwise knowingly gain a financial benefit from the declarant's death” or who “[i]s directly involved in the declarant's health care.”[6]  In addition, “[n]ot more than one of the witnesses may be an employee, agent, or medical staff member of the health care facility in which the declarant is receiving health care.”[7]  As a practice note, many hospitals and other facilities have policies against their employees serving as witnesses or notaries, and therefore it is advisable to bring your own witnesses, as it may not always be possible to find a helpful bystander who will serve as a witness.  It should also be noted that “[a] physician or health care provider who is directly involved in the declarant's health care may not serve as the declarant's health care agent.”[8]  Unlike with last will and testaments, where copies can be more problematic, “A copy of an advance directive for health care executed in accordance with this Code section shall be valid and have the same meaning and effect as the original document.”[9]  Any amendments must be executed with the same requirements as above.

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[1] O.C.G.A. § 31-32-2 (“‘Durable power of attorney for health care’ means a written document voluntarily executed by an individual creating a health care agency in accordance with Chapter 36 of this title, as such chapter existed on and before June 30, 2007.” “‘Living will” means a written document voluntarily executed by an individual directing the withholding or withdrawal of life- sustaining procedures when an individual is in a terminal condition, coma, or persistent vegetative state in accordance with this chapter, as such chapter existed on and before June 30, 2007.”)

[2] O.C.G.A. § 31-32-3. (“Living wills, claims, rights, or remedies executed or accrued prior to July 1, 2007 The provisions of this chapter shall not apply to, affect, or invalidate a living will or durable power of attorney for health care executed prior to July 1, 2007, to which the provisions of former Chapter 32 or Chapter 36 of this title shall continue to apply, nor shall it affect any claim, right, or remedy that accrued prior to July 1, 2007.”)

[3] O.C.G.A. § 31-32-5.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Id.

[9] Id.

The Importance of Planning When You Have Capacity

In Georgia, incapacity planning takes several forms.  With planning documents, such as Advance Directives and Financial Powers of Attorney, one can designate who can make important life decisions, without the intervention of a court.  The downside to these documents, however, is that they must be executed when a person has sufficient capacity.  Unlike last will and testaments, Advance Directives and Financial Powers of attorney require more than just testamentary capacity to execute, and instead require the higher standard for contracts.  Another problem is that people with dementia may, in their illness, revoke the documents out of suspicion, thereby necessitating the use of a guardian and conservator.  However, even in that situation the documents do help a court determine who the proper person should be to serve as guardian and conservator.  Of course, particularly with Financial Powers of Attorney, it is essential that the agents named be very trustworthy.

            Trusts are probate avoidance devices.  Any property that is put into them becomes a non-probate asset, and thus not subject to probate proceedings.  Trusts may also have provisions to deal with incapacity.  However trusts have no control over assets that are not placed into them, either by deed, bill of sale, transfer of title or testamentary disposition.