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Advance on Inheritance?
Old 10-22-2019, 07:33 PM   #1
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Advance on Inheritance?

Does anyone know if it is legal for a power of attorney agent to arrange for an advance on inheritance for himself and sister? Mother is in mid 90s and has enough for ten more years in assisted living or nursing home.
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Old 10-22-2019, 07:39 PM   #2
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I don't believe there is such a thing as an advance on an inheritance (after all, the assets are not yet in the estate), but can't the mother choose to gift assets now instead?
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Old 10-22-2019, 07:41 PM   #3
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cool your jets......What's the urgent need?

Probably a way, have to look at the will, trust etc. Might be able to call it a "loan"
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Old 10-22-2019, 07:42 PM   #4
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Not legal as far as inheritance advance. If your mother has a revocable living trust, and you are trustee, you have to wait until she dies and you become the executor for the now irrevocable trust. If no trust, then you still have to wait for her to die and then probate court can appoint you. It's a lot better if your mother has a RLT in place to help avoid the probate hassles.

If you have POA over your mother's finances, and she agrees to give some money to you and sister, that would fall into the yearly/lifetime gift allowance. You as POA could distribute funds as gift to family. It would not be as inheritance, although it effectively is practically similar - pay now and inherit less later.
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Old 10-22-2019, 07:55 PM   #5
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FYI, I amNOT the party who is requesting an advance on inheritance.
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Old 10-22-2019, 07:58 PM   #6
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I am not an attorney, but...an inheritance doesn't exist until someone dies. Wills can be changed or contested, ergo, while the person who does own the estate is still breathing, it can be changed.

However, as mentioned, assets can be gifted.
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Old 10-22-2019, 08:29 PM   #7
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So you are not the "himself" or the "sister"? That wasn't clear. But it is your Mother we are talking about?

It's not up to anyone other than "Mother" to decide if she has "enough". Though probably unlikely, what if she lives more than ten years? What if costs go up? That is why we hang onto our money until we die.

If Mother is incapacitated, I really doubt that the POA can decide for themselves to distribute her estate before her death. I am not a lawyer, but that just doesn't sound right, or legal.

Tell us more, you may just need some good link/references with solid info, or perhaps an eldercare attorney if "himself and sister" don't agree.

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Old 10-22-2019, 09:10 PM   #8
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Should have said their mother. I am concerned about the legality of the POAs proposed actions; and even if legal, the appearance of impropriety. Seems to me that proposed actions should not be legal as no one knows with certainty how long the principal may live or what expenses may come up in the future.
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Old 10-22-2019, 10:14 PM   #9
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Here's some info, specific to NJ, so look for something in your state: https://www.rcshea.com/Articles/Fami...of-Gifts.shtml

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If the power of attorney is silent as to gift giving then gifting is not allowed. However, the power of attorney can be written to allow your attorney-in-fact to make gift of your assets to other persons. Which is right for you?

In New Jersey, like many other states, it was presumed that the powers granted by a power of attorney did not allow the attorney-in-fact to make gifts of the maker's assets. This is because the attorney-in-fact is a fiduciary and must always act in the best interests of the maker of the power of attorney.

In 2003, by statute, New Jersey clarified that unless the power of attorney contains specific gifting powers, the attorney-in-fact has no ability to make gifts of the maker's assets. Specifically, N.J.S.A. 46:2B-8.13a, states that the power of attorney must contain express and specific authority to allow the gifting of assets.
edit: based on your name, if you are in California, then state law says that POA forms sold here must contain this notice to the person acting as attorney-in-fact:

"You may not transfer the principal’s property to yourself without full and adequate consideration or accept a gift of the principal’s property unless this power of attorney specifically authorizes you to transfer property to yourself or accept a gift of the principal’s property. If you transfer the principal’s property to yourself without specific authorization in the power of attorney, you may be prosecuted for fraud and/or embezzlement. If the principal is 65 years of age or older at the time that the property is transferred to you without authority, you may also be prosecuted for elder abuse under Penal Code Section 368. In addition to criminal prosecution, you may also be sued in civil court."
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Old 10-22-2019, 11:00 PM   #10
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I think that's generally referred to as felony theft.
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Old 10-23-2019, 05:13 AM   #11
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Mom has the right to give it, you do not have the right to take it.
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Old 10-23-2019, 05:46 AM   #12
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I seem to remember a story about this in the Bible.
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Old 10-23-2019, 06:57 AM   #13
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My DM's power of atty gave the "atty-in-fact" power to gift (as well as trade stocks, sell real estate, take out mortgages, etc). As others have said, a gift is a gift. There are gift-tax issues/limits. In my DM's power of atty the gift can be considered an "advancement of a bequest to beneficiaries under my will". I'd suggest you need to read the POA document and see what it allows.
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Old 10-23-2019, 06:57 AM   #14
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AFAIK, POA actions are intended to be for the BENEFIT and on BEHALF of the encumbered person, not the heirs or anyone else.
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Old 10-23-2019, 07:13 AM   #15
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Quote:
Originally Posted by sanfanciscotreat View Post
Should have said their mother. I am concerned about the legality of the POAs proposed actions; and even if legal, the appearance of impropriety. Seems to me that proposed actions should not be legal as no one knows with certainty how long the principal may live or what expenses may come up in the future.
If I were POA I would be cautious and fully document everything. The distribution could be characterized as a gift or a loan that is due when the estate is distributed and will be offset against the heir's distribution. A loan might be easier as there would be no need to make a codicil to the will... the loan would just be an asset of the estate.

Is the mother cognizant and can she sign a document authorizing the loan or the gift and a corresponding codicil to the will? If I were the POA and did this I would also have someone record the mother signing and have her indicate that the gift or loan is her wish and is not being done under pressure or duress... or something along those lines to document that the POA is proceeding according to her explicit authorization.

If the distribution is a gift and if the amount exceeds the annual limits then technically a gift tax return would need to be filed but there would not be any gift tax due. I don't think this would be required for a loan.

Then there would need to be a codicil to the will to reduce the amount that the gift recipients get from the estate by the amount of the gifts. Again this would not be needed for a loan as the loan would become an asset of the estate.

One downside to the loan construct is if the estate assets decline to a point where the recipient's share of the estate is less than the loan then the recipient would not need to come up with cash to pay off the loan.

Above assumes that there is more than one heir.

Another problem could be if the mother ends up needing Medicaid long-term care then the gift/loan would be subject to the 5-year look back.
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Old 10-23-2019, 07:14 AM   #16
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Mom has the right to give it, you do not have the right to take it.
^ This >>> It is this simple. Also to keep in mind the look back Gov. time period. It may not be an issue in your case the way it looks, but things do change and it might.
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Old 10-23-2019, 07:21 AM   #17
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Many years ago, when we lived in the US, we moved my wife's father to our state for assisted living, and he gave her power of attorney. However, we insisted that he sign up with a local attorney as "his attorney" so that he would have that added protection. We found one who specialized in elder care and she was great in representing him. We did not want to do anything through our ignorance that might be to his or his other heir's disadvantage.

Perhaps this might be suggested in Mother's case?

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Old 10-23-2019, 08:06 AM   #18
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I had POA for mom and at her request o had gifts of $14K sent to each child and the spouses each year. So she started passing along estate about 5 years early. She had plenty of assets to pay for the home she lived in including pension and SS. If mom wanted to you could do something like that perhaps.
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Old 10-23-2019, 08:25 AM   #19
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Wow, just wow.
As others have said, Mom can gift, but kids can't take.
Mom could live more than 10 years and need more expensive care as time goes on.

If this POA and sister were in my family, I certainly would tell them to back off. Greed at its worst. My opinion only.
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Old 10-23-2019, 08:30 AM   #20
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I had POA for mom and at her request o had gifts of $14K sent to each child and the spouses each year. So she started passing along estate about 5 years early. She had plenty of assets to pay for the home she lived in including pension and SS. If mom wanted to you could do something like that perhaps.

Yes, but with elder and estate law in particular, you have to be careful about self-dealing. I am not a lawyer, but I have worked with aging issues for decades, and unless the trust/POA specifically allows for this, it would probably be considered financial abuse. If the mother is not competent to request this themselves, then I would strongly advise against it. In fact, the POA would be smart to seek a medical competency evaluation to back up that the loan/advance was voluntary.
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