The Legal Insider
In this issue:
Why You Need a Power of Attorney
Medicine has become very good at saving lives, but physicians and hospitals are not always able to ensure that patients are able to maintain a high quality of life. Patients might not be able to pay the bills, continue the mortgage, or even make decisions about their own life.
If illness causes you to be unable to meet financial obligations, the consequences can be devastating for your family. For example, if you end up in a coma because of a car accident, who will ensure that the house is paid off for the children?
This highlights importance of the durable power of attorney.
A power of attorney is a series of legal documents that permits another party to act on your behalf in certain events. Note that a power of attorney does not actually mean you need to appoint an attorney to act on your behalf in the event you are injured. You could appoint a close friend, a spouse, or an adult child. However, the required documents can be complex, so having a lawyer draft a power of attorney is helpful.
Here are a few tips to help you think about how to structure a power of attorney:
- An agent can be given permission to make any number of decisions. For example, who decides to end life support if you are in a coma?
- The authority can be divided. One person can be appointed to make healthcare decisions while another person can be appointed to manage finances.
- Different powers can be passed based on different events. For instance, if you lose your ability to move, your financial duties can be passed to an agent without jeopardizing your power to make lifestyle decisions.
- Have back-up agents. Many people will appoint their spouse to be their agent. However, if your spouse passes away before you do, you will need a secondary agent.
Do it earlier rather than later. Often the people who need powers of attorney the most have chronic diseases, such as cancer. It’s better to appoint an agent while you are still coherent rather than wait until you’ve had four or five sessions of chemotherapy.
What to Do If You Bought a Defective Car?
If you’ve purchased a defective car, known as a “lemon,” there are several options available to you. Lemon laws are specific to each state. You will have to find out whether your car meets the qualifications of a lemon and also if you will receive protection under consumer laws.
In the majority of states, in order for a car to be classified as a defective or a lemon vehicle, it must comply with the following requirements:
- It must have a “substantial defect” that is covered by warranty and that developed within a specific time frame following your purchase of the vehicle.
- It must also still be defective after reasonable efforts at performing repairs.
Since states have different definitions for “substantial defect” and “reasonable amount of repairs,” you should find out the law as it applies to defective cars in the state in which you live. For instance, in New York, under the NYS New Car Lemon Law, which provides a legal remedy for new cars and some used cars, the vehicle must adhere to the following:
- The vehicle must have been covered by a warranty upon delivery.
- It must have been bought, leased, or transferred before it exceeded 18,000 miles, or within two years of the date of initial delivery, whichever is earlier.
- It must have been bought, leased, or transferred in NYS or is currently registered in the state.
- Is was used mainly for personal purposes.
The NYS New Car Lemon Law defines a reasonable number of attempts at repair to be the following:
- A minimum of four attempts to repair the car, or
- The car is inoperable because it was being repaired for a minimum of 30 days.
If your car complies with the above requirements, you may receive a refund or have the car replaced.
In California, under the Song-Beverly Consumer Warranty Act, consumers have some protection if the vehicle fails to perform as stated under an express warranty. The law states that if the manufacturer or dealer is unable to repair a new car after a reasonable amount of repairs, the manufacturer must immediately provide a replacement vehicle or refund the consumer the purchase or lease price. If you decide to file a lawsuit alleging breach of warranty, or claiming that there were violations of Song-Beverly, you must do so within the four-year statute of limitations.
The California Lemon Law is a provision of the Song-Beverly Act that helps make a determination as to what constitutes a reasonable amount of attempts at repairs. The Lemon Law is applicable if the defect occurs within the initial 18 months following delivery of the vehicle, or within the initial 18,000 miles on the odometer, whichever happens first. The law applies to new vehicles that are mainly used for personal purposes.
Under the Song-Beverly Act, there is also coverage for consumer products, including motor vehicles that are not new, as long as they were sold with an express warranty that is written. If you would like to obtain legal advice concerning your vehicle, you should consult a consumer rights attorney.
Tax Tips for Rental Property Owners
If you are the owner of rental property, there are many deductions that you can take when filing your taxes. Many landlords pay more taxes than are required because they do not take advantage of all of the deductions available to them. By taking as many tax deductions as possible, you are more likely to realize a profit than a loss on your rental property.
The largest deductible expense for a landlord or owner of rental property is interest. For instance, if you took out loans to purchase or improve your rental property, then you can deduct the mortgage interest payments on those loans. You can also deduct the interest on credit cards that you used to pay for goods or services that were utilized in a rental activity.
When you buy a single-family home, multi-family residence, or apartment building, the cost is not fully deductible in the year of purchase. Rather, you deduct part of the cost of the property over a period of many years through a process called depreciation.
You can fully deduct repairs to rental property in the year in which you pay for the repairs, which must be ordinary, necessary, and reasonable. While you may deduct the cost of repairs in one year, you may not fully deduct the cost of improvements in a single year. Instead, the cost of improvements must be depreciated over a number of years that can be as many as 27.5. You must know how to distinguish a repair from an improvement.
Examples of repairs include painting, fixing leaks, plastering, and replacing broken windows. Some examples of improvements are replacing a roof, re-plastering an entire wall, and buying a new washing machine.
Travel expenses related to rental activities are also deductible. For instance, whenever you drive to your rental property to address a rental issue or grievance, you can deduct the expenses you incurred in traveling there. You may also deduct your travel expenses when you go to buy parts needed to perform repairs on the rental property.
There are two ways in which you can deduct the expenses incurred in using your vehicle. They are the standard mileage rate and the actual expense method. Under the standard mileage rate, the deduction is 56 cents per mile for tax year 2014. However, in order to be eligible for the standard mileage rate, you must have applied this method during the first year in which you used a car in your business. Furthermore, you will be unable to use the standard mileage rate if, in previous years, you claimed accelerated depreciation deductions, or took a deduction for the vehicle using §179.
There are many other deductions that you can take, including those for your home office, insurance premiums for your rental property, such as fire, theft, and flood insurance, and landlord liability insurance. Additionally, the fees you pay for professional services, such as legal, accounting, and real estate investing, are deductible.
In order to ensure that you are taking full advantage of the maximum amount of deductions to which you are entitled, you should consult a tax professional.
Avoid the Penalty for Lack of Health Insurance with These Exemptions
If you were without health coverage that qualifies as minimal essential coverage in 2014, you may be exempt, in which case you will not have to pay a penalty.
You may be exempt from paying a penalty if any of the following apply to you:
- The lowest-priced coverage available to you through your employer or the Marketplace exceeds your household income by 8%.
- You are not required to file a tax return due to the fact that your income is below the filing threshold.
The above exemption relate to income. The following exemptions related to health coverage:
- You were without insurance for two consecutive months or less.
- You enrolled in a health plan by or before May 1, 2014.
- You resided in a state where the Medicaid program was not expanded. However, you would have been eligible for Medicaid if it had been expanded.
- Within the 2014 Open Enrollment period, you had your child enrolled in the Children’s Health Insurance Program (CHIP), though your child was without coverage earlier in the year.
- You had coverage via Medicare or TRICARE that provides coverage for limited services.
- You refused an offer of a health plan through your employer that began in 2013 and expired in 2014.
- You had health coverage through AmeriCorps, the National Civilian Community Corps, or VISTA.
There are many other exemptions for which you may qualify, including hardship exemptions.
How to Claim an Exemption to Avoid a Penalty
You can claim some exemptions at the same time that you prepare your federal tax return. Other exemptions can be claimed by sending a paper application to the Marketplace via mail.
If you claim an exemption when you prepare your tax return, you will complete a Form 8965 – Health Coverage Exemptions. Should you have any questions or concerns about whether or not you qualify for an exemption if you were without health coverage last year, consult your tax professional.