Q: What is the difference between a living will and a health care power of attorney?
A: For all practical purposes a health care power of attorney gives the power to a proxy to make health care decisions in the event of your incapacity. The living will is an effective document once permanent comatose or death is imminent. Therefore, the health care power of attorney is a directive when normal life is possible beyond treatment. The living will, on the other hand, becomes effective once normal, healthy life is impossible after treatment.
Q: Where is the best place to store estate plan documents?
A: The best place to store estate plan documents is in a secure location that others know of and that is easily accessible. Storing the documents in a safe deposit box that a friend knows of can be a good place as long as that friend knows where to get the keys. Hiding documents in a book or in a safe that no one has the combination for renders the documents useless to both you and those that are trying to help you.
Q: If you lease an item that is generally subject to depreciation, how do you know whether the item is to be expensed as a rental expense or depreciated as an asset?
A: Whether leased assets get depreciated or written off as rent depends on the intent of the parties. If the lease is written in such a way that the agreement resembles a sales contract in that it allows for a bargain purchase at the end of the lease, requires the one leasing the property to maintain the unit, and generally resembles a sale, it is appropriate to expense the item as depreciation. If the agreement leans more towards a rental agreement in that the property must be returned, the payments don’t substantially equate to a purchase as opposed to rent, then the item’s payments should be expensed as rent.
By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors