What Is Incapacity? And What To Do If Your Parent Has It?

As our loved ones get older they may start to lose some of their mental capacity. When is forgetfulness just “senior moments” and when does it become dementia? How do you know if your parents are suffering from a dangerous debilitating disease like Alzheimer’s? You may not know for sure unless you have them tested. However, doctors, in general, do minimal cursory tests that may not give you enough information to make important decisions for the care and safety of your parent. These are hard questions.
One way to protect your parent is to make sure they have a durable power of attorney for asset management and an advance health care directive signed and notarized before they become incapacitated. When you use documents like these the definition of incapacity can be written in to the document. Like many legal provisions you can alter the standard legal definition by writing your own definition in your document.

The legal definition of incapacity provided by the California Probate Code provides:

A person is of unsound mind or lacks the capacity to make a decision or do a certain act when there is a deficit in at least one of the following mental functions and the deficit significantly impairs the person's ability to understand and appreciate the consequences of his or her actions with regard to the act or decision in question:

(1) Alertness and attention:
(A) Level of arousal or consciousness.
(B) Orientation to time, place, person, and situation.
(C) Ability to attend and concentrate.

(2) Information processing:
(A) Short- and long-term memory, immediate recall.
(B) Ability to understand or communicate with others, either verbally or otherwise.
(C) Recognition of familiar objects and familiar persons.
(D) Ability to understand and appreciate quantities.
(E) Ability to reason using abstract concepts.
(F) Ability to plan, organize, and carry out actions in one's own rational self-interest.
(G) Ability to reason logically.

(3) Thought processes:
(A) Severely disorganized thinking.
(B) Hallucinations.
(C) Delusions.
(D) Uncontrollable, repetitive, or intrusive thoughts.

(4) Ability to modulate mood and affect: a pervasive and persistent or recurrent state of euphoria, anger, anxiety, fear, panic, depression, hopelessness or despair, helplessness, apathy or indifference, that is inappropriate in degree to the individual's circumstances.

These are the areas of cognizance that are tested to determine if a person is legally incapacitated, such as when a conservatorship is in question. You can write in your parent’s power of attorney that they are considered incapacitated if you get a letter from 2 doctors saying so. This makes it much easier to take control of your parent’s financial affairs when it becomes necessary. For more information please contact us Law Offices of Patricia Rowe (925) 256-1000.

6 Things To Do If You Get Audited By The IRS

1. Don't panic- if you get a letter from the IRS or California Franchise Tax Board- it may not be an audit- it may be something specific they're asking for that can easily be provided to settle the issue quickly. Call us, send us the letter and we'll let you know.

2. Figure out what they want- sometimes it's just some of your tax payments that have been misposted on their computer- if you didn't write your Social Security number, the year and the form number, i.e. "1040" on your check then your payments may have been recorded incorrectly. (See next page for solutions)

3. Get help- Sometimes the issues can be resolved with a letter. Sometimes it calls for a field audit (at your place of business) or an office audit (the IRS office). In any case you don't have to talk to the IRS by yourself. Actually you don't have to talk to them at all. You can get someone to represent you. Then the IRS must talk to your representative. Our clients never talk to the IRS. As with any adverse legal proceeding- you might say something that can be used against you. For a client who admitted to the IRS, before coming to us, that he shouldn't have deducted travel expense to his job, we presented evidence that he was on a temporary assignment and therefore, could deduct it.

4. Gather your records- Look at the notice and see what year it's for. Then get your records that you used to prepare that year's tax returns. Work with us or another tax professional to determine exactly what information you will give the IRS and how it will be presented. Start early in case you have to request copies of bank or investment account statements.

5. Don't Ignore the IRS- It is never a good idea to ignore the IRS or other taxing authority. You or your representative should contact them as soon as possible and notify them that you are gathering your information. Usually you will be able to get a "hold on collection efforts" while you obtain your records and prepare your response. Again- it's better to have a tax professional contact them for you.

6. Present As Much Information As You Can- Even ifyou're missing some of your records present what you have to the auditor. Oftentimes he or she will let it slide that you are missing some of your documentation, especially if it appears that you have the majority of your records to support your deductions.