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The dangers of not having a power of attorney

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By James S. Rizzo, Esq.

A man who procrastinates in his choosing will inevitably have his choice made for him by circumstance.” — Hunter S. Thompson

Clients are often surprised when I tell them the Power of Attorney is arguably the most urgent estate planning document to have completed, with a Will and Health Care Proxy as close runners up. Ideally, all three documents should be in place for anyone over 18. However, if you have a short or long term health setback where you cannot manage your own assets and have not properly authorized someone to handle them, your return to health may be met with overwhelming financial strain.

With a Power of Attorney, you designate which individuals are in control of your assets and who can take care of your affairs if you are unable to do so.

The following are a few of the common and very avoidable problems that can arise without an up to date Power of Attorney in place:

Your family may need to undertake a Guardianship Proceeding. If you become incapacitated, your loved ones may be forced into court to apply for guardianship in order to act on your behalf. This is true even if you are married, to allow for a spouse to act on your behalf. The legal cost of a guardianship proceeding can be in the thousands and take several months to complete. It may also increase the potential for animosity and expensive litigation if other family members disagree and challenge the application.

Serious Financial Problems. This is a broad and potentially devastating category. If bills, accounts, mortgages, etc., are only in your name, someone will need the authority to pay such debts on your behalf. Bad credit, house foreclosure, loss or lapses of insurance coverage, having judgments and liens filed against you and being forced into bankruptcy are just some of the avoidable financial black holes one may fall into without a responsible adult having the authority to manage debts.

Nursing Home bills and denial of Medicaid Eligibility. With the average cost of nursing homes in Upstate New York ranging between $10,000 – $12,000 per month, even one month of Medicaid ineligibility can result in great financial distress. The Medicaid application process, even with qualified attorneys involved, requires a diligent and responsible person to gather a multitude of records, sign numerous documents and follow through with the myriad requirements to achieve Medicaid coverage. If a Medicaid application is denied, generally you will need a personal representative to proceed with an appeal or fair hearing to get coverage in place.

Inability to obtain Medical Records. A Power of Attorney should include an authorization for your appointed agent to take care of health care billing and payment matters and access medical records in compliance with the strict privacy requirements of the Health Insurance Portability and Accountability Act (“HIPAA”).Without such authority, even a spouse or other close family member may be denied access to review records and/or the ability to oversee proper treatment and care. This becomes more urgent if you suspect medical malpractice or mistreatment by providers.

Inability to transfer assets if necessary. There can be a host of circumstances where an estate attorney may recommend transferring an asset such as a home or other large assets out of an incapacitated person’s name. The most common circumstance, and one usually fraught with peril without a qualified estate attorney involved, is during the Medicaid application process when a person requires nursing home care. There may be other tragic circumstances, such as a person in the final stages of life, where transferring an asset while the person is still alive can avoid a long and protracted probate proceeding after they die. Such a transfer of assets can only take place if the Power of Attorney is up to date and has a fully executed “Statutory Gift” authorization in place.

While there are many unexpected and stressful circumstances that can ensue without a Power of Attorney in place, the good news is these situations can be easily avoided by meeting with an estate attorney for usually less than an hour. The Power of Attorney should be an inexpensive component of any estate plan. It provides peace of mind, can be easily updated and substantially eases the emotional and financial burden on your family members by clearly stating who is in charge and allowing those persons to resolve matters efficiently on your behalf should these situations arise. In short, do not let procrastination and chance determine what happens to your hard earned assets!

James S. Rizzo is an attorney with the law firm of Rheinhardt and Bray, P.C., with offices in Rome and Ilion, NY and serving the CNY area. He can be reached at (315) 339-0503 or jrizzo@cnyelderlaw.comfor a free, confidential initial consultation.Visit us on the web at: www.cnyelderlaw.com.

Last Revised:July 16, 2021

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Are Sallie Mae Student Loans Federal or Private?

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When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances

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Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit

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Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.

 

 

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