Q: My elderly aunt does not have a spouse or children and does not have the ability to file her taxes anymore. Can I file taxes for her?
A: If your aunt still has the mental capacity to execute a Durable Power of Attorney (POA), she can make you her agent and you can file taxes on her behalf. If she does not have the mental capacity to execute a POA, you may need to commence a guardianship proceeding to have the ability to file her taxes as her guardian.
If you are not sure whether your elderly loved one has the mental capacity to sign a POA, you should consult an attorney with experience in estate planning and guardianships. According to the New York General Obligations Law, which governs the execution of POAs, there is a presumption that adults over the age of eighteen have the requisite decision-making capacity to execute legal documents. An individual has adequate capacity if he or she understands the nature and consequences of the powers they are bestowing upon the POA agent.
Cognitive decline does not always mean mental incapacity. There are situations in which people have mild cognitive symptoms and still have the capacity required to execute legal documents. If it is determined that your loved one lacks the mental capacity needed to execute a POA, a guardianship proceeding must be commenced in Supreme Court and is the only avenue through which you can lawfully assist with a loved one’s financial matters.
If you are a POA agent, you are not necessarily obligated to file taxes on behalf of the person who established the POA. However, if you are the guardian of an individual, you are required to file income taxes on his or her behalf, depending on their income. If you are unsure whether the individual needs to file an individual income tax return, you should consult an accountant. Guardianship proceedings are burdensome, lengthy, and expensive, so executing a POA before it is too late is crucial.
If someone does not have the ability to file taxes for the years preceding death, whoever is appointed as representative of the estate will be responsible for filing any outstanding state or federal income tax returns. To determine your responsibility as representative of an estate or trustee of a decedent’s trust, you should consult an accountant and an attorney versed in trust and estate matters.
Erin Cullen, Esq., is an associate attorney at Burner Prudenti Law, P.C., focusing her practice on trusts and estates. Brittni Sullivan, Esq., is a partner at Burner Prudenti Law, P.C., focusing her practice on estate planning and elder law. Burner Prudenti Law, P.C. serves clients from New York City to the East End of Long Island, with offices located in East Setauket, Westhampton Beach, Manhattan, and East Hampton.