Comprehensive Planning. Lifelong Solutions.

Assuring an Inheritance for your Heirs

By Elizabeth Boehmcke

Many of our clients come to us primarily for estate planning. They are interested in making sure that their assets are distributed to their beneficiaries in the amounts and in the manner that they want. For many of our clients, that means devising ways to transfer assets to children after the death of one or both spouses. However, because we are elder law attorneys, most of our clients are also advised about long-term care planning and asset protection strategies. We believe that good estate planning does not and cannot happen in a vacuum and attention should be paid to all matters that may impact a client’s goals.

For instance, many clients feel strongly that it is important to provide some measure of an inheritance to their children. However, it is clear in reviewing their overall financial picture that if one of the spouses requires long-term care, there may be very little to no inheritance left to give. For clients in such circumstances, pre-planning for long-term care costs may well allow them to assure an inheritance that could otherwise be lost.

We can create a trust that provides for the payment of the income of the trust back to the creator (or the “grantor”) of the trust and which, upon the death of the grantor, distributes the remaining assets of the trust to grantor’s beneficiaries (typically the grantor’s descendants but could also be a continuing income interest for the surviving spouse). If the trust is created and funded more than 5 years before the grantor applies for Medicaid, the Department of Social Services cannot consider the assets held by the trust in determining the eligibility of the grantor for Medicaid. In addition, Medicaid cannot put an estate recovery lien against the property held in the trust upon the death of the Medicaid recipient. Thus, the assets put in the trust are preserved for the heirs of the grantor. Only the income paid out by the trust can be assessed against the grantor and counted as part of his income for Medicaid purposes. Not quite like having your cake and eating it too, but you are certainly licking the icing.

What assets are appropriate for such an income only trust? Truly any assets can be used for such a trust. A residence can be a good asset to transfer into the trust for these purposes because a residence typically does not produce any income. The grantor can maintain a right to live in the house via a lease agreement with the trustee of the trust and pay the carrying costs of the house (insurance, real estate taxes, maintenance etc.) instead of rent. Thus there is no income to be distributed to the grantor and the grantor continues to live in the house and pay the expenses he or she was already paying. If the grantor wants to downsize or needs to move into a nursing home, for instance, the trustee can sell the house and reinvest the proceeds. If the grantor is still living independently, the assets can be invested in income-producing property that can be distributed to the grantor for living expenses. If the grantor is on Medicaid, the property can be invested in very low or no-income producing property that minimizes the income that is payable to the grantor (and thus to the nursing home for care). If it is not appropriate to transfer a residence into the trust (for instance because it still has a mortgage on it), other assets – from cash to stocks and bonds – can be transferred to the trust.

The trust is structured in a way to preserve the income tax benefits that are available to the grantor if nothing were done. For instance, the grantor can still exclude $250,000 of capital gains if he or she transfers his or her primary residence to the trust and the trust later sells the house. In addition, all of the assets in the trust receive a step-up in basis to the fair market value of the assets as of the date of the grantor’s death, just as if he or she had held them in his or her name alone at death. This means that when the assets are distributed from the trust to the grantor’s beneficiaries, they will be able to sell them with far less capital gains tax to pay than if the same assets were gifted outright to the beneficiaries before the grantor’s death.

Part of the beauty of an income-only trust plan is that while the grantor is living a healthy and independent life, he or she can benefit from the income generated by the assets (or continue to live in the home). However, it should be noted that the gift of the assets into the trust is a completed gift at the time of the transfer. The grantor has no ability to change his or her mind later, to access the principal of the trust or to compel the trustee to distribute the assets back to him or her. This limitation on the ability for a grantor to change the plan in the future is why we do not advise clients to put all of their assets into a trust of this sort. It is important that clients have sufficient other assets in their own names to continue to live their lives, pay their bills and support themselves. Thus, while the income only trust is not miracle cure in the sense that it cannot protect all of a client’s assets from the costs of long-term care, it can assure that at least some part of the estate is preserved for the heirs.

Make an appointment with any of the experienced attorneys at the Hook Law Center to discuss whether an income-only trust can be an appropriate part of your estate plan.

Kit KatAsk Kit Kat – White Giraffes

Hook Law Center:  What can you tell us about white giraffes? Are there really such creatures?

Kit Kat:  Yes, there really are! Two such giraffes were recently spotted in Kenya in Garissa County near the Ishaqbini Hirola Conservancy. Technically, reticulated giraffes come from eastern Africa, and have large brown spots which are separated by cream lines. The two which were sighted in Kenya appeared to be whitish, with the baby giraffe being a tad darker than its mother. As the giraffes mature, those with leucism, like the ones observed in Kenya, become lighter. They are not really albinos. They have the condition known as leucism, meaning they have pigmentation in their soft tissue, but not very much in the skin cells. Animals with leucism also have normal eye color; those with albinism usually have red eyes. Leucism exists throughout the animal kingdom, and species as diverse as birds, lions, fish, moose , and snakes all have been noted to have the condition.

Giraffes currently are classified as ‘vulnerable’ to extinction. This classification is somewhat less alarming than the ‘endangered’ classification, but it does mean that they warrant protection. In the last thirty years, the giraffe population has declined by 40 percent. At present, it appears there are 97,600 giraffes worldwide. However, they are extinct in at least seven countries in Africa. According to the Giraffe Conservation Association, half of all baby giraffes die before the age of six months, because they are the victims of other animal predators like lions and hyenas.

This was the third sighting of giraffes with leucism over the past few years. One of the other sightings occurred in another part of Kenya and in Tanzania. According to Dr. Abdullahi H. Ali, founder of the Ishaqbini Hirola Conservancy mentioned previously, the two giraffes will be monitored to gather information about their life span. The normal life span is in the range of 25 years. Time will tell whether these two recent specimens will be so fortunate. (Yonette Joseph,“Rare White Giraffes Cause a Stir in Kenya,” The New York Times, September 16, 2017)

Upcoming Seminars

Distribution of This Newsletter

Hook Law Center encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Hook Law Center, P.C. If you are interested in a free subscription to the Hook Law Center News, then please telephone us at 757-399-7506, e-mail us at mail@hooklawcenter.com or fax us at 757-397-1267.

Posted on Friday, September 29th, 2017. Filed under Newsletter.

Myths about Public Benefits

By Letha Sgritta McDowell, CELA

In my years as an elder law practitioner, I’ve had clients come into me professing extensive knowledge of public benefits (particularly Medicaid) that were wildly off-base. There are any number of myths that have to do with public benefits planning, and I thought I would take this chance to “myth bust” some of the most common myths about benefits.

  1. “They are going to take my house.” False! While I am never exactly sure who “they” is, no person or entity takes away a home or other property for that matter. This includes the Medicaid agency, nursing facility or assisted living facility, social services, etc. However, some planning in advance may be prudent in order to achieve the goal of avoiding “estate recovery.” Estate recovery is the process by which the state Medicaid agency recovers from an individual’s assets after their death. With proper planning, this result is often avoidable.
  2. “My income is too high to qualify.” False! Different public benefits programs have different eligibility requirements. One of the most confusing is the benefit known as “Medicaid.” While we tend to use it as a blanket term, there are a number of different programs which fall under the Medicaid umbrella. Each program has different eligibility requirements so, while your income may be too high to qualify for one program, you may be well within the guidelines for another. The Medicaid program that pays for nursing care and the Special Pension Benefit commonly referred to as “Aid & Attendance” typically only require that the applicant’s monthly income is less than the cost of their care.
  3. “I must have practically no assets to qualify.” False! While many public benefits programs require countable assets to fall within certain limits, there is no limit on the amount of non-countable assets a person can have. Proper planning allows the conversion of countable assets into non-countable ones and allows the applicant and/or his or her spouse to protect assets and still qualify for benefits.
  4. “I have to give everything away in order to qualify for benefits.” False! In many cases, giving assets away causes penalties which could have been avoided with proper planning. And, when you give assets away to children or other family members, you have lost your ability to control them and potentially subject them to creditor claims or divorce actions which you may never have seen coming.
  5. “I have to do planning at least five (5) years before needing care.” False! Many asset protection strategies can be implemented at the time you need care. However, it is critical to have the proper tools in place to allow an agent to assist you in asset protection planning should you need care in the future.
  6. “A Revocable Trust protects my assets.” False! While revocable trusts can be a power estate planning tool, a revocable trust does not protect your assets from the claims of creditors or the cost of nursing care. However, there are other types of trusts which can be used to protect assets.
  7. “Adding my children’s names to the deed to my house will protect my home.” False! Adding a child’s name to any asset, including a home, can cause a period of ineligibility for public benefits. In addition, adding them as an owner of an account makes the account “their” money in the eyes of the law. This means it could be subject to the claims of their creditors or other financial problems. In addition, this may cause the accidental disinheritance of a child or other family members. AND, in many cases, the home is an exempt asset anyway.

Whether you are considering your long-term care plan early or are facing an immediate nursing care need, it is never too late to plan to protect assets. Don’t let these common “myths” about asset protection planning prevent you from taking action or influence you to make decisions which may have possibly devastating consequences.

Kit KatAsk Kit Kat – Pet Investigaors

Hook Law Center:  Kit Kat, what can you tell us about the Humane Society’s undercover investigators?

Kit Kat:  Well, these brave people perform a humanitarian service which makes a huge difference in the lives of animals. They investigate abuse, and they have to go undercover using fake names and identities to protect themselves. One such investigator is named Amy Winter (her alias). Her current assignment is working at a pet shop in New York City, where she investigates the sale of sick puppies from the Midwest. Though only 26, she is on her last assignment. This kind of work takes a toll. She has been travelling around the country staying for a few months at a time in a particular location investigating animal abuse. She cannot use social media, and must not get too close to her co-workers. Later this year, she will enter a police academy to train as an animal protection officer. Her five-year stint is longer than most investigators who last only 2-3 years. She has investigated 2 industrial pig farms, a calf ranch, a tiger facility, a horse stable, and 3 research laboratories. She says, ‘For all the cases of mine, I felt I made some impact on the animals, which means the world to me.’

In her current assignment at the pet store, she hears customers ask repeatedly, “Are these puppies from puppy mills?” The staff are instructed to say definitely not. So, she goes about her business of secretly recording what is going on at this particular store. She hope her information will be enough to shut down this particular store. She says, ‘A lot of very sick puppies are being sold. I think a lot of people are going to be shocked.’

Another undercover agent named Cody investigated an egg factory farm in Iowa. What he witnessed there was so horrifying that he lost weight and was having nightmares. After that final assignment, he decided to study law and help animals through the legal channel.

We owe these investigators a tremendous debt. They are helping society monitor the management of animals. When things are not done in an appropriate way, the investigators are there to call attention to the matter, and to hopefully, make corrective action happen. (Julie Falconer, “True Grit,” All Animals, September/October 2017, p. 24-28)

Upcoming Seminars

Distribution of This Newsletter

Hook Law Center encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Hook Law Center, P.C. If you are interested in a free subscription to the Hook Law Center News, then please telephone us at 757-399-7506, e-mail us at mail@hooklawcenter.com or fax us at 757-397-1267.

Posted on Friday, September 22nd, 2017. Filed under Newsletter.

The Equifax Data Breach: Take This One Step Now

By Jessica A. Hayes

As you have probably heard by now, Equifax, one of the three major credit reporting agencies, was hacked earlier this summer. As a result, nearly half the U.S. population’s personal data, including full names, addresses, dates of birth, and Social Security Numbers, is at risk. This is enough information for the hackers to open up credit cards in your name, apply for loans, and go on spending sprees. You may not find out immediately – especially if the hacker also has your mail forwarded to a different address. Because there is about a 50% chance your information was involved in the breach, now is the time to act.

The most important thing you can do now to protect yourself against someone else using your personal information is to place a credit freeze with each of the three credit reporting agencies. A credit freeze is a tool which prevents credit inquiries and the opening of new lines of credit. Anyone who attempts to open a credit card using your information, for example, will be automatically declined. If you wish to open a new line of credit yourself, or to permit a mortgage lender, for example, to make a credit inquiry on your record, you may temporarily lift the credit freeze either for a period of time or for a certain lender.

I first wrote about credit freezes in this newsletter back in June, following my own experience with identity theft. Because significantly more of you may be affected by the Equifax breach, I think it worth repeating.

If you put a credit freeze into place with a credit reporting agency, the agency will require you to use a Personal Identification Number (PIN) anytime you want to lift the freeze. To best protect yourself, you should place a credit freeze with each of the three agencies, meaning you will need to keep track of three different PINs. Keep them in a safe place to avoid losing them.

The three credit reporting agencies’ webpages on credit freezes are located here:

Experian: https://www.experian.com/freeze/center.html

Equifax: https://www.freeze.equifax.com/Freeze/jsp/SFF_PersonalIDInfo.jsp

TransUnion: https://www.transunion.com/credit-freeze/place-credit-freeze

Each agency charges a small fee to place a credit freeze; however, Equifax has recently announced that it will waive this fee in light of the breach.

When you go to place your credit freeze with each agency, this would also be a good time for you to request a copy of your credit report. Review it carefully to ensure that all entries relate to you. If you see something that does not belong on your credit report, contact the credit reporting agency directly to request a correction.

Kit KatAsk Kit Kat – Veteran & Service Dogs

Hook Law Center:  Kit Kat, are service dogs assigned to veterans long after their service has ended?

Kit Kat:  Well, yes, and this is an interesting story. Retired Army Sgt. Toby Yarbrough had served overseas and returned home with post-traumatic stress disorder and seizures after suffering a traumatic brain injury while on active duty. Mr. Yarbrough credits his service dog, Duke, with saving his life. Were it not for Duke, Mr. Yarbrough said he probably would have committed suicide. He has detailed his experiences in a self-published book entitled “The Quiet Healing.” Mr. Yarbrough now lives in Chesapeake, VA. Duke is still with him, and accompanies him to work every day at a payroll company in Newport News, VA. Also, they are accompanied by Sasha, a 3-year old former rescue dog, who has taken over for Duke, because he is aged at 13.5 years old and suffers from arthritis and spinal degeneration.

Mr. Yarbrough, Duke, and Sasha came to the attention of some local part-time filmmakers—Andrew Lauto and Jacob Woodward, who then collaborated with Dave Alegre of Virginia Beach who owns Green Thumb Studios, a multimedia business. They plan to make a short film of about 20 minutes in length about Mr. Yarbrough and his dogs. They also will feature other veterans with service dogs and those who train the dogs. It, too, will be called “The Quiet Healing,” and they hope to have it ready to air around Christmas on YouTube and Vimeo. They are also considering entering it in some film festivals.

This is a wonderful story which may give hope to others! When someone is down, seek help. There is always a solution to every problem. (Victoria Bourne, “Filmmakers to tell story of veteran with PTSD and his service dogs,” The Virginian-Pilot, Sep. 5, 2017, pg. 3)

Upcoming Seminars

Distribution of This Newsletter

Hook Law Center encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Hook Law Center, P.C. If you are interested in a free subscription to the Hook Law Center News, then please telephone us at 757-399-7506, e-mail us at mail@hooklawcenter.com or fax us at 757-397-1267.

Posted on Monday, September 18th, 2017. Filed under Newsletter.

Palliative Care and Hospice: Quality of Life for Patients with Serious Illness

By Shannon Laymon-Pecoraro, Esq.

Hook Law Center, P.C. recently had the pleasure of hosting Dr. Marissa Galicia-Costillo from Sentara Norfolk General at our most recent Coffee with Colleagues seminar to discuss the difference between hospice and palliative care. While many people have heard of hospice, few have heard of palliative care, and even fewer understand the difference between the two. A brief synopsis of the takeaways from the presentation are provided herein.

Palliative Care

Palliative care, by definition, is medical care for people with serious illness that focuses on relief of symptoms to improve the quality of life for the patient and the family. Unlike hospice care, palliative care is appropriate at any stage of a serious illness (such as organ failure, Parkinson’s, dementia, and cancer) and can be provided in conjunction with curative treatment. As a result, it is never too early to bring in a palliative care team who can help define what goals you have for treatment.

Instead of treating the actual illness, a palliative care team focuses on various symptoms such as pain, shortness of breath, nausea, loss of appetite, fatigue, and sleeplessness. Aside from these physical symptoms, the team may also address mental, social, and spiritual issues. The goal with palliative care is to manage symptoms to improve overall quality of life. Because quality of life varies among individuals, a palliative care team works to understand what is important to you and help set treatment goals based on your priorities. From there, the team uses your goals to guide the care you receive.

In our area, palliative care is currently provided in facility settings, most often a hospital.

Hospice Care

Hospice care is a type of palliative care provided during the last stage of a serious illness. At such point, curative treatment ends and the focus becomes comfort management. Hospice eligibility requires the patient to be considered “terminal” and prepares the patient and the family for end of life. Essentially, the doctors indicate that it would not be surprising if the patient were to die within six months. The goal is to stop focusing on treatment, and allow an individual to spend their last days as comfortable as possible.

Hospice care can be provided in a facility setting and in the home. Our area does not yet have a hospice house, although plans are underway to build one.

Kit KatAsk Kit Kat – Great Danes Saved

Hook Law Center:  Kit Kat, what can you tell us about 84 Great Danes that were rescued in New Hampshire?

Kit Kat:  Well, this story has a happy ending, but it was not such a wonderful existence for 84 Great Danes that were recently discovered in a puppy mill in northern New Hampshire. They were housed in a 15,000 sq.ft. mansion. The mansion may have had crystal chandeliers, but it was a prison of sorts for the dogs. Living in a mansion doesn’t sound too bad, but the place was a wreck. There was trash everywhere, and some wooden floors were covered in diarrhea. In other rooms, the smell of urine was so strong, that rescuers had to take breaks and tag team each other during the removal of the dogs to a shelter.

The staff of the Animal Rescue Team are to be commended for the way they handled the rescue and re-location of these dogs to a shelter. Neither dog nor human suffered any injuries. The whole process took and entire day—from 5 AM to 11 PM, and it rained heavily that day. Dogs had to be coaxed one-by-one to get in cages. Some of the dogs were so large, though, they couldn’t fit into standard cages, so the team secured a couple of horse trucks to carry them. Once at the shelter, the dogs have been receiving veterinary care. Some have pressure sores from spending too much time on hard surfaces. Others have issues with their eyes or cardiac problems. Volunteers are helping to fill staffing gaps. A lot of hands are needed to care for so many large animals. They are providing the dogs with lots of tender, loving contact and help in the feeding process. All together these 84 dogs require 225 pounds of food per day! The dogs have also received 9,946 medical treatments to date.

This is a wonderful story that indeed ended well; however, it’s a shame any animal has to endure such treatment, even for a portion of their existence. (Holly Hazard, “Animals Saved: 84 Great Danes,” All Animals, September/October 2017, p.6)

Upcoming Seminars

Distribution of This Newsletter

Hook Law Center encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Hook Law Center, P.C. If you are interested in a free subscription to the Hook Law Center News, then please telephone us at 757-399-7506, e-mail us at mail@hooklawcenter.com or fax us at 757-397-1267.

Posted on Friday, September 8th, 2017. Filed under Newsletter.

Exercise & Foreign Language

By Hook Law Center

While exercise and learning a second language may not be at the top of your list of priorities, a new study may shed light on how people acquire new skills and how learning and can be enhanced. Learning is a continual process which enriches us at every stage of life. Scientists already had lots of information about animals and people and how exercise improved their learning capability and long-term mental acuity, but the latest study decided to examine how exercise could facilitate the acquisition of a second language. Learning a second language becomes more difficult after childhood when the brain begins to lose plasticity. Prior studies have not come to any conclusion about what types of exercise are best, or when they are optimally performed to have maximum impact.

The researchers from China and Italy recently published their results in PLOS ONE. Using 40 college-age males and females they designed a control group and an experimental group. The control group would learn in a traditional fashion—seated and in rote memorization sessions. The experimental group, on the other hand, rode stationary bicycles at 60% capacity for 20 minutes before instruction began and throughout 15-minute segments of instruction. Both groups were presented vocabulary on a large screen, paired with pictures. 40 words were given at each session, and there was some repetition of the material. After a brief rest, all completed a computerized quiz. The trial lasted over a period of two months, and eight different groups of words were presented. The results were significant for those in the experimental group. Those that exercised while learning had higher learning rates on simple vocabulary tests, but more amazing, was the fact that they were also more skilled at recognizing entire sentences, though the latter skill did not manifest itself until after several weeks of instruction. In addition, the experimental group’s learning gains persisted a month after instruction ceased, as compared to the control group. In the interim, there had been no direct teaching.

The implication in the real world is this. According to Dr. Simone Sulpizio, a professor of psychology and linguistics at the University of Vita-Salute San Raffaele in Milan, Italy, and a co-author of the study, ‘We are not suggesting that schools or teachers buy lots of bicycles. A simpler take-home message may be that instruction should be flanked by physical activity. Sitting for hours and hours without moving is not the best way to learn.’ More studies will be needed to get specificity on what types of exercise yield the best results in learning new skills. However, one can undoubtedly conclude that exercise causes the release of neurochemicals in the brain which, in turn, causes new brain cells to grow and new connections between neurons. This is the essence of all learning—new pathways are acquired, and the brain is changed forever. (Gretchen Reynolds, “How Exercise Could Help You Learn a New Language,” The New York Times, Phys Ed section of Well, August 16, 2017)

Kit KatAsk Kit Kat – Pets & Harvey

Hook Law Center:  Kit Kat, how is Texas dealing with all the stranded pets during Hurricane Harvey?

Kit Kat:  Well, they’re doing amazingly well, for the most part. One man, Joe Garcia, made sure his aging German shepherd, Heidi, was not left to fend for herself. After loading his belongings in a plastic tub and getting it aboard a rescue boat, he went back to his flooded home in Spring, Texas (north of Houston) to get her. She’s a large dog, but he maintained her head above water, and they both safely boarded the rescue boat. In another case, Belinda and Scott Penn, also of Spring tried to stick it out in their home with their 2 dogs—Winston and Baxter (a West Highland terrier and a Shih Tzu, respectively). They retreated a while to their 2nd floor, but after a day like this, they decided to take advantage of a rescue boat. Wading through high water with the dogs at their hips, they arrived at Belinda’s mother’s apartment in Woodlands. Ms. Penn commented, ‘Every situation is different, but for us, it was not an option to leave our pets behind. They are my best friends.’

Other pets have been rescued by Good Samaritans. A woman in Corpus Christi posted on social media that she had taken in a neighbor’s dog which had been left in the backyard. A photographer for The Daily Mail rescued a dog he found chained to a pole in Victoria. In Dickinson, a reporter from CNN rescued 2 retrievers floating in an unattended boat.

Shelters have been set up to take these abandoned animals. In San Antonio, for example, as of Monday, August 28, two hundred animals have been sheltered. More are coming. The San Antonio shelter is in an air-conditioned warehouse. Cats, thank goodness, were taken to a separate location. Whoever had that idea got it right—cats get very nervous when they hear barking dogs.

There is such an influx of animals to be cared for that arrangements have been made to take animals already in the shelters before the hurricane to shelters in other states. On Tuesday, August 29, a flight full of cats and dogs left San Antonio for New Jersey. On Wed., August 30 another flight took a plane full to Seattle.

The efforts of those in rescue services have been heroic. Recovery will take a long time, but at least it is good to know that our furry friends were not forgotten in the chaos. (Matthew Haag, “Saving Pets is Paramount for Many Fleeing Tropical Storm Harvey,” The New York Times, August 28, 2017)

Upcoming Seminars

Distribution of This Newsletter

Hook Law Center encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Hook Law Center, P.C. If you are interested in a free subscription to the Hook Law Center News, then please telephone us at 757-399-7506, e-mail us at mail@hooklawcenter.com or fax us at 757-397-1267.

Posted on Friday, September 1st, 2017. Filed under Newsletter.
Like us on Facebook
Planning Guides

Sign up for our email newsletter and get access to our free planning reports.

SUBSCRIBE NOW

Ask Kit Kat: Pet advice and wisdom as Kit Kat sees it.

ASK ME