Comprehensive Planning. Lifelong Solutions.

What Just Happened?

By Letha Sgritta McDowell, CELA

Last week the US House of Representatives passed a tax bill that appears to overhaul the Internal Revenue Code as it has existed since 1986.  While many favor simplifying the tax code and its maze of complex rules, the House simplification would have ramifications that require careful thought and analysis.  The current Internal Revenue Code was passed in 1986 and  took more than 3 years to write; the recent House tax bill took just a few weeks and was passed without a single hearing.

Despite the apparent haste, many Americans still don’t seem overly concerned about the possibility of an overhaul of the tax code.  However, it is likely that for many in the middle class, the proposed changes would have a significant increase in their overall tax liability.  In addition to changes for the middle class, others such as the elderly or people with disabilities, will also be affected.

Included in the House version of the tax bill, and indeed a major vocalized motivation for tax reform, is a reduction in corporate taxes.  The idea is that corporations will be less likely to move overseas to avoid the current corporate tax structure.  However, for individuals, the changes are much broader than a change in rate.  The House bill proposes to compress the number of tax brackets from 7 to 4 ranging from 12% to 39.6%.

What is of most concern is the elimination of almost every itemized deduction with a few exceptions.  The charitable deduction will remain, deduction for real property taxes up to $10,000 will remain, and the home mortgage deduction will remain.  However, the state and local tax deduction is eliminated, as is the deduction for tax preparation and many deductions related to paying for college. Of concern for many locally who own a second home or vacation home for rental purposes, the deduction of mortgage interest for second homes has been eliminated.  This proposes to have a major impact on the tourist economy, especially in North Carolina.

Furthermore, for many elderly and people with disabilities, the elimination of the medical expense deduction is troubling.  Many rely on the medical expense deduction to reduce or eliminate taxes, because they are utilizing a large portion of their income to pay for their much-needed medical services and supports.  This includes those paying high health insurance costs, using savings to pay for long-term care, as well as those paying their income as a “co-pay” to their long- term care facility since they are eligible for Medicaid.

In addition to these changes, the standard deduction is almost doubled, simplifying tax filings for many.  However, the personal exemption is eliminated.  In addition, the proposed estate tax exemption is increased to $11million per person or $22 million per married couple.

In sum, there are sweeping changes proposed in the House bill.  A Senate version has also been proposed. While containing some differences, it is not wildly different from the House bill.  There appears to be pressure in Washington to get new tax legislation passed before the end of the year.  Many feel that it is too early to determine how this tax bill will actually affect the average American, or the net impact on the federal deficit. Stay tuned as this important issue continues to unfold.

 

Kit KatAsk Kit Kat – Benefits of a Dog

Hook Law Center:  Kit Kat, what can you tell us about the benefits of having a dog?

Kit Kat:  Well, there is some research coming from Sweden which says that having a dog might actually extend your life! The research was compiled by scientists from Uppsala University. Sweden, it appears, is the perfect place to conduct such studies. Detailed records are kept on its citizens including hospitalizations, medical history, and even such things as whether they own a dog. Over the 12-year period of the study, what was discovered is that people who had a dog had less cardiovascular disease or die for any reason. This was especially true for single people. Mwenya Mubanga, one of the authors of the study, says, ‘Dog ownership was especially prominent as a protective factor in persons living alone, which is a group reported previously to be at higher risk of cardiovascular disease and death. Perhaps a dog may stand in an important family member in the single households.’

Another interesting finding was that hunting dogs seemed to offer the most protective health benefits. Scientists are not quite sure what is the cause of the improved health benefits. Are people who chose to own dogs a healthier lot overall, or does having a dog lead to one taking more exercise and leading a more active lifestyle? We don’t know for sure at this point, but what the study is definitely telling us is that having a dog may indeed be a life extender.

This study did not tackle the subject of owing other pets, but I would say from informal observation that owning other pets such as cats can be just as beneficial! We felines are very attentive to our parents, and we love them just as much as our canine cousins! (Michelle Cortez, “Having a dog might just save your life, Swedish research says,” from Bloomberg News, as re-printed in The Virginian-Pilot, Nov. 19, 2017, p. 10)

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 Tuesday, November 28th, 2017. Filed under Newsletter.

Buyer Beware: The Dangers of Do-it-Yourself Estate Planning

By Jessica A. Hayes

There are increasingly more websites offering do-it-yourself estate planning documents at a very low cost.  If you’re trying to save money, it might be tempting to cut corners and use one of these websites, especially if you believe your wishes and your estate are simple.  Unfortunately, while the cost to use these websites may be low, the expense of fixing the problems they cause is almost guaranteed to be significantly higher.

In recent years, I’ve encountered several documents generated online which had serious flaws – for example, a trust that was missing major distribution provisions, a will without the necessary attestation clause, and a power of attorney that was not sufficiently broad enough to permit the agent to assist the client in qualifying financially for Medicaid.  If the issue is brought to my attention while the individual still has the mental capacity to sign a new document, we’ll sign the new document, revoke the old one, and the crisis will have been averted.  If I am seeing the document for the first time after a client has died or lost mental capacity, unfortunately, we will have to rely on that document moving forward.

You may create a revocable trust online, but if you fail to fund it – to transfer assets into it or name it as the beneficiary of those assets, or to pass assets into it at your death via a “pour-over” will – it will be useless.  You may also create a power of attorney online, but if you fail to include some of the powers we often recommend in order to assist clients in qualifying financially for Medicaid or VA Aid & Attendance, your agent will have fewer options available to them in the event you require assistance paying for long-term care.  These documents are more than just forms to be filled in.  What they say matters.

A well-formed estate plan takes into account your wishes, your family circumstances, your financial situation, and any potential tax consequences.  To truly be effective, it must be comprehensive.  If someone – an online service or even an attorney – is willing to prepare estate planning documents for you (a will, trust, advance medical directive, and/or power of attorney, generally) without getting a full understanding of your family dynamics and your assets, consider that a red flag.  You will not be getting the best advice, nor will it be tailored to meet your needs.

An experienced estate planning attorney will walk you through the estate planning process, gathering the necessary information and making recommendations specific to you.  You will walk away not only with a set of documents carefully crafted to meet your needs, but also with specific recommendations and the peace of mind in knowing that your affairs are in order.

Hook Law Center recognizes the importance of keeping estate planning affordable, and is in some circumstances able to prepare same-day documents for clients, keeping costs down and avoiding a return trip to our office.  To determine whether you may be a good candidate for this service, contact the Hook Law Center today.

 

Kit KatAsk Kit Kat – Dementia & Keeping a Pet

Hook Law Center:  Kit Kat, should someone with dementia keep a pet?

Kit Kat:  Well, there are many things to consider when a person is diagnosed with dementia. If there is a beloved pet in the household, it may be best not to make any change right away. Pets are an enormous source of comfort and stimulation for anyone, let alone one who is declining in mental awareness. As the disease progresses, there will be things to consider about maintaining a pet.

First, one must consider the capability of the person with dementia. In some, the disease progresses very slowly. My human mother’s mother lived with dementia/Alzheimer’s for 17 years. In others, the disease progresses rapidly. So each situation must be evaluated individually, and it must be determined if the person with dementia has the capability of caring for a pet. Pets, though, lovable, do require work. With cats, buying litter, scooping it daily, maybe too much for someone with impairments to manage by themselves. Dogs need to be walked. Is there a close friend or relative who can help with these tasks?

Second, one must ask if the individual wants to keep the pet. Sometimes, with dementia, there are accompanying personality changes. Do pets bring joy to him/her or are they a source of irritation?

Should the decision be made that the person in question can no longer keep the pet, there are alternatives. A friend or relative may volunteer to raise the pet and allow visits with its former owner. As a last resort, surrender the pet to a no-kill animal shelter or the humane society.  Never just let the pet out on the street to fend for itself. Cats, which have been indoor all their lives, do not adapt well there. My family adopted one such cat we found in a restaurant parking lot. She had been fixed, but was about 10 years old, the vet estimated. Sometimes, people are specifically looking for older pets who are past the kitten/puppy stage where they jump a lot and chew on things.       The final decision should be made considering what is best for both the person with dementia and the pet. (Adapted from Celia Monroe, https://supercarers.com/blog, 10-16-17)

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, November 17th, 2017. Filed under Newsletter.

Protecting Assets When A Spouse Enters A Nursing Home

By Shannon Laymon-Pecoraro, CELA

As an Elder Law attorney, I often see the devastating toll the cost of nursing care can have on a married couple’s assets. The most upsetting cases involve healthy spouses that have essentially been impoverished as a result of the unhealthy spouse’s need for care. The basic fact is that such impoverishment can be completely avoided with proper guidance as a result of the Medicare Catastrophic Coverage Act of 1988 (“MCCA”), which essentially provides a framework to prevent spousal impoverishment under the Medicaid rules. While it would be nearly impossible to debunk all the myths pertaining to Medicaid we address, there are a few common ones that we at the Hook Law Center see most often.

Myth – They only look at one spouse’s assets when determining eligibility.

Resources held by either the institutionalized (the spouse that needs care) or community (the spouse that does not need care) spouse shall be considered available to the institutionalized spousal however, certain exclusions apply to various assets. For example, some assets, such as the primary residence of the community spouse, is a non-countable resource for Medicaid eligibility. Additionally, the MCCA sets forth an exemption amount, known as the community spouse resource allowance, to ensure there is a small safety net for the community spouse. Currently, the community spouse resource allowance is 50% of the total countable resources of the couple up to $120,900, with a floor set at $24,180. The countable assets of the couple above the community spouse resource allowance must then be “spent down.” A spend down, to an elder law attorney, merely means the conversion of a countable resource to either a non-countable resource or a new income stream, and does not necessarily mean that money needs to be spent. Once the institutionalized spouse is eligible for Medicaid, the resources and income of the community spouse will not be considered for continuing eligibility of the institutionalized spouse.

Myth – I can’t gift money to my spouse because of the 5-year look-back period.

The Virginia Medicaid manual has a blanket exemption for transfers between spouses. This permits spouses to transfer assets between another without risk of a penalty period for the transfers. The tough analysis associated with these transfers include whether someone has the legal authority to transfer assets to the community spouse (via a power of attorney or conservatorship that expressly permits such gifts) and what tax implications, if any, would result in such a transfer.

Myth – Medicaid is going to take my house.

Medicaid does not take anyone’s home, let alone the primary residence of a community spouse. Instead, the Medicaid considers the primary residence of a community a non-countable, or exempt, resource when determining eligibility.  This myth, I believe, arises from the fact that if a single individual does not reside in real property for 6 months then the home must be listed for sale, and that Medicaid may put a lien against the home upon the death of a Medicaid recipient. The fact remains, that while the house may need to be sold or when the house sells, Medicaid may be entitled to some of the proceeds, Medicaid does not actually take the home.

Myth – We have too much money for Medicaid.

With proper planning, most couples can protect their assets and qualify as an institutionalized spouse for Medicaid. The planning, as previously mentioned, requires the conversion of countable resources to non-countable resources or a new income stream and does not require the impoverishment of the community spouse.  The plan should be custom tailored to each couple, and what works for one, may not work for another. As a result, you should consult an experienced elder law attorney to develop a plan that will work for you.

 

Kit KatAsk Kit Kat – ECPI to the Rescue

Hook Law Center:  Kit Kat, what can you tell us about ECPI helping a 3-legged dog walk again?

Kit Kat:  Well, this is a wonderful story. A four-year-old beagle named Ray Ray lives in Norfolk. He’s had quite a lucky life in some respects, and unlucky in others. The unlucky part is that a couple of years ago he was in an accident, and had to have his back right foot amputated. That led to other problems like gait and stress issues on his remaining legs.

Now comes the lucky part. His first bit of luck was to be adopted by Susan and Phil Glassner of Norfolk. To do so, Ray Ray had to move from North Carolina where he had been taken in by a rescue group. He loved his new home, and the other two dogs who already lived with the Glassners. However, dealing with a missing foot was causing stress on his hips and spine.

Then came his second piece of good luck. His mother, Susan, happened to see on Facebook a post about some students at ECPI’s Richmond campus who had made a prosthetic arm for a child. Susan had a friend who worked at ECPI’s Virginia Beach campus, Nadine Newhart, who contacted the Richmond campus for her. It was an incredible feat of timing! The engineering students at ECPI’s Richmond campus needed a project for their senior capstone class. The students got to work on it, and within no time they created a prosthetic leg for Ray Ray. The new leg is supported by a harness and wheel combination that allows Ray Ray to make turns. The students had to be quite creative, because the leg had to be made of certain materials which Ray Ray would not destroy by chewing.

So thanks to ECPI students, who used their ingenuity and technical smarts, Ray Ray is enjoying life once more as a four-legged canine! (Robyn Sidersky, “ECPI students accomplish a real feat, and an amputee dogs gets a prosthetic limb,” The Virginian-Pilot, November 3, 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, November 13th, 2017. Filed under Newsletter.

Can You Be Held Personally Liable for Your Parent’s Long-Term Care in Virginia?

By Sarah Schmidt, Esq.

In 2017, the average cost of nursing home care in Virginia amounts to $94,896 per year, $7,908 per month, for a private room.[1] That cost is steep enough to concern even the most affluent of clients. While children often feel morally responsible to step in and help out an aging parent financially, what if they do not?  What if they cannot? Can they be held legally responsible? The answer may surprise you.

As many as twenty-nine (29) states have filial responsibility laws on the books.[2] Filial responsibility laws are statutes which require an able child to provide financial support for an indigent parent.  Any legal obligation of an adult child to support his or her parent is not founded in common law; such an obligation can only be created by statute.[3] While many states have never enforced their filial statutes,[4] such statutory obligations do exist, and the policies behind them are deeply rooted in history and tradition.[5]  The theory and policy behind filial responsibility is one of reciprocity. When the government began providing public benefits through social security, Medicare, and Medicaid, this greatly reduced the need to enforce filial responsibility laws.[6] Some commentators, however, opine that the enforcement of such obligations will resurge due to the predicted deficits in the public benefit programs.[7]

 

Virginia Code Section 20-88 was enacted in 1920. It imposes an obligation on persons eighteen years of age or older, to provide for the support and maintenance[8] of his or her mother or father, if: (1) after reasonably providing for his own immediate family, the child is of sufficient earning capacity or income, and (2) the parent is then and there in destitute or necessitous circumstances.[9] The Virginia Supreme Court interpreted this to be a subjective standard and found that the parent’s standard of living to which they are accustomed is taken into account.[10]

The juvenile and domestic relations district courts have exclusive jurisdiction in all cases arising under Virginia Code Section 20-88. Because the juvenile and domestic relations district courts are not courts of record, the total number and frequency of cases involving Code Section 20-88 remain unknown, but the statute has been enforced. For example, this statute was enforced in a 2015 case filed in Virginia Beach Juvenile and Domestic Relations District Court, where a Judge ordered eight children to pay for the assisted living expenses of their biological mother in the amount of $5,500 a month. This award, according to counsel for the petitioner of that case, amounted to as much as $71,500. The order was appealed to Virginia Beach Circuit Court, but the case settled before trial. [11]

While the Virginia Supreme Court has never considered a case regarding filial responsibility and long-term care, this statute undoubtedly extends to support for the cost of long-term care. Fortunately, there are a number of defenses a child might use to protect himself or herself from a filial responsibility action, but the details of those defenses are beyond the scope of this newsletter. Should you find yourself facing an action by a third-party to be held liable for your indigent parent, it is imperative that you hire an attorney with experience in elder law and long-term care planning.

[1]       See Genworth 2017 Cost of Care Survey (last visited Oct. 30 2017),  https://www.genworth.com/services/servlets/pdf/CostofCare_2017

[2]     Jared M. DeBona, Mom, Dad, Here’s Your Allowance: The Impending Reemergence of Pennsylvania’s Filial Support Statute and An Appeal for Its Amendment, 86 Temp. L. Rev. 849, 855 (2014).

[3]     Americana Health Ctr. v. Randall, 513 N.W.2d 566 (S.D. 1994).

[4]     Lundberg, supra note 29 at 534.

[5]     Swoap v. Superior Court, 516 P.2d 840, 848–49 (Cal. 1973) (“[T]he duty is deeply rooted and of venerable ancestry; it can be traced back . . .  to the year 1601.”);  Americana, 513 N.W.2d at 571;  see Jared M. DeBona, Mom, Dad, Here’s Your Allowance: The Impending Reemergence of Pennsylvania’s Filial Support Statute and An Appeal for Its Amendment, 86 Temp. L. Rev. 849, 855 (2014) (referring to the Elizabethan Poor Laws in 1601 which created statutory obligations to provide for poor family members).

[6]     Jared M. DeBona, Mom, Dad, Here’s Your Allowance: The Impending Reemergence of Pennsylvania’s Filial Support Statute and An Appeal for Its Amendment, 86 Temp. L. Rev. 849, 849 (2014).

[7]     Id. at 856.

[8]   Mitchell-Powers v. Hardware Co. v. Eaton, 198 S.E. 496, 499–50 (Va. 1938)  (“Support and Maintenance, as used in the statute, mean in a moral and legal sense, having a regard to the situation, mode of life and condition of the persons concerned. It means more than the son or daughter, if of sufficient earning capacity or income, must do more than relieve the pangs of hunger, provide and furnish only enough clothes to cover the nakedness of the parent. He or she must furnish such support as comport with the health, comfort, and welfare of a normal individuals according to their standards of living, considering his or her own means, earning capacity and station in life.”).

[9]    Id. at 499 (emphasis added) (finding that “Destitute” or “Necessitous Circumstances” is defined as: “not possessing the necessities in life; in a condition of extreme want; without possessions or resources,” and “living in or characterized by poverty; needy . . . [and] as narrow, destitute, pinching, [and] pinched.”).

[10]      Id. (finding that Va. Code § 20-88 “was intended to cover the case of a parent in destitute or necessitous circumstances according to his or her standard of living.”).

[11]       See Johnson v. Southerland, Virginia Beach Circuit Court No. CL15-381 (2015).

 

Kit KatAsk Kit Kat – Shrews in Winter

Hook Law Center:  Kit Kat, what can you tell us about how shrews handle the winter? Are they out and about or do they hibernate?

Kit Kat:  Well, they are out and about for sure; however, the interesting thing is that their skull and brain mass shrink by about 18 % during the winter. Shrews are about the size of a mouse, but are really more like a mole. Also, they are found in almost all parts of the world. Scientists speculate that their brains become shrunken to conserve energy. According to Javier Lazaro of the Max Planck Institute for Ornithology in Germany, “They also have high metabolic rates and very little fat stored in their bodies. Therefore, they starve within a few hours if they do not hunt constantly.” Therefore, a smaller skull and brain, as well as some of their major organs and  their spines also shrivel in size as well. A smaller corpus means less food is needed to sustain it during the cold months.

To conduct the study, the researchers captured 12 shrews in Germany near the Max Planck Institute from summer 2014 to fall 2015. All were micro-chipped, and measured at three different intervals. The skull-shrinking phenomenon was noticed in all twelve. What the scientists think happens is this—their “brain case shrinks when the joints between the bones of the skull reabsorb tissue during autumn and winter. As spring approaches, the bone tissue regenerates.” Scientists are not sure why other invertebrates can’t do the same, but the phenomenon may have implications  for humans, especially those who are afflicted with osteoporosis, and other bone and joint diseases. Medical researchers are very intrigued by this new information. Stay tuned as scientists continue to study this issue. (Douglas Quenqua, “As Winter Sets In, Tiny Shrews Shrink Their Skulls and Brains,” The New York Times (Science section), Oct. 23, 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 Tuesday, November 7th, 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