Comprehensive Planning. Lifelong Solutions.

Unexpectedly Disinherited?

By Sarah Schmidt, Esq.

What if your mother or father assured you that you should expect some version of an inheritance after death, but the Will reveals that you have been disinherited?

This scenario is unfortunately common, and it raises a number of questions: Was the will, or portions of it, forged? Was it a product of undue influence or other fraud? Or was it indeed the testamentary intent of the testator and he or she either changed his or her mind after the discussion with you or simply did not want to hurt your feelings by telling you the truth? These questions can be difficult to answer after some one has passed away. If you indeed believe the will was a product of fraud or undue influence you will need evidence to prove those allegations.

If your mother repeatedly assured you that you could expect an inheritance, though they may help, the statements your mother made to you during life, standing alone, will likely be insufficient to set aside the will. This is because “such declarations, standing alone, are not admissible as direct evidence to prove or disprove the genuineness of the will.” See Canody v. Hamblin (2018), quoting Samuel v. Hunter, 122 Va. 636, 95 S.E. 399 (1918). Only where testamentary intent is first found on the face of the will is extrinsic evidence, such as the declarations, “admissible as circumstances, either to strengthen or to weaken the assault, according to their inconsistency or their harmony with the existence or terms of the will.” Id. Furthermore, Virginia’s Dead Man’s Statute requires corroboration of such testimony when offered by an interested party. See Va. Code § 8.01-397.

Thus, standing alone, allegations that your mother told you differently will likely be insufficient. Once a proponent of a will proves that the statutory formalities of a valid will have been met, a presumption of testamentary capacity arises and the burden of going forward will be placed on you, the contestant to produce evidence to support your claims.

If you have been unexpectedly disinherited you should seek the advice of an estate litigation attorney as soon as possible. The time frame in which to contest a will is very short and you should act immediately to seek legal advice to see whether you have a case worth bringing.

Note* This article is referring to generally vague promises of a decedent as to how their will disposes of property and is not intended to address gifts causa mortis.

Kit KatAsk Kit Kat – Sunk Costs Apply to Animals

Hook Law Center: Kit Kat, what do you mean by saying, “Sunk costs apply to animals?”

Kit Kat: Well, there is a psychological theory called the “sunk cost fallacy” which applies to humans, and now, apparently to animals. Let me explain. According to this theory, once someone has invested in an idea or paid money for something, for example, they are extremely hesitant to abandon their endorsement or activity. For instance, if you have paid a lot of money for a concert or Broadway show, but 10 minutes into the performance, you realize you hate the show, you still may stick it out until the end, because you have already invested so much time and money at this point.

Now new research suggests that animals operate the same way. In a study published July 12, 2018 in the journal Science, researchers from the University of Minnesota report observing the same phenomenon in rats and mice. The rats and mice were waiting for a reward of flavored pellets and persisted longer than normal, even when the reward was extremely delayed (varied from 1-30 seconds). Once they decided to enter the waiting zone for the pellets (though they had a choice not to enter at all), they did not exit before receiving the reward. Dr. A. David Redish, one of the authors in the study, further observed, “Even more important than the similarity among species was the study’s findings that sunk cost effects appeared only after the subjects had decided to pursue a reward, not while they were still deliberating whether to do so.”

Shelly Flagel, as associate professor of psychiatry at the University of Michigan, who was not involved in the study, said the research had “far-reaching implications across fields including education, economics, psychology, neuroscience, and psychiatry.” She clarified by adding, “Persisting in a behavior even though it has adverse consequences is reminiscent of the conduct exhibited by people with addictions.” This new knowledge may lead to better treatment methods for those who have psychiatric disorders, of which addiction is a prime example. It has much to say about what motivates people and animals and what doesn’t. Further research will elucidate whether this theory is operational in other animal species. (Eric Goode, “Mice Don’t Know When to Let It Go, Either,” The New York Times, July 12, 2018)

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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, July 30th, 2018. Filed under Senior Law News.

IRS Announces Refunds and Credits for Some Veterans

By Amanda L. Richter, CPA

On July 11, 2018, the IRS announced in IR-2018-148 that certain veterans who received disability severance payments after January 17, 1991, and included that income on their returns, may claim a credit or refund of the overpayment. This announcement is a result of the Combat-Injured Veterans Tax Fairness Act that was signed by President Obama in 2016 to keep the Department of Defense (DOD) from improperly taxing veteran’s disability severance payments.

Most veterans who received a one-time lump-sum disability severance payment when they separated from their military service will receive a letter from the DOD with information on how to claim tax refunds to which they are entitled. The DOD estimates that over 133,000 veterans may be eligible for a refund of Federal taxes under the Combat Injured Veterans Tax Fairness Act.

To claim the credit or refund of the overpayment attributable to the disability severance payment, veterans will need to file Form 1040-X, Amended U.S. Individual Income Tax Return. The IRS is allowing veterans to submit a claim based on the actual amount of their disability severance payment or a simplified method can be used. The simplified method is a standard refund for a set period of years. Veterans who choose to use the standard refund (simplified method) may find this to be the easier way to claim a refund, because you do not need to access the original tax return that was filed from the year of their lump-sum disability severance payment. Below are the standard refund amounts and the years to which it applies:

$1,750 for tax years 1991-2005

$2,400 for tax years 2006-2010

$3,200 for tax years 2011-2016

As with most tax refunds, there is a statute of limitations to claim the credit/refunds. The law provides veterans making these claims have the normal limitations period for claiming a refund or one year from the date of their letter from the DOD, whichever expires later. This is especially important, since some of the claims for refunds are on taxes paid as far back as 1991.

If this applies to you or someone you know, please contact Hook Law Center if you would like assistance with completing Form 1040-X to claim the refund.

Kit KatAsk Kit Kat – Dogo Argentino Rescued

Hook Law Center: Kit Kat, what can you tell us about the Dogo Argentino breed and how one was rescued recently in Alabama?

Kit Kat: Well, this is interesting. I had never heard of the Dogo Argentino breed before reading about how one was rescued in January 2015 from a puppy mill in Alabama. The dog in question, named Ann, was bred repeatedly for puppies, only to have them yanked from her. Along with Ann, there were more than 60 dogs rescued from this living nightmare of malnourishment and mistreatment. At last justice prevailed, and the owner of the farm was convicted in February 2018 of six felony counts of animal cruelty and one misdemeanor.

After Ann was seized from her delinquent owner, she and others from the Alabama property soon were placed by the Humane Society of the United States (HSUS) in a shelter belonging to HSUS in Ann Arbor, Michigan. There they were rehabilitated and received therapy from canine behaviorists. One of Ann’s favorite canine friends named Ivan was adopted quickly after his arrival. Ann, however, lingered for almost a year and a half. Her adoption day did arrive eventually. She was adopted by Jane Harlow, who was visiting the shelter for a special event. It has been a happy arrangement for both. Ann is getting up to her ideal weight, and she has the run of large, fenced yard. To top it off, she even has play dates with Ivan, who lives nearby.

The Dogo Argentino is a relatively new breed. According to Wikipedia, “The Dogo Argentino, is a large, white, muscular dog that was developed in Argentina primarily for the purpose of big-game hunting, including wild boar; the breeder, Antonio Nores Martínez, also wanted a dog that would exhibit steadfast bravery and willingly protect its human companion.” The breed was first introduced in 1928 from the Córdoba Fighting Dog and other breeds such as the Great Dane. Although the Dogo Argentino is banned or has ownership restrictions in some countries, Ann is a wonderful example of the breed. She displays no aggressive tendencies, and has been living uneventfully with Ms. Harlow for over a year at this point. Thanks to HSUS for their timely intervention! (Kelly L. Williams, “To the rescue—case history: Ann,” All Animals, May/June 2018, p. 6-7 / Wikipedia)

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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, July 23rd, 2018. Filed under Senior Law News.

Anxiety and Dementia

By Letha Sgritta McDowell, CELA

A recent study has found that anxiety during middle age may be linked to higher rates of dementia late in life.  The study followed almost 30,000 for more than a decade and there was a clear link between anxiety mid-life and dementia later in life.  The study wasn’t a controlled study with the intent to calculate the magnitude of increased risk.  Instead the study simply indicated an increased risk without eliminating other factors.

When experiencing anxiety or stress, the body produces the hormone cortisol and prolonged heightened cortisol levels have been linked to weight gain, lower immune function, lower bone density, higher rates of mental illness and depression, higher rates of heart disease and more.  It is possible that dementia is another possible side effect of prolonged increased cortisol levels.  On the other hand, anxiety is often a symptom of dementia, making the corollary between the two difficult to connect.

Therapy exists to assist individuals with the reduction of anxiety and cortisol levels.  For individuals who live with high stress and anxiety, pursuing therapy to reduce these levels is critical due to the host of other health problems which may result.  The possibility of reducing the chances of developing dementia later in life is simply an added bonus to reducing stress.

While there is no way of eliminating the chances of developing dementia, there are some things one can do to aid in prevention.  Reducing stress is one and maintaining heart health through diet and exercise is another.  The Alzheimer’s Association also recommends education and regularly getting the right amount of sleep as another.

How do you recognize dementia?  The Alzheimer’s Association has provided 10 signs of dementia which, if you notice any one of them in yourself or a loved one, warrants a visit to a physician for further testing.  They are:

  • Memory loss that disrupts daily life – This includes forgetting recently learned information, important dates or events, or repeatedly asking for the same information. This does not include occasionally forgetting a name or an appointment, then remembering later.
  • Challenges in planning or problem solving – This includes difficulty with following a familiar recipe or keeping track of bills but would not encompass the occasional math error or learning a new task.
  • Difficulty completing familiar tasks at home or work.
  • Confusion with time or place – While it is common for many to occasionally forget what day it is but then remember later, it is not common to forget and not remember at all.
  • Trouble understanding visual images or spatial relationships. This includes trouble judging distances or determining color contrasts.
  • New problems with words in speaking or writing – Examples of this are trouble in following a conversation or having trouble finding the right word for something and calling it by the incorrect name.
  • Misplacing things – While everyone misplaces their keys on occasion, a person with dementia may place their keys in an inappropriate location (such as the freezer) then later be unable to find them and not have the ability to retrace their steps.
  • Decreased or poor judgement – This is difficult to ascertain, but is unfortunate and an often missed early sign. Decreased judgment is often what leads individuals to take action such as gifting sums of money when they otherwise would not do so.
  • Withdrawal from social activities – This is often as result of having difficulty in following a certain activity or being able to engage in conversation.
  • Changes in mood or personality – Different from simply becoming irritable when a routine is changed, a person with dementia may become easily upset, afraid, depressed or fearful, even when in a familiar setting.

Studies now show a link between anxiety and developing dementia.  While the strength and nature of this connection remains unknown, it is certainly cause to take steps to reduce stress and anxiety now.  To the extent any preventative measure can be taken, it is critical to implement.  For those who have prolonged exposure to stress and anxiety; be sure to know the early warning signs of dementia and pursue treatment in order to improve overall quality of life.

Kit KatAsk Kit Kat – Virginia Honeybees

Hook Law Center: Kit Kat, is it true the Virginia honeybee population was reduced by half after this past winter?

Kit Kat: Yes, unfortunately, it was closer to 60% that was lost. This was the highest reduction of managed colonies of honeybees since the Commonwealth of Virginia started tracking them in 2000. Normally, only 30% are lost over the winter period. It could be devastating for the state’s agriculture, because honeybees are critical to pollinating crops, and wild bees perform the same function in wild areas such as wetlands and forests. Honeybees are responsible for about 90% of the pollination of apples, cranberries, broccoli, and blueberries. They are also essential for pollinating almonds, to name just a few of the crops which they pollinate. According to Keith Tignor, apiarist for the Virginia Department of Agriculture and Consumer Services. Virginia was 4th in the nation for loss of bees, with only Arizona, Tennessee, and Louisiana losing more. The phenomenon is known as “colony collapse.” Scientists have not yet figured out why this is happening. They have some ideas, however.

According to Margaret Couvillon, assistant professor of pollinator biology and ecology at Virginia Tech, the four stressors for bees are known as “the four P’s—pesticides, pathogens, pests, and poor nutrition.” Contributing factors this year were an unusually long winter and a brief warm-up in February which tricked them into thinking spring had come. Also, the bees battled parasitic Varroa mites and infections from nosema fungi. Furthermore, they have had to deal with a loss of habitat, as more and more woodlands are converted to farming nationwide. Finally, it is becoming harder to make a living as a full-time beekeeper. Therefore, fewer people undertake the task, thus reducing the number of bees, because there are fewer active agents revitalizing their numbers each year after a cold winter.

What can you do to help the situation? 1) Become a beekeeper, or expand the number of hives you have, if you already keep bees, 2) plant flowers; even if you live in an apartment, you can plant in pots, 3) monitor your bees if you are a beekeeper for mites, especially in July and August, and 4) seek advice from state extension agents before applying any pesticides. (Katherine Hafner, “Over half of Virginia’s honeybees died last winter. Here’s what that means.” The Virginian-Pilot, pg. 1 and 7, July 9, 2018)

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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, July 13th, 2018. Filed under Senior Law News.

Think Before You Liquidate That IRA

By Shannon Laymon-Pecoraro, CELA

One of the biggest problems faced in estate and trust administration is the liquidation of qualified assets, such as a 401k or IRA. Often, clients forget that the funds in the qualified account have not yet been taxed, and as a result, when withdrawn from the account, the full withdrawal will be taxed as ordinary income.

Estates and trusts have a condensed tax structure, and as a result, it only takes $12,500 worth of income for an estate or trust to be taxed at the maximum marginal tax bracket (37% in 2018). To put things into perspective, an individual would need to earn over $500,000 to hit the same tax bracket. As a result, planning the timing of distributions from qualified accounts becomes an important.

The rules for inherited account vary greatly from those of a traditional account holder. With the exception of spousal rollovers, distributions from qualified accounts, which will become an inherited IRA, must begin immediately and must generally be taken over the lifetime expectancy of the beneficiary (in the event of multiple beneficiaries, it would be the life expectance of the oldest beneficiary) or within five (5) years after the decedent’s death. These rules will vary based on circumstances set by the Internal Revenue Service.

Beneficiaries are often anxious to collect their inheritance, and as a result, the fiduciary often liquidates a majority of the assets with the goal of closing an estate as quick as possible.  This is often a costly mistake. Working with a professional, the fiduciary of the estate or trust can develop a distribution schedule that complies with the rules set by the Internal Revenue Service and will push the income out to the beneficiary(ies) so as to minimize the overall tax effect.

The attorneys at the Hook Law Center are well versed in estate and trust taxation, but the addition of a CPA has added comprehensive tax service to the firm. Not only do we prepare decedent and estate returns, but we can address tax issues associated with qualified accounts as we develop an estate plan, and work with fiduciaries to plan distributions from Inherited IRAs.

Kit KatAsk Kit Kat – Don’t Feed the Horses

Hook Law Center: Kit Kat, what can you tell us about 1) the St. Paul raccoon who was climbing the UBS building and 2) the habits of mammals that are becoming increasingly nocturnal?

Kit Kat: Yes, it’s very true, and there can be life and death consequences for the wild horses if this is not taken seriously. Signs in the area say “Apples and carrots ‘kill’ wild horses.” It’s not an exaggeration. While most horses can tolerate these delicious treats, the wild horses that were left by the Spanish in 16th-17th centuries cannot. Jo Langone, chief operating officer of the Corolla Wild Horse Fund, says their normal food is the grasses in the area. If they eat other things, it can cause colic or even death. Also, it is advisable to keep one’s distance from the wild horses. Ms. Langone said to think of them as wild—like a bear. Stallions can suddenly begin to fight one another, or sometimes the herd gets spooked and begins to stampede, quite unaware of their surroundings.

If you live in that area and want to help, you can put a sign in your yard saying “Don’t feed the horses!” They are available at the Corolla Wild Horse Fund museum and gift shop in Corolla. Other great citizens have helped by financing a billboard on their own property on US 158. Karen and Mac Quidley gave the space. R.O Givens Signs paid for installation, and Terry Douglas, a graphic artist from Richmond, did the design for free. What a wonderful community effort to protect the beautiful wild horses of the Outer Banks! (Jeff Hampton, “In NC, billboard pulls no punches on safety of horses,” The Virginian-Pilot, June 29, 2018, 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, July 9th, 2018. Filed under Senior Law News.

New Changes to 529 Plans

By Amanda L. Richter, CPA

The Tax Cuts and Jobs Act (TCJA) has made some significant changes to qualified tuition programs also commonly known as “529 plans”. These plans are a tax-advantaged savings plan designed to encourage savings for future education costs. 529 plans are authorized by Section 529 of the Internal Revenue Code “IRC” and are sponsored by states, state agencies, or educational institutions.

Distributions from 529 plans are tax-free if it is used to pay “qualified higher education expenses” of the beneficiary (student). Under old law, tuition for elementary or secondary schools was not considered a “qualified higher education expense”. So students (529 beneficiaries) who had to pay tuition for elementary or secondary schools could not receive tax-free distributions from their 529 plans.

Now under the TCJA, the law provides greater flexibility for families by expanding qualified higher education expenses to also include expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school. And as a result, tax-free distributions from 529 plans can now be received by beneficiaries who pay these expenses, effective for distributions from 529 plans after 2017. Also, 529 plans can be transferred between relatives, allowing significant amount of flexibility for families with overfunded 529 plans.

Under subsection (b)(1)(A)(ii), there is a limit to how much of a distribution can be taken from a 529 plan for these expenses. The amount of cash distributions from all 529 plans per single beneficiary during any tax year can’t, when combined, include more than $10,000 for elementary school and secondary school tuition incurred during the tax year. Any excess distributions received by the beneficiary would be treated as a distribution subject to tax under the general rules of section 529 of the IRC.

Kit KatAsk Kit Kat – Koko Passes

Hook Law Center: Kit Kat, who was KoKo, and has she now died?

Kit Kat: Koko was a beloved gorilla who was a pioneer in communicating with humans using sign language. She was age 46, and she lived her last years at The Gorilla Foundation’s preserve in Northern California. She died in her sleep the week of June 18, but it was first reported in The Washington Post on June 21, 2018.

Koko was a very social creature, and her two loves were baby dolls and kittens. During her lifetime, she had several cats—All Ball, Lips Lipstick, Smoky, Ms. Gray, and Ms. Black. She tended to them and stroked them, like any human owner would. They were pure delight for her! She appeared on the cover of  National Geographic twice. In one of the articles, Koko was featured with her kitten, All Ball. That led to a book called Koko’s Kitten, which is still a part of many elementary school curriculums today.  Koko also had relationships with several celebrities including Mister Rogers, Betty White, and Robin Williams.

Koko was born in captivity at the San Francisco Zoo on July 4, 1971. She was a western lowland gorilla. Her official name was Hanabi-ko, which means “fireworks child” in Japanese. It soon was shortened to Koko. At the zoo, she started working with Francine “Penny” Patterson, who was a young animal psychologist. It was she who introduced Koko to an adapted version of American Sign Language, which she soon dubbed “Gorilla Sign Language,” or GSL. There is some debate about whether or not Koko was really internalizing language or merely mimicking Dr. Patterson’s movements, with whom Koko had developed a close relationship. Nevertheless, the foundation issued a statement after Koko’s death about the importance of her life—“Her impact has been profound and what she has taught us about the emotional capacity of gorillas and their cognitive abilities will continue to shape the world.” (Lindsey Bever, “Koko, the beloved gorilla that learned to communicate using sign language, has died,” The Washington Post (Animalia section), June 21, 2018)

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, July 2nd, 2018. Filed under Senior Law News.
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