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Year-End Tax Planning Ideas

By Jennifer Rossettini, CFP®

As 2019 draws to a close, the focus for many of us will turn from holiday shopping to getting ready to file our income tax returns for the year.  Try to find some time in between the hustle and bustle of the season to consider the following opportunities to potentially lower your taxable income.

Pay Some 2020 Bills Early: As we learned during tax season last year, the increased standard deduction (from $12,700 in 2017, for married couples filing jointly, to $24,000 in 2018) that came about as a result of the Tax Cuts and Jobs Act of 2017 made it more difficult to itemize deductions.  If you anticipate being close to the threshold for 2019, consider prepaying some deductible expenses that are due in January like mortgage payments or state taxes.

Prepay Tuition or Contribute to a 529:  If you are the parent of a student in their first four years of undergraduate study, you can deduct up to $2,500 for each student, even if you do not itemize.  If your tuition payments have not yet reached this level, consider paying January’s tuition bill in 2019.

If you are a Virginia resident and a parent or a grandparent who is thinking of putting money away for your child’s or grandchild’s education, consider contributing to a 529 college savings plan.  You may not be able to deduct these contributions on your federal tax return, but you can deduct up to $4,000 per account from your Virginia taxable income.  If you are 70 years of age or older, the $4,000 limit does not apply – you can deduct the full amount of your contribution from Virginia taxable income.  

Harvest Investment Losses:  Look for holdings in your taxable investment portfolio that may have lost value this year.  Speak with your financial advisor about whether you should sell those holdings at a loss.  If you have holdings that have gained value this year, you can not only use the losses to offset any gains in your portfolio, you may be able to carry over any excess loss (up to $3,000) to reduce your ordinary taxable income.  

Max Out Your Pre-Tax Retirement Savings: Taxpayers can contribute up to $19,000 per year, pre-tax, to employer-sponsored retirement plans such as 401(k)’s, 403(b)’s, or federal Thrift Savings Plans.  If you are over 50 years of age, you can add an additional $6,000 contribution for a total of $25,000.  Pre-tax savings decrease your taxable income.

If you are self-employed, the tax savings could be even greater.  For a solo 401(k) plan, you can contribute up to 20% of net self-employment income to the plan.  This amount is capped at $56,000 per year or $62,000 if you are 50 or over. 

Bunch Two or More Years’ Worth of Charitable Contributions Into One Year or Open a Donor Advised Fund:  If you normally contribute to charitable organizations, but the tax benefit  of doing so is lost because of the increased standard deduction, consider “bunching” two or more years’ worth of contribution into one year in order to exceed the standard deduction.  If you do not wish to give that much to any given charity at one time or you are undecided as to which charitable organizations to support, you can contribute a lump sum to a donor advised fund, take the deduction in the year of the contribution, and decide later how you want to ultimately have those funds distributed.

Transfer IRA Money to Charity:  If you are over 70 ½ and required to take a distribution from your IRA this year, consider donating that required distribution directly to charity if you do not need the funds to support your lifestyle.  This is a great way for taxpayers who no longer itemize their deductions due to the increased standard deduction to still support their favorite charities AND receive a tax benefit.  As long as the distribution is made directly from the custodian of the IRA to the charity, taxpayers can donate up to $100,000 this year.

Ask Kit Kat: Beagle Brigade

Hook Law Center: Kit Kat, what can you tell us about the beagle brigades which patrol airports and border entry points?

Kit Kat: Well, this is an interesting tale! Beagles, as it turns out, are perfect for sniffing out meats, fresh fruits, vegetables, plants, seeds, and any products made from animals or plants. Some passengers innocently bring these items into the United States, either taking a ham sandwich which was served on the airplane, or bringing favorite fruits/vegetables from their home country. While most passengers don’t understand the degree of danger this poses, the beagle brigade attached to US Customs and Border Protection are there to make sure these items are disposed of properly upon entry to the United States. Pork products pose a special hazard. African swine fever may be responsible for having infected ¼ of the world’s pork since last August. China, Vietnam, Philippines, Eastern European countries like Romania and Bulgaria, and in September, Belgium was added to the places where the swine flu has spread. There is no cure, nor a vaccine to prevent this disease. While humans themselves cannot catch the virus, the United States is trying to keep it from infecting American animals. At Dulles International Airport in Virginia on a daily basis, 100-400 pounds of prohibited items are seized each day. Agents estimate 99% of it is food.

As it turns out, beagles are ideally suited for this work. They have great olfactory sense, and they are friendly, smart, and non-threatening. Their training involves being able to identify 5 things: apples, mango, citrus, beef, and pork. Special attention is given to identifying pork products because of the swine flu problem. US Customs wants to add, in the near future, 60 more teams to bring the number of beagle teams to 179 across the United States. It also turns out to be an economical investment to deploy the beagles, because their sniffing capability is so strong, that they can sense contraband even when it is moving on a luggage carousel. Each correct identification saves taxpayers untold money in disease prevention and actual outbreaks of disease.

They are vital partners of US Customs and Border Patrol. Their handlers love them, too! They do all this hard work for simple rewards like Pup-Peroni, a dog treat and a pat on the head!

(Laura Reiley, “Ham’s best friend: The beagle brigade is the last line of defense against African swine fever in U.S.,” The Washington Post, Nov. 27, 2019)

Posted on Thursday, December 26th, 2019. Filed under Senior Law News.

Important Update: SECURE Act 2019

By Letha Sgritta McDowell, CELA CAP

The SECURE Act was passed yesterday as part of the House Appropriations Bill, making sweeping changes to how qualified plans are paid out after the death of the original owner. Hook Law Center originally reported on this issue on May 28, 2019, analyzing the potential end of the stretch IRA. At that time there were differences between the House and Senate version of the bill which had to be reconciled before the bill, which would change how IRAs and other qualified plans could be paid out after the death of the original owner, became law. After several months and reconciliation, a modified version of the House bill passed.

The SECURE Act now allows continued tax deferrals for spouses, minor children, persons with disabilities, and certain trusts created for the sole benefit of persons with disabilities. Any other beneficiaries must withdraw the funds from the qualified plan within 10 years after the date of the original owner’s death.

Prior to the passing of the SECURE Act, with careful planning, tax deferred funds could be passed to subsequent beneficiaries and paid out over the lifetime of the beneficiary, thus allowing the assets to grow tax free and minimizing the amount the beneficiary was required to take annually, therefore reducing income taxes. Now, absent one of the exceptions, tax deferred funds will be subject to continued tax deferral for a maximum of 10 years, thus greatly accelerating the time frame in which taxes must be paid.

Guidance as to how some of the provisions of the new SECURE Act will need to be provided in the form of regulations and many details remain unclear. However, it is clear that many estate and financial plans involving qualified retirement funds will need to be reviewed and revised to take into account the changes in the law.

Join us for two FREE seminars in January to learn more about how the SECURE Act can affect your Estate Plan.

Wednesday, January 22 – The Hilton Garden Inn Harbour View/Suffolk – 10 AM. Click here to RSVP.

Tuesday, January 28 – TowneBank Great Bridge – 10 AM. Click here to RSVP.

Posted on Monday, December 23rd, 2019. Filed under Senior Law News.

How to Cope With End-Stage Dementia

By Emily Martin, Esq.

No one likes to imagine what will happen if a loved one is diagnosed with dementia. The reality of a dementia diagnosis is difficult and heartbreaking to face, but if you fail to face it before the situation becomes a crisis, you may actually be doing your loved ones more harm than good. This is why it is important to plan for the worst but hope for the best – especially when planning for the possibility that you or your loved one may get dementia.

If it is progressive, dementia is a process that gradually takes over different parts of the brain. As dementia spreads throughout the brain, the bodily functions controlled by that part of the brain will begin to deteriorate. There are three main features of end-stage dementia: extremely decreased cognitive function, the need for assistance with almost all physical activity, and the loss of the ability to control normal bodily functions. By focusing on these features, we can better determine how to plan for the worst, even while we hope for the best.

• Cognitive decline: As dementia progresses, it is important to prepare for a time when your loved one may no longer recognize you or other friends and family members, even if she has known them for years. Eventually, people with end-stage dementia will not even be able to speak. While it is impossible to know how much they understand, it is important to continue communicating with them in as normal a way as possible.

At this point it is good to identify yourself each time you see your loved one. For example, you might say, “Hi Mom, it’s your son, John.” By using a calm, friendly voice, your tone can communicate that they are safe and loved. It may be up to you to carry the conversation, but having someone talk with them can help them to feel valued. Because long-term memory deteriorates much more slowly than short-term memory, you may find that your loved one is more receptive when you talk with her about the “old times.” People with dementia may not remember what day it is or where they are, but they will enjoy speaking about events from their childhood or early adult life.

Another great way to connect with someone who has dementia can be through music. Music is processed in a different area of the brain than speech, so many people who suffer from dementia may be able to sing or recognize music when they are unable to carry on a normal conversation. Singing songs from your loved one’s past can be a great way to connect with them and even get them to smile and sing along.

The need for total assistance: Dealing with the decline of your loved one’s mental abilities can be emotionally draining, but providing complete physical assistance can be hard on your body. No matter how much you may want to, it is impossible for one person to provide 24/7 care to someone who suffers from dementia without causing significant harm to his/her own physical health. Often, this difficulty means that a loved one with dementia will need to live in a long-term care facility such as a nursing home. This can provide relief for the caregiver, while allowing the person with dementia to receive the assistance they need.

If you decide to keep your loved one in the home, your loved one will likely need round-the-clock care, whether it is provided by a combination of family or friends, professional caregivers, or both. It is important to remember that one person cannot do it all, nor should they try to. Your loved one will benefit from a variety of caregivers with differing abilities and skills.

• Loss of bodily functions: People with end-stage dementia will eventually lose the ability to walk, feed oneself, control bowel and bladder, and swallow without aspirating food or liquids into the lungs. Additionally, the fact that your loved one is immobile and confined to her bed can cause skin breakdown from sitting or lying in one position too long. Eventually, this skin breakdown can lead to open areas that are prone to infection, known as bedsores. For this reason, it is important to make sure your loved one has a position change every two hours.

The inability to eat by oneself means someone has to physically feed the individual. This can be accompanied by poor appetite, so the caregiver needs to keep track of what and how much the patient eats and drinks. Otherwise, the person may suffer from dehydration and malnutrition, which can cause additional medical conditions.

Problems with swallowing food and liquids can cause the most problems. Aspirating foods or liquids can cause pneumonia, which can cause death in a frail person. Caregivers need to be alert for coughing when eating or drinking, because this is a sign of aspiration.

Sometimes the only way to decrease the risk of aspiration is a feeding tube, which often becomes necessary as the condition progresses. However, once decline has reached this point, many people would not like to be kept alive artificially, whether that means feeding tubes or artificial respiration. For this reason, it is important to make sure that you and your loved ones state your desires regarding end-of-life care in an advance medical directive before dementia sets in.

Unfortunately, many people do not like to think about the possibility that they may be diagnosed with dementia at some point, and therefore they do not have an estate plan in place. If you become incapacitated and you have not executed a medical or financial power of attorney, your loved ones may have to ask a court to appoint them guardian and conservator over you so they can make those decisions for you. In that case, the decision falls to the court to decide who to appoint to make decisions for someone who is incapacitated. The person who the court appoints is not necessarily who would have been chosen before the incapacity set in. To avoid forcing your loved ones to go through this difficult process while they are already dealing with an incapacitated family member, it is important to execute these documents as soon as you become an adult. Furthermore, it is important to review these documents on a regular basis and update them as changes in your family situation, your financial situation, or changes in the law occur.

Ask Kit Kat: Rising Eagles

Hook Law Center: Kit Kat, what can you tell us about the resurgence of bald eagles in Virginia?

Kit Kat: Well, this is interesting, because, defying the experts who predicted the demise of the bald eagle in urban areas in the state, the opposite has happened. Bald eagles appear to be rebounding, and actually thriving. “From the 50s to the 90s, the belief was that they would not nest in urban areas,” according to Bryan Watts, the director of the Center for Conservation Biology in Williamsburg. He continues, “But that hasn’t turned out to be the case. Eagles nesting in cities are producing at rates similar to and higher than ones nesting in rural areas.” Pairs have been spotted in Richmond, Williamsburg, Virginia Beach, and Northern Virginia. For a while, Norfolk International Airport had a problem with them attacking planes and in flight paths.

This represents a remarkable comeback since eagles were listed on the Endangered Species list several decades ago. Their numbers had been reduced due to the use of DDT which had been used as a pesticide. DDT was effective in killing insects, but it also affected eagles’ eggs. Eagles which had eaten fish contaminated with DDT produced eggs that were not able to develop full-term, because of a thinning of the egg shell. By 1963, eagles’ numbers had been hit hard, with only 487 nesting pairs spotted across the United States. Virginia at this time was down to 30 pairs.

With DDT eventually banned, they were able to make a comeback. Now there are more than 1,500 in Virginia alone. Their preferred habitat is tidal rivers, of which Virginia has several. Their diet normally consists mostly of fish, but urban eagles are adapting and learning to scavenge among landfills and in areas where hunters have left remains after skinning their kill. Feeding off landfills has its own drawbacks—like when they ingest other things like plastic—but overall, they are thriving. They also are becoming comfortable with people. There is a picture in The Virginian-Pilot of one sitting on a deck in the retirement community of Atlantic Shores in Virginia Beach about 10 feet away from a couple relaxing on their deck. Who would have guessed this would be the outcome for our national bird? It’s a great turn of events! (Lee Tolliver, “Swooping in to our cities,” The Virginian-Pilot, Dec.9, 2019, p.1 and 10)

Posted on Thursday, December 12th, 2019. Filed under Senior Law News.

Crowdfunding and Public Benefits: GoFundMe Campaigns May be Detrimental in the Long Term

By Shannon Laymon-Pecoraro, CELA

Today there are countless crowdfunding sites (i.e. GoFundMe) which provide opportunities to raise funds online for specific purposes. Increasingly, I am sought to provide on advice with regard to how these funds affect means-tested public benefits such as SSI and Medicaid. Although I am not aware of any current case law surrounding crowdfunding campaigns, and there are no formal regulations in place from the Social Security Administration or the Department of Medical Assistance Services, there are issues that should be taken into consideration when a campaign is established for someone receiving benefits.

The first thing to asses is who setup the campaign. If the individual established their own crowdfunding campaign, they have unlimited access to the funds, and as a result, the funds received should be treated as income to the individual in the month received by the campaign, and as an asset for every month thereafter. As a result, the funds in the campaign would impact both SSI and Medicaid eligibility in the month funds are received, and every month thereafter until the funds are spent below $2,000.

If the campaign is established by another individual, I find the campaign to be analogous to a trust. Essentially, the establisher of the campaign controls the funds, similar to a Trustee, for the benefit of the individual, the Beneficiary, for the purpose detailed within the campaign. The best advice I can give to a client is that there is an affirmative duty to report a change of circumstances, and as a result, the beneficiary of the campaign must report it to avoid consequences such as long-term benefit overpayments or fraud charges.

When asked how I believe these accounts will be treated, I always indicate that without formal guidance from the agencies I cannot guarantee an answer, but that I believe the agencies will analyze the campaign to determine 1) how distributions will be made from the campaign and 2) the purpose of the campaign. Once again, this is similar to how such agencies would assess a trust established by another for an individual on benefits.

I believe that cash distributions would be treated similarly to cash distributions from the trust –  as unearned income thus affecting SSI and Medicaid. In-kind distributions would result in payments to a vendor for services, and should therefore not be treated as income affecting benefits. In-kind distributions alone, however, may not be enough to satisfy agencies if the purpose of the campaign is for something benefits would otherwise cover, or if designed for “support” of the individual. Understanding that SSI and Medicaid are needs-based programs, the agencies essentially determine that if someone else is “supporting” the individual then there is no need for “support” from governmental sources. As a result, funds raised for “support” of the individual are to be used before those from the government resulting in a loss of benefits. Additionally, if the funds are for food or rental expenses, there is an in-kind support and maintenance rule in Social Security policy that would cause a reduction in the individual’s SSI. There can also be a detrimental impact if the campaign is established for the benefit of the individual’s family, and not just the individual, since many benefits look at household income and assets.

As you can see, the laws and policies surrounding crowdfunding campaigns are uncertain and complex. Before you establish a crowdfunding campaign, you should consult with an elder law attorney who may be able to discuss the impact of your intended campaign and what other options may exist to accomplish your overall objective. In many cases a better option may be to utilize a third-party special needs trust to hold the funds for the intended purposes. This will ensure that funds to be gifted to the individual do not impact an individual’s eligibility for public benefits.

Ask Kit Kat: Retired Police Dogs

Hook Law Center: Kit Kat, what’s new about how retired police dogs are handled in Texas?

Kit Kat: Well, this is a change that was long overdue. On November 5, 2019, voters in Texas voted for a constitutional amendment to allow dogs, horses, or other law enforcement animals to be adopted by their handlers or other caretakers who are considered “qualified.” Now this only makes sense, but before this change in the law, police dogs were considered to be property. Once they were no longer useful, they could be legally euthanized. Not all police units would take this extreme step, but some did.  Collin County (TX) Sheriff Jim Skinner commented, “There’s been a lot of great dogs with great handlers, and right thing should have been done by them. But it’s better late than never.” It was also common practice overseas with the US Military, until 2000 when military law was changed to allow their handlers to have the first crack at adoption and, in 2016, the ability to bring the dogs home courtesy of the government. Before that time, dogs who could no longer perform as required were abandoned or euthanized.

It’s a shame it’s taken this long for dogs to distinguish themselves from being considered as property, but the practice goes back centuries. Police and other security dogs shouldn’t just be released to general animal adoption centers, complicating the adoption process. State Senator Birdwell, one of Texas law sponsors, comments that “Few people are qualified to humanely care for and properly supervise a police dog or horses, and these animals need to be cared for by a capable individual at the end of their service.”

It appears the old saying, “The wheels of justice turn slowly,” was very correct in this situation, but they did turn for the best eventually. Kudos to the Sheriffs’ Association of Texas who supported the amendment wholeheartedly! (Karen Bruillard, “Retired police dogs had to be sold or destroyed under state law. Voters just changed that,” The Washington Post, November 6, 2019)

Posted on Friday, December 6th, 2019. Filed under Senior Law News.

How Tech Can Help Your Career When You’re Living with a Disability

By Patrick Young

When you’re living with a disability, it’s important to use all the resources at your disposal when it comes to your job. Fortunately, these days, there are a ton of apps, sites, and devices that can help you do your job with ease. Whether you’re looking for a job or just need to be able to work comfortably from home, there are several tools you can use that will help you advance in your career. Think about what your needs are, and then consult this list for ideas on how to use tech to your advantage when it comes to your professional life.

Make Working from Home a Cinch

Some of the best jobs for individuals who are living with a disability are the ones that allow for remote work, which means you can get things done in the comfort of your own home. In the past, finding a job that allowed a person to work from home was like finding a pot of gold, but these days, more and more companies are turning to freelance contractors who can do their jobs outside the office and save them money. Using a job board will help you connect with the right gig for your experience level, such as data entry. As Upwork points out, data entry can put your detail-oriented skills to work by populating spreadsheets or transferring info to databases, and you can do it all from the comfort of your own house without a long commute.

Utilize Your Phone

If you’re going the freelance route, make sure you have a dependable phone that will help you stay connected no matter where you are or what you have going on. Need an upgrade? Check out the super-fast iPhone XS Max, which has a state-of-the-art dual-camera system and will keep you going for 13 hours before it needs to be charged. Not an Apple user? The Samsung Galaxy S10+ has similar features but offers a wide camera rather than the dual option.

Prep for Your Interview

When you’re ready to look for a new job, it can be intimidating to think about polishing up your résumé and going in for interviews. With a few helpful apps, however, you can prep for those face-to-face meetings by researching the company, boosting your cover letter and résumé, and even getting ready for the technical aspect of the interview, such as practicing potential questions. By utilizing these resources, you can find out more about a business through their social media posts, which could help when you’re ready to sit down with the hiring manager.

Boost your Small Business

Owning and operating a small business is a huge job, and tech can come in handy in just about every aspect. Whether you run things from home and need a streamlined method of communication with your team or you just want to make your online presence bigger, there are several ways to go about it. One of the easiest places to start is the Google Suite, which offers everything from customized email to file-sharing services that will allow you to stay organized. You can also consider using a portable card reader so you can do business on-the-go.

Whether you’re ready to overhaul your career or just give it a little push, there are so many ways you can make the process easier on yourself using tech. Think about your specific needs and where your budget lies, and make sure you’re educated about how to become a freelance contractor, if that’s the route you want to go in. Look online for details concerning the state you live in since freelancers are typically required to apply for a business license. By utilizing the resources at hand, you can boost your career in just about any direction with ease.

Ask Kit Kat: Species Re-dicovered

Hook Law Center: Kit Kat, what can you tell us about a re-discovered species in Vietnam?

Kit Kat: Well, this is another wonderful tale about the resiliency of nature. Scientists had feared the silver-backed chevrotain (also called the Vietnamese mouse deer) was extinct. However, in mid-November 2019, data about the creature was released in the scientific journal Nature Ecology & Evolution. First noticed in the spring of 2019, the chevrotain was photographed in the wild in southern Vietnam over a 5-month period. It was the first time the mammal had been spotted in about 30 years. The term “mouse deer” is very accurate as far as how the animal looks. About the size of a rabbit, it looks like a mouse on relatively long, skinny legs. “For so long, this species has seemingly only existed as part of our imagination. Discovering that it is, indeed, still out there, is the first step in ensuring we don’t lose it again, and we’re moving quickly now to figure out how best to protect it,” says Vietnamese biologist An Nguyen, an associate conservation scientist with Global Wildlife Conservation, a nongovernmental organization.

The habitat of the chevrotain is the coastal rainforest in southern Vietnam. To gather more information about the chevrotain, scientists set up cameras for 5 months in areas where local people had spotted them. Over that period, 1881 photographs were taken. Chevrotains are neither related to mice nor deer, but are labeled ungulates or hoofed mammals. They are the world’s smallest in this class. They usually weigh under 10 pounds, are shy and solitary, seem to walk on the tips of their hooves, and have 2 small fangs.

Scientists first described the species in 1910 when they had access to 4 specimens. Then, they seemed to disappear, and there were no more verified records until 1990, when they became aware of one caught by a hunter in central Vietnam, much further north than the latest sightings. The two habitats are different—one is in wet evergreen forests, and the other is in dry forest. There is still much to be learned about these unusual creatures. Also, how they were discovered offers lessons as well—scientists utilized local people and listened to their stories. They did not discount their accounts. With modern technology, they were able to verify and collect data about them. Hopefully, measures can now be taken to protect this unusual species.

(Katie Hunt, “Tiny deer-like animal thought lost to science photographed for first time in 30 years, “ www.cnn.com, Nov. 11, 2019)

Posted on Wednesday, November 27th, 2019. Filed under Senior Law News.

Medigap or Medicare Part C: What’s the Difference?

By Letha Sgritta McDowell, CELA CAP

There are just a few days left during this Medicare open enrollment period and, if a change is needed to your Medicare plan, then this is the time to make the change. Open enrollment is from October 15 through December 7 each year and is the time when a Medicare recipient can switch from a Medicare Advantage plan to traditional Medicare or change back to traditional Medicare and a supplement from Medicare Advantage. This is also the time period in which individuals can change their Medicare Part D plans.

While Americans are largely familiar with Medicare (it’s the health insurance plan to which we contribute our entire working lives), many are confused between traditional Medicare, Medicare supplements and Medicare Advantage Plans. Traditional Medicare includes Medicare Part A and Medicare Part B. Part A covers hospital expenses and Part B covers physician services, outpatient treatment and medical equipment. Medicare Parts A&B have both deductibles and co-pays which could amount to significant out-of-pocket costs if the enrollee has a major medical event.

Since there could be significant out-of-pocket expenses with traditional Medicare, private health insurance plans are available to cover the potential out-of-pocket expenses or coverage gaps which exist with basic Medicare. These plans are also referred to as Medigap plans. Each company offers a variety of plans at varying premium levels and which result in varying out-of-pocket costs for the enrollee. With traditional Medicare and a Medicare supplement, an enrollee should also choose a Medicare Part D plan. Part D is to portion of Medicare that insures against the costs of prescription drugs.

While Medicare coupled with a Medicare supplement is typically excellent insurance coverage, many find the out-of-pocket premium expenses to be high. An alternative is a Medicare Advantage Plan (also known as Medicare Part C). Enrolling in Medicare Advantage means that the individual actually dis-enrolls from traditional Medicare. The entire health insurance package is offered by the private health insurance plan and combines some of the coverages from Parts A & B as well as the supplemental insurance and prescription drug coverage. Medicare Advantage may also offer services or treatments which would not be covered by traditional Medicare. Because Medicare Advantage is entirely administered by private health insurance companies, plans are often limited based on geographical area and may limit the enrollee to physician groups and hospital systems. The US Government provides some funding to private health insurance companies to administer Medicare Advantage plans and for that reason, some may have little to no out-of-pocket costs monthly; however, the overall coverage may be more limited based on the plan chosen.

Both Medicare Supplement plans and Medicare Advantage plans offer combined coverage for those who are eligible. Ultimately, what plan is appropriate should be based on health concerns, lifestyle, income, and ability to pay out-of-pocket expenses in the event of an illness. There are insurance professionals who can assist in reviewing a person’s circumstances and assisting in choosing the best coverage option. For those currently unhappy in their plan, now is the time to investigate options and make changes as needed.

Ask Kit Kat: Raymond Retired

Hook Law Center: Kit Kat, what can you tell us about the mule named Raymond who lives in the Outer Banks of North Carolina?

Kit Kat: Well, I have written about Raymond before—the first time in early July of this year. He is a much beloved figure there. However, Raymond has been aging lately, especially his hooves. He’s a scrappy little fellow around the age of 20. He has wandered with the wild horses of Corolla, sometimes getting into scrapes with the stallions who dwarf him in size. Raymond never let his diminutive size deter him from doing what he wanted to do. In September, however, his hooves became worse due to navicular disease and laminitis. Meg Puckett, manager of the Corolla wild horse herd, said the decision was made to move him to Grandy, NC in nearby Currituck County, so he would not be under so much stress to forage and deal with others in the wild horse herd. Other older horses from the Corolla wild herd are there, but Raymond has his own corral. He made the move on Sep. 29, 2019. Ms. Puckett commented, “We really did not want to pull him off the beach. If we had put him back on the beach he would have died a slow and painful death. We’ve got the X-rays to prove it.”

Raymond, they report, was not exactly a model resident at first. When he spotted a male horse at a nearby stall, he started kicking, and nearly broke through his stall. When that strategy didn’t work, he tried to climb over the stall. Staff then had to put him in isolation, where he was closely monitored and fed hay and one carrot a day for several days. He has calmed down a lot, but leaving nothing to chance, they have built him a corral with thick posts, heavy gauge wire fencing, and 2 lines of electrified rope. This is in contrast to the much larger horses who peacefully reside behind a low plastic fence.

If you’d like to visit Raymond, contact the Corolla Wild Horse Farm, 102 Young Rider Lane, Grandy, NC. Occasionally, they have open houses, or they just might let you schedule a visit. (Jeff Hampton, “Raymond the mule retired from the wild and taking it easy on the farm,” The Virginian-Pilot, Nov. 11, 2019, p. 1 & 11).

Posted on Friday, November 22nd, 2019. Filed under Senior Law News.

Avoiding IRS Scams

By Hook Law Center

With tax season around the corner you can expect an increase in tax related scams. Which it is why it is important to know how to identify a scam quickly so that you do not find yourself in a situation where you have divulged personal information or given money to a scammer. Below are a few tips to be aware of and things to be on the lookout for.

First, it is important to understand how the IRS initiates contact with taxpayers. Most communication with the IRS is through regular mail such as the U.S. Postal Service. There are very few circumstances where the IRS will contact a taxpayer at his or her home or business. If you do receive a phone call from the IRS it is likely due to one of the following circumstances:

  1. As a result of an overdue tax bill. Keep in mind that prior correspondence through regular mail would have been sent to you.
  2. To secure a delinquent tax return.
  3. To tour a business as a result of an audit or criminal investigation.

Next it is important to understand what the IRS will not do. This includes:

  1. Make threatening phone calls and demand that you use a wire transfer or prepaid gift card to make a payment. Instead, payments should be made payable to the U.S. Treasury or can be made online at: IRS.gov/payments
  2. Demand for immediate payment. Remember, the IRS will send you several notices including the option to appeal or provide you with information to contact the IRS regarding questions on the amounts that are owed.
  3. Threaten to contact the local or state police. This type of scam is a popular tactic with the goal being to scare you into making an immediate payment with the scammer.

You should not give out sensitive information including your SSN, date of birth, address, bank account, etc. over the phone or through email unless you know for certain who you are speaking with and that the individual is in fact who they say they are. If you do not owe taxes and have no reason to think that there are any issues with your account, you can report the scam to the IRS via email at phishing@irs.gov. You will need to include the caller id and call back number when submitting the information to the phishing department. 

Ultimately, if you are ever in doubt about the caller – hang up! You can contact the IRS directly at 800-829-1040 regarding your individual account or 800-829-4933 for your business account. You can also view your account online with the IRS by going irs.gov/payments/view-your-tax-account.

Ask Kit Kat: Special Dogs

Hook Law Center: Kit Kat, what can you tell us how specially-trained dogs, known as conservation dogs, help track endangered species?

Kit Kat: Well, this is another wonderful story! Dogs, as you may know, have a keen sense of smell. This is just not an interesting characteristic, but a useful one as well. We all have heard about how service dogs help the blind, sense diabetics’ low blood sugar, and even can alert medical personnel to the presence of cancer. Now there is a new use to which they are being assigned—assisting with the tracking of endangered species. Their fine sense of smell is being used to track endangered species through detection of scat (fecal matter) that a particular species leaves in its particular environs. This method has the advantage that the species in question does not have to be trapped to gather information. According to the Journal of Wildlife Management, this method has been used to collect data about the San Joaquin kit fox, gray wolves, cougars, and others.

Now scientists have switched their attention to reptiles. The focus of their research is the blunt-nosed leopard lizard in the San Joaquin Valley (CA). To track this particular lizard, they used one female German shepherd and two male border collies. The dogs were very precise about identifying the correct type of scat. From the samples, scientists got information about the diet, habitat, and even gender of the reptiles. The samples were taken over a four-year period. The dogs would signal when they had found the correct sample by laying down next to it. The blunt-nosed leopard lizard is considered endangered, because much of its habitat has been destroyed.

The next step is to determine if this method can work on a larger scale. “So many reptilian species have been hit so hard,” says Mark Statham, of Mammalian Ecology and Conservation Unit of the UC Davis School of Veterinary Medicine. He continues, “This is a really valuable way for people to be able to survey them.” Kudos to the dogs who have brought us this far! (“How conservation dogs help track endangered species,” www.cnn.com, Oct.30, 2019)

Posted on Monday, November 18th, 2019. Filed under Senior Law News.

Assuming Roles of Trustee and Power of Attorney

By Jennifer Rossettini, CFP®

Your loved one has lost capacity and you are named in their Power of Attorney and/or Trust – Now what?

If you are fortunate, your loved ones have done their estate planning and put documents in place to enable a trusted person to assume the management of their financial affairs in the event of their incapacity.  If you are that trusted person who has been named as an agent in a Power of Attorney or as the successor Trustee in a Revocable Living Trust,  what are the steps that you need to take before you can fulfill those roles when your loved one has lost the ability to manage his/her own financial affairs?  The answer is, it depends on the particular document.

If your loved one has a General Durable Power of Attorney which becomes effective as soon as it is signed, that is great news for you.  There are no other hoops that you have to jump through before beginning to act on your loved one’s behalf.  However, if the General Durable Power of Attorney states that it only becomes effective upon the principal’s incapacity, you have a little more work to do before you can act.  You will need to get a written statement from a treating physician stating that your loved one is no longer capable of managing his/her financial affairs.

If your loved one has a Trust, things can become a little more complicated. You will need to read the Trust very carefully to determine how “incapacity” is determined and to what role the definition applies – your loved one as “grantor” of the trust or as “trustee” of the trust. Incapacity may be defined differently for each role.  Most Revocable Living Trusts make provisions for what the Trustee can do with the assets if the Grantor, the person creating the Trust, becomes incapacitated.  For example, the Trustee may be limited in how to make distributions from the Trust.  Similarly, most Revocable Living Trusts make provisions for when a successor Trustee can be named.  Usually, this is when the original Trustee, who is often also the Grantor, “fails to qualify or ceases to serve” as Trustee.  This can be the result of the death, resignation, or incapacity of the Trustee. 

Incapacity of the grantor is often defined as the inability of the Grantor to manage his/her financial affairs.  On the other hand, incapacity of a Trustee is often defined as the inability of the Trustee to manage the affairs of the Trust.  If you are attempting to assume the role of Trustee, it is very important to read the Trust to determine the exact language that the physician will need to use in the opinion letter or certification.  The Trust will also dictate how many physician opinions you will need to get and from what kinds of physicians.

Once you have obtained the necessary physician letters with the appropriate language, you will need to do a few more things before you can go to the bank and assume responsibility of your loved one’s trust accounts.  You will need to sign an Affidavit that outlines the facts surrounding the determination of your loved one’s incapacity and your acceptance of the role of Trustee.  You will also need to sign a Certificate of Trust that tells third parties that you are the new Trustee.  Some financial institutions will even require an opinion letter from an attorney that says the correct procedure has been followed.

When you are called upon to manage the financial affairs of a loved one and you’re not sure what to do, look to the document itself for specific instructions. 

Ask Kit Kat: New to the Zoo

Hook Law Center: Kit Kat, what can you tell us about the new arrivals to the National Zoo in Washington, D.C.?

Kit Kat: Well, two mustachioed monkeys have made DC’s National Zoo their new home, having moved from the Como Park Zoo and Conservatory in Minnesota. They were introduced to the public on Oct. 23, 2019. They are brothers Poe (1.5 years old) and Fleck (2.5 years old). Technically, they are emperor tamarins which are known for their long white mustaches, which stand out against their grayish-black coats. They could give Colonel Sanders a run for his money—their mustaches are much longer than his! They each weigh about a pound, and that is considered full grown. If you want to see them, they are in the Amazonia forest exhibit. Their native home is in the Amazon basin which includes area in Bolivia, Peru, and Brazil. Tamarins are very social, and live in groups their entire lives. They help care for each other, until it is time for them to separate and form their own families. I am happy to say, this is one species that is not endangered. Their numbers are such that they are classified as “least concern” by the International Union for Conservation of Nature. However, if too much of their habitat would be destroyed, that classification could change.

Another new arrival to the zoo is a lesser kudu calf. Kudus resemble small antelope. Their coat is tan (reddish brown for females), but adults and calves have white stripes which run perpendicular to their spines, speckled by a few white spots. Males also have a spiral rack of horns when fully mature. The male calf, who is not yet named, was born Oct. 14, 2019. He has a 10-month old brother named Kushukuru. They seem to be getting along well, frolicking, and playing with dad, who is 9 years old. Originally from Tanzania, Uganda, Kenya, and Ethiopia, they have adapted well to captivity. The average lesser kudu lives up to 15 years in the wild, but can live about 5 years longer when protected. Their status is “near threatened” by the International Union for Conservation of Nature. About 100,000 exist in the wild. The National Zoo is lucky to have these beautiful creatures. (Dana Hedgpeth, “National Zoo welcomes a couple of mustachioed monkeys and a lesser kudu calf,” The Washington Post, Oct. 30, 2019)

Posted on Friday, November 8th, 2019. Filed under Senior Law News.

The Effect of Annuities on Long-Term Care Plans

By Shannon Laymon-Pecoraro, CELA

Annuities are great investments for people who are frightened by the stock market or need a tax-deferred investment, and they have long been used to ensure a guaranteed income in retirement. In simple terms, an annuity is a contract with an insurance company whereby the purchaser pays a certain amount of money and the insurance company sends payments in accordance with the purchase terms. The terms of the annuity will spell out whether the return is fixed at a certain percentage, or subject to the market and therefore a variable return with a minimum guarantee, and whether the payments will be immediate or deferred, and made in equal installments or contain balloon payments. While insurance producers often try to match the purchase terms to the client’s current or anticipated goals, what is often overlooked when these annuities are purchased is the effect on the purchaser when there is a long-term care need.

Annuities were often used in the financial services world by individuals that were accredited by the Department of Veterans Affairs to convert assets of the individual into an income stream, creating eligibility for the non-service connected pension benefit. Under the rules implemented by the Department of Veterans Affairs in October 2018, the purchase of an annuity within three years of an application for pension benefits will result in a penalty period.  As a result, the timing of a purchase, or the annuitization of an already purchased annuity, may impact a Veterans eligibility for the pension benefit.

Even more complex is the Medicaid-compliant annuity, the purchase of which is subject to a five year lookback. Under federal law, annuities may still be purchased during a “Medicaid spenddown” by either the applicant or spouse, provided certain criteria are met. Such an annuity must be an irrevocable, non-assignable single premium immediate annuity that is actuarially sound pursuant to Medicaid’s life expectancy tables. Additionally, in most cases, the state Medicaid agency must be named as the primary benefit of the annuity in the event the annuitant dies prior to the completion of the annuity payout. While the annuity is a great way to shelter an asset, the purchase of the annuity generates a new income stream and could disrupt income eligibility in some circumstances. Consequently, an elder law attorney must dissect the terms of the annuity to analyze the effect of its purchase, or annuitization, on the overall plan.

An elder law attorney must stay up to date with the current rules and regulations surrounding purchases and annuitization of annuities with regard to both Veterans pension and Medicaid claims. A failure to satisfy the rules and regulations may create an irreversible penalty, and therefore jeopardize the long-term care plan. The use of an annuity for long-term care planning should be made in conjunction with the recommendation of an experienced elder law attorney.

Ask Kit Kat: Counting Squirrels

Hook Law Center: Kit Kat, why were the squirrels in Central Park of New York City counted in October 2018?

Kit Kat: Well, this was an interesting endeavor. It really never had been done before in Central Park in the systematic way which will be described. The study began Oct.5, 2018 and took about 2 weeks to complete. It was the brainchild of Jamie Allen who conducted a similar census in 2012 in Inman Park in Atlanta. The study will give more information about the Eastern gray squirrel (Sciurus carolinensis). The data collected from the Atlanta study yielded information with some unexpected results.

The counters, called squirrel sighters, were largely from Colin Jerolmack’s environmental studies class at NY University. The park was divided into 350 one hectare squares. A hectare is equivalent to 2.5 acres. Each sighter spent 20 minutes twice a day and recorded what was observed. Observation times occurred early in the morning and again in late afternoon. The sighter walked the perimeter of the hectare and then moved to scan the interior. They were not only looking at the number of squirrels, but also at their behaviors—running, eating, foraging, etc. They also looked at coat color which can vary among gray squirrels—gray, black, cinnamon, or white. Vocalizations were also analyzed. Scientists call the most frequent sound squirrels emit as “kuks” which have a clicking sound. “Quaas” are sort of joyful noises indicating yahoo! They even make “moans,” especially when the weather is not so great—like when it is drizzling. Creating the map of the hectares was a feat in itself. A cartographer, Nat Slaughter, took 15 months to make it.

The process may seem a bit imprecise, but the scientists have a way to compensate for this. There actually is a formula designed in 1959 by squirrel biologist, Vagn Flyger, to count squirrels, knowing that they can hide or blend in with their surroundings. AZ/VπSy2. Therefore, A (area surveyed) x Z (# of squirrels seen) is divided by V (visibility quotient of 0.6) x π x S (time observing) x y (average observation distance) squared. Stay tuned for the results. They should be released shortly. Not sure what the holdup is, but these active little creatures are fun to watch. We cats love their tantalizing tail movement! (Andy Newman, “Why Count All the Squirrels in Central Park? Why the Heck Not,” The New York Times, Oct.6, 2018)

Posted on Tuesday, November 5th, 2019. Filed under Senior Law News.

What Happens to My Online Accounts After I Die?

By Emily Martin, Esq.

In today’s world, many people connect with friends and family via social media more than they do in “real life.” Additionally, online shopping has expanded vastly in the past several years, and most people have several online accounts they use regularly. While the Internet has allowed us to have more connections and to conduct business from the convenience of our home, there is often a concern about what will happen to these accounts after the owner dies. Of course, no one wants their online banking or shopping accounts to be used after they die. Additionally, most people would not want their social media accounts to go on as usual, but many people may wish to keep their page available to friends and family who wish to remember them in a special way.

Facebook has a feature that allows account holders to choose a Facebook friend to be a “legacy contact.” While your legacy contact cannot actually log into your account, change or delete past posts, or remove friends and read messages, this person will have the ability to post information on your behalf, respond to new friend requests, and update your profile picture. In order to turn over access to a legacy contact, the page must first be memorialized, meaning that the legacy contact must prove that the person has died by sending a death certificate or obituary. When you designate your legacy contact, you can direct that your account be deleted upon your death or that it be preserved as a place where loved ones can share memories about you. Similarly, Instagram will also allow an account to be memorialized.

While Twitter will not give anyone else access to your account after you pass away, it will accept requests to deactivate the user’s account from either an immediate family member or the executor of your estate.

Additionally, Google allows people to assign beneficiaries of their Google accounts. If you fail to log into Gmail, Google Maps, GoogleDrive, YouTube, or other Google apps for a set amount of time (between three and 18 months), the Inactive Account Manager will send you a text message and an email. If you don’t respond, Google will send your data to a trusted contact, who will then be directed to delete your account or manage your Google services as you have directed.

On the other hand, Yahoo will not grant access to a deceased user’s account without a specific request letter from the personal representative of their estate. The same is true of PayPal, which has a quite complicated process required to close a user’s PayPal account.

In this age, technology and social media are often our main means of communication. It is important to make sure you know what will happen to your online accounts after you pass away. If you have an estate plan in place, it is a good idea to include with your original estate planning documents a listing of all of your online accounts and what your username and password is for those accounts. This will allow your loved ones to be able to manage those accounts for you if you become incapacitated or pass away. If you use specific accounts, be sure to find out what actions are available to your loved ones after you pass away.

Ask Kit Kat: Lone Wolf

Hook Law Center: Kit Kat, what can you tell us about the wolf who lives at the Virginia Living Museum in Newport News, VA?

Kit Kat: Well, the male wolf who inhabits the Virginia Living Museum (VLM) in Newport News, VA is a red wolf who is 12 years old. Until a few weeks ago, he had a female red wolf companion who was 11 years old. Unfortunately, she died, and he is now alone. Their species is endangered, and there are only a few hundred left. They are protected under the federal red wolf Species Survival Plan (SSP). Red wolves are the only wolf species native to the southeastern United States. They have a short coat, and are smaller than other wolf species. At present, their range is limited to Albemarle Peninsula in North Carolina. It is hard to re-introduce them to the wild, because people mistake them for coyotes, and sometimes they are considered a nuisance.

The male red wolf was born at the museum in Newport News in April 2007. He was one of 6 pups and was known as the most submissive in the litter. That is probably why he bonded so well with his female companion. His mother and siblings were eventually moved to other SSP facilities. His father remained with him until his death in January 2019. Not wanting him to be alone, VLM located a female for him from Brevard Zoo in Melbourne, Florida, and she arrived in the spring (2019). They got along well, and they even dug a den together. However, it was evident from the start that she had health issues—digenerative disc disease in her lower back. In late September (2019), she suddenly declined, and had to be put down. VLM is now looking for another female for their male. At his age, he is unlikely to father any pups, but VLM doesn’t want him to be alone for his remaining years. Red wolves are social creatures, and like to live with others of their kind. Let’s hope VLM finds him a companion very soon. (Matt Jones, “A lone wolf once more,” The Virginian-Pilot, October 11, 2019, p 1 & 4)

Posted on Monday, October 28th, 2019. Filed under Senior Law News.
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