Comprehensive Planning. Lifelong Solutions.

Penalty Periods and the 5-Year Lookback: Some Good News

By Letha Sgritta McDowell, CELA

On April 17, the acting director of the Centers for Medicare and Medicaid Services issued a policy clarification to all state Medicaid Directors regarding the imposition of penalty periods for individuals requesting Home and Community Based Services.  This clarification may be beneficial to many hoping to receive services in their home.

Individuals requesting Medicaid assistance with the payment of their nursing care expenses must meet certain eligibility criteria, both financial and non-financial, before Medicaid will begin assistance.  The non-financial criteria includes US Citizenship or lawful permanent resident status, state residency, and a demonstrated need for a certain level of care.  The financial criteria includes meeting certain income requirements and having minimal countable assets (there is no limit on non-countable assets).  In addition, if an applicant or their spouse has made any uncompensated transfers, then Medicaid will impose a penalty based on the asset transfer.

Asset transfers including gifting cash or property, paying bills or expenses for other individuals, or selling real or personal property for less than fair market value.  For example, selling real property for less than the tax assessed value, even if it was a third party sale, is considered an uncompensated transfer.  Paying for a grandchild’s wedding or college tuition is considered an uncompensated transfer.   If a Medicaid applicant has made uncompensated transfers, then the total value of the transfers will be added together and the amount divided by a penalty divisor (set by each state).  The resulting number is a period of months in which Medicaid will not pay for the applicant’s care.

Prior to the Deficit Reduction Act of 2005, the penalty for an uncompensated transfer began in the month of transfer.  Therefore, for many applicant’s gifts made prior to any spell of illness never affected them.  The Deficit Reduction Act of 2005 altered the Medicaid policy on uncompensated transfers by stating that any uncompensated transfer made within the sixty months prior to application had to be disclosed and the resulting penalty would not run until the applicant was otherwise eligible for Medicaid services and receiving institutional level of care services.  It is important to note here that the sixty month lookback only applies to uncompensated transfers (not transfers for value) and that an uncompensated transfer does not automatically render a person ineligible for benefits for sixty months.

For individuals in a nursing facility, the “otherwise eligible for Medicaid services” standard is obvious.  It includes meeting the financial eligibility requirements as well as the non-financial eligibility requirements, including residence in a nursing facility.  For individuals hoping to receive Medicaid services in their homes however, the interpretation of receiving institutional level of care services meant that the penalty period would not begin unless they moved into a nursing facility.  For many remaining in their homes, this put them in limbo because their penalty never began.

The clarification issued on April 17 states that the policy shall now be interpreted to read that the penalty will begin when the applicant meets the financial and non-financial criteria for Medicaid and would otherwise be receiving Medicaid services but for the penalty.  This new policy will allow a penalty period to begin without the need to move into a nursing home.

The reasons for penalty periods and uncompensated transfers are varied and may be part of a broader asset protection plan or may simply be the result of a life action taken with no thought of the need for nursing services.  For whatever the reason, this development will likely be useful for those wishing to receive services in the home.

 

Kit KatAsk Kit Kat – Corolla Herd

Hook Law Center: Kit Kat, what can you tell us about how the wild horse herd is doing in Corolla, NC?

Kit Kat: Well, the wild horses in Corolla have suffered a bit of decline, so some action is being taken to improve their situation. Enter Gus, a male, wild stallion that has come from another herd on the Shackleford Banks, NC. It is hoped that introducing another genetic line will help improve the health of the Corolla herd, which has become inbred. The Corolla herd is based on a single, maternal line. Over the years, since their introduction by the Spanish in the 1600s, the herd has displayed such defects as locked patellas, parrot mouth, and decreased stature. Gus is descended from the Shackleford Banks herd which has three maternal lines.

Poor Gus! A lot of hope is being placed in him. He’s almost seven, which means he’s reaching his reproductive maturity. Thus far, after being in Corolla for three years, he has not yet fathered any offspring, as far as can be determined. Interestingly, Gus is named after an equine expert from Texas A & M University named Gus Cothran. Cothran is the one who recommended expanding the Corolla herd to 150. Presently, the herd size hovers around 60, due to previous grazing restrictions and birth control measures given to females, like darting them with a birth control chemical.  Next month, a compromise agreement is to be signed by the Corolla Wild Horse Fund, which will allow the herd to increase to between 110-130 horses. The Corolla Wild Horse Fund will also begin monitoring the herd every two months instead of  one time per year to gather information on the herd’s movements and grazing patterns. The goal is, according to Jo Langone, chief operating officer of the Fund, to have healthy horses, while maintaining the integrity and health of the land on which they graze—the Currituck National Wildlife Refuge and the North Carolina Estuarine Research Reserve. (Jeff Hampton, “The new stud on the range: Gus offers the promise of a greater genetic mix to the Corolla wild herd,” The Virginian-Pilot, April 16, 2018 p. 1 & 9)

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

April 17th Marks the Tax Deadline! Have You Filed Your Return?

By Amanda Richter

Tuesday, April 17th, 2018 is the deadline for most taxpayers to file their federal income tax return and pay any tax liability that is owed. If you miss the deadline to file, you may be assessed penalties for failing to file and failing to pay your tax liability on time. The good news is that there is no penalty if you file a late tax return but are due a refund.

Don’t worry, if you have been procrastinating when it comes to preparing and filing your tax return this year. You may want to consider filing an extension. You may be asking what does the extension do? An extension is a formal way to request additional time from the Internal Revenue Service (IRS) to file your tax return. Filing an extension gives you an additional six months to file and prepare your individual tax return. The extension is done by filling out Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.

By filing an extension, you can avoid a failure to file penalty which is equal to 5% per month (or partial month) of lateness to a maximum of 25%. If you file an extension, you are not filing late, unless you miss the six-month extended due date.

It is important to be aware that an extension of time to file your return does not grant you an extension of time to pay your taxes. Any tax that is due on your return must be paid by April 17th, 2018 in order to avoid penalties for failure to pay your tax liability on time.  The failure to pay penalty is a separate penalty from that of the failing to file penalty. The failure to pay penalty is the “gentler” of the two, running at 1/2% for each month (or part of a month) the payment is late. For example, if payment is due April 15 and is made May 20, the penalty is 1% (1/2% times 2 months (or partial months)). The maximum penalty is 25%.

If you have any questions or need to file an extension for your tax return, please do not hesitate to call our office at 757-399-7506.

 

Kit KatAsk Kit Kat – Bathing Monkeys

Hook Law Center: Kit Kat, what can you tell us about the snow monkeys of Japan and how they like to bathe in hot springs?

Kit Kat: Well, this is quite a funny story! Japan has long been known for their snow monkeys, also known as macaques. One group of macaques lives in the north, near Nagano, the site of the 1998 Winter Olympics. Others of their species live even further north, so all are used to severe, cold weather. However, it is the group near Nagano which is the subject of this article. These macaques are very particular about where they will bathe. Though there are natural, hot springs in their area with water over 140 degrees Fahrenheit, they apparently find these too hot. They have come to prefer man-made pools which hover around the 104-Fahrenheit degree mark. It happened like this. Around 1963, a female macaque wandered into a hotel heated pool. At first hotel guests welcomed her and a couple of other macaques, finding it to be a novelty. As the number of macaques visiting the hotel increased, there were health concerns. So, a park was built exclusively for the macaques, so they could have their own spring-like hot pools, heated to their preferred temperature of 104 degrees.

This in turn aroused the curiosity of scientists. Led by Rafaela S.C.Takeshita of Kyoto University, she and her team wondered what was causing this unique behavior. They have published their results in the journal Primates. They don’t really know why the macaques prefer the slightly warmer pools, but they did find that bathing in hot springs causes their stress levels to decrease. In cold weather, glucocorticoids, which indicate stress levels, naturally go up. Bathing in the hot springs lowers the number of glucocorticoids, hence, reducing the level of stress.

It turns out these macaques are really smart! Who knew there was a scientific explanation for their behavior! (James Gorman, “Hot Springs Lower Stress in Japan’s Popular Bathing Monkeys,” The New York Times, Science section, April 3, 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, April 13th, 2018. Filed under Senior Law News.

Administration of Small or Insolvent Estates

By Shannon Laymon-Pecoraro

Many people do not understand the complexities involved in administering a decedent’s estate. Estate administration can be even more problematic when the estate is relatively small. As a result, one of the first things we assess when meeting with a new client is the size and solvency of the estate.

An estate valued below $50,000 is, by statute, a small estate in the Commonwealth of Virginia. Although the probate of a will is still required, qualification of a personal representative is not necessary. Instead, the successors to the property of the estate may claim property via an affidavit that attests to a certain set of facts, including the value of the property.  The important thing to note is that, although the small estate affidavit should make the administration simpler, the claiming successor(s) of any property has a duty to safeguard and promptly pay or deliver the small asset as required by the laws of the Commonwealth.

The problem associated with the small estate affidavit resolves around the payment of estate assets as required by law. The Virginia Code outlines an order for which debts are to be paid, and a failure to abide by that order could result in personal responsibility for the debt. When an estate, whether small or large, has assets that are insufficient to cover the full extent of the liabilities, then each liability must be properly assessed and if one level of priority cannot be fully paid, then the liability of that priority must be paid pro rata.

A number of clients in recent years have promptly qualified on insolvent estates and started to negotiate payments with vendors, often paying creditors out of the order of priority. Although there were no ill intentions, the personal representative, as a result of the incorrect payments, was held personally responsible for the errors.

Before rushing to the court to qualify as Executor or Administrator, you should meet with someone who can discuss the particular circumstances of the estate. This will not only provide for efficient administration, but can limit your personal liability.

 

Kit KatAsk Kit Kat – Why Curly Hair?

Hook Law Center: Kit Kat, what makes hair curl in sheep?

Kit Kat: Well, this is interesting.  There have been two competing theories for quite some time. New research indicates that neither is completely correct. Researchers in New Zealand and Japan have recently published their findings in the Journal of Experimental Biology. What they have determined, however, is that differences in certain types of cells are interacting to make  hair curly. They are not just not sure how the interaction works. They are interested in solving the mystery, because it may shed light on why human hair is curly in some and not others. Human hair has more complex tangles, unlike sheep hair, so sheep were chosen for the study. All will give us more information on how species have adapted over time.

The first theory postulates that a curly strand of hair has cells on one side (orthocortical cells) that divide more quickly than the other type of cells (paracortical cells). Orthocortical cells tend to be longer than paracortical cells. Therefore, the curve of the curl would be determined by the ratio between the two types of cells. This theory was debunked when they discovered there was not a difference in the number of cells inside the curve v. outside the curve.

The second theory revolved around the issue of cell length. Orthocortical cells do tend to be longer than paracortical cells, but there is a great deal of variation in the lengths, so there was not reliable standard to say that the ratio always works in a certain way. As Dr. Duane Harland, one of the scientists conducting the study, commented, “You could not say that having 60% orthocortical cells and 40% paracortical cells will always lead to a 15-degree curve.” What they did find, however, is that in general, on any given strand of hair, an orthocortical cell will always be longer than any paracortical cell. So, there is some link between the two types of cells. Further study will have to determine what that relationship is. (Veronique Greenwood, “What makes Some Hair Curly? Not Quite What Scientists Thought,” The New York Times, Science section, March 22, 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, April 9th, 2018. Filed under Senior Law News.

The Surprising Things Medicaid Won’t Pay For

By Hook Law Center

Many people know that they won’t become eligible for Medicaid until their countable assets are down to a very low number. In Virginia, that number is $2,000.00. While some people might worry about having to “spend down” their assets before they can qualify for Medicaid because it will leave virtually no inheritance for their children and grandchildren, others may not be as concerned with leaving an inheritance. We have many clients who ask, “Why can’t I just spend down my assets until I qualify and let Medicaid take care of the rest?”

Well, the problem is that Medicaid won’t “take care of the rest.” In fact, there are several important basic necessities that Medicaid doesn’t cover. If you spend down your assets to $2,000, leaving yourself almost no extra money, your children, grandchildren, and loved ones will be forced to pick up the tab for the following things:

  • Dental care. In Virginia, basic dental care such as regular cleanings, fillings, root canals, and dentures are not covered by Medicaid. If you expect to get regular cleanings and checkups or if you get a cavity or need dentures, you will have to cover the cost of this on your own.
  • Eye care. In Virginia, Medicaid provides eye exams every two years, but does not cover the cost of eyeglasses or contacts for adults. This is another expense that you will be required to pay for out of pocket.
  • Groceries, clothing, and other incidental expenses. Medicaid only pays for medical expenses, such as nursing home care. If you want those special chocolates from the grocery store or if you need a new dress, Medicaid won’t foot the bill.
  • Beauty care. This is another thing many people don’t think about. If you spend down all of your assets to $2,000, that doesn’t leave much money for regular hair appointments or makeup purchases. While this isn’t a necessity, it is part of what allows you to live your life the way you always have and can help many nursing home residents continue to feel comfortable with themselves.
  • Finally, Medicaid won’t provide any funds for your entertainment – whether that includes going to the movies, purchasing DVDs, or extra money to keep up with hobbies that you might have enjoyed for decades. Studies show that keeping your mind occupied with entertaining and stimulating activities can help ward off dementia and keep you happy longer. If you can’t afford these activities because you’ve spent down your money, you may face depression and even dementia later on down the road.

As you can see, while Medicaid helps people afford the constantly escalating cost of nursing home care, it isn’t the solution to all of your financial needs. If you want to have some money left over to spend on these extra expenses and still be able to leave some behind for your children, it is important to do some advance planning.

 

Kit KatAsk Kit Kat – Rehoming Horses

Hook Law Center: Kit Kat, what can you tell us about the Hallelujah Horses—907 horses from South Dakota who were rehomed after being neglected by their original owners?

Kit Kat: Well, this is a terrific story! Largely thanks to the intervention of one heroic woman named Elaine Nash. In October 2016, Elaine was contacted by the police in a rural part of South Dakota. They had just taken possession of 270 horses that had been severely neglected. Once involved, she found out that 637 more horses were impounded from other areas. They would most likely be sold to slaughter houses, so now there were 907 horses who needed homes! Elaine was contacted because she was the founder and executive director of Fleet of Angels, a nonprofit that arranges for transport at an affordable rate for those who adopt older or infirm horses. This wasn’t exactly her expertise, but she jumped in and started to work on finding the 907 horses homes. They called them the “Hallelujah Horses,” because everyone cheered hallelujah when all were found homes.

Elaine and her team stayed 60 days in South Dakota, but they needed more time. They found another location in Fort Collins, Colorado. By then, they only had 312 horses to be rehomed. This last batch were the oldest and had some health issues, like blindness. Some of the males needed gelding, and a makeshift hospital was set up with the help of a local veterinarian. This phase lasted 8 months! However, all found homes. Many adopters had to take more than one horse, because of the amount of time some of the horses had spent with each other. Cindy Gendron, manager of the Humane Society of the US-sponsored Home for Horses Coalition says of Nash’s effort, “The bigger picture that it teaches us is that there are homes for so-called unwanted horses.” It proves that there are other alternatives than slaughter for old and infirm horses. That definitely merits a Hallelujah! (Kelly L. Williams, “Seeking Sanctuary,” All Animals, March/April 2018, p.6-7)

 

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 Thursday, March 29th, 2018. Filed under Senior Law News.

Elder Abuse, Neglect, and Exploitation, Part One: What is it and Can it Happen to You?

By Hook Law Center

On February 22, 2018, the Department of Justice issued a press release announcing the “largest coordinated sweep of elder fraud cases in history.” It turns out that more than 250 defendants victimized more than a million Americans, most of whom were elderly, and caused losses in excess of half a billion dollars. The sweep involved both widespread fraud schemes and individual incidents of fraud committed by relatives and fiduciaries. Unfortunately, this is not a new phenomenon and, with today’s demographic data, it is a situation that certainly has the potential to get worse in the very near future. This is a first in a series of articles about elder abuse and exploitation, which are designed to raise awareness of the issue and provide some useful tools for protecting your family members, friends, neighbors and clients.

The population of adults over the age of 65 will nearly double in the next four decades, rising from 43.1 million in 2012 to 83.7 million in 2050. By 2030, adults over 65 will make up more than 20% of the U.S. population.  The same 20% of the population will comprise 54% of the nation’s wealth.  In addition, of this age group, 1 in 4 of them will live past age 90 and 1 in 10 will live past age 95. The larger and older our elderly population gets, the more risk there is of someone becoming a victim of elder abuse.

Definitions of elder abuse differ between federal and state agencies as well as between different states. In Virginia, §63.2-100 of the Virginia Code differentiates between “abuse,” “neglect,” and “exploitation.” Adult (“adult” is defined in §63.2-1603 as any person over age 60, or any person over age 18 who is incapacitated) abuse is defined as the willful infliction of physical pain, injury or mental anguish or unreasonable confinement of an adult. Adult neglect means that an adult is living under such circumstances that he or she is not able to provide for themselves, or is not being provided services necessary to maintain their physical and mental health and that the failure to receive such services impairs or threatens their well-being. Adult exploitation means the illegal, unauthorized, improper, or fraudulent use of an adult or his funds, property, benefits, resources, or other assets for another’s profit, benefit, or advantage, including a caregiver or person serving in a fiduciary capacity, or that deprives the adult of his rightful use or access to such funds, property, benefits, resources or other assets. Interesting to note is that the terms “unauthorized,” “improper” and “fraudulent” did not exist in this Code section until 2017. Prior to that, the act of using an adult’s funds for another’s benefit had to have been illegal in order for it to fall within the definition of exploitation.

The revised Code section further states that adult exploitation includes:

  1. An intentional breach of a fiduciary obligation to an adult to his detriment or an intentional failure to use the financial resources of an adult in a manner that results in neglect of such adult;
  2. The acquisition, possession, or control of an adult’s financial resources or property through the use of undue influence, coercion, or duress; and
  3. Forcing or coercing an adult to pay for goods or services or perform services against his will for another’s profit, benefit, or advantage if the adult did not agree, or was tricked, misled, or defrauded into agreeing, to pay for such goods or services or to perform such services.

Now that you know how Virginia defines Elder Abuse, you may be wondering: well, how prevalent is this problem and can it happen to me? The answer can be found in some statistics, but because many incidents happen between and among family members, they go unreported. Here is what we do know:

Nationwide, elder abuse is experienced by an estimated one out of every ten people, ages 60 and older, who lives at home. For every one case of elder abuse that is detected or reported, it is estimated that approximately 23 cases remain hidden. In Virginia, for fiscal year 2017, Adult Protective Services (APS) received a total of 8,408 substantiated reports of abuse of adults over the age of 60. Of those reports that were filed, 60% of the victims were female; 70% of the incidences occurred in the adult’s own home; and 11.5% of the incidents involved financial exploitation. Substantiated reports rose by 12% from fiscal year 2016 and financial exploitation cases alone rose by 20%.

In the next part of the series, we will discuss what to watch out for and what is being done by federal, state and local agencies to combat the problem. The final part of the series will discuss what you can do to protect yourself, your loved ones, and/or your clients.

 

Kit KatAsk Kit Kat – Rewilding Carnivores

Hook Law Center: Kit Kat, what does it mean to ‘rewild’ carnivores?

Kit Kat: Well, that is a technical term meaning that wild animals that were previously missing in a particular area, are re-introduced to the area by the efforts of humans. A prime example is the rewilding of gray wolves in Yellowstone National Park. In the early 1900s, it would have been difficult to spot a gray wolf, but not so today. In the 1990s, the experiment with rewilding began in Yellowstone and Idaho. The efforts have been extremely successful.

The nice thing, though, is that with rewilding it was found there were unintended, positive consequences. Wolves thinned deer and elk herds, which had denuded many valleys of vegetation.

That led to the return of trees and shrubs, which led to the return of certain birds and beaver. Bears and raptors consumed carrion. More trees also meant less erosion, so rivers became fuller which fostered other habitats. ‘We’re just uncovering these effects of large carnivores at the same time their populations are declining and are at risk’, says Dr.William Ripple, an ecologist at Oregon State University.

Unfortunately, rewilding will not work for all endangered species in all places. Dr. Ripple and a postdoctoral research assistant named Christopher Wolf have analyzed hundreds of possible rewilding sites from a database of protected areas around the world. To be successful, there must be room for reproduction, a food source appropriate for the species, and humans who will not interfere and hunt them. In the United States, they came up with 2 other areas which might be suitable for rewilding—gray wolves in Olympic National Park in Washington State and red wolves in Everglades National Park in Florida.

In the developing world, rewilding will not be so easy. Many animals in those areas are used for food survival or in traditional medicines. According to Layla AbdelRahim, an anthropologist who has studied human understanding of wilderness, “Perhaps the solution is rethinking what it means to be humans in a natural world. We must recognize our role as partners with the environment, rather than dominators, to maintain functioning ecosystems.” (Joanna Klein, “’Rewilding’ Missing Carnivores May Help Restore Some Landscapes,” The New York Times, Science-Trilobites section, March 16, 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 Friday, March 23rd, 2018. Filed under Senior Law News.

Complications of Owning Real Property in Multiple States

By Sarah Schmidt

There is, of course, a great allure to the idea of owning an apartment in New York City, a summer fishing cabin in Alaska, or a beach house in the Outer Banks, but with additional benefits also comes additional complications. The complications not often contemplated when purchasing a property across state lines is the complexity it adds to your estate planning.

Any time a person owning property in multiple states passes away, it can create a much larger headache for a personal representative in charge of administering the decedent’s estate. If the decedent owned the property in his name alone, this will often require a probate administration not just in one state, not just in two states, but in just about every state the decedent owned real property. This adds a great deal of time and expense to the administration process. Indeed, the time and expense of multiple ancillary administrations can be five to ten times more expensive than it would have been for the individual to pay for proper planning during his or her lifetime.

Estate planning attorneys have a wide variety of tools to avoid the time and expense of not only a probate administration in a client’s home state, but also avoid any need for an ancillary administration in any other state. One of the most often cited tools used to avoid probate is a revocable living trust. Keep in mind, though, an often overlooked fact is that a trust only avoids the necessity of a probate administration if the property is actually transferred to the trustee of the trust during the grantor’s life. In other words, the deed to your house must be in your trust’s name, not your name. Transfer on death deeds, or limited liability companies can also be effective planning tools to avoid any need for an ancillary probate administration.

If you own any property across state lines (no matter its value), you should always let your estate planning attorney know and work this fact into your estate plan. The cost and expense of proper planning is by far cheaper than what it will cost your estate after your death without planning.

 

Kit KatAsk Kit Kat – Bobcat in Captivity

Hook Law Center: Kit Kat, what can you tell us about Lynxie, the bobcat, who was found living in an industrial park in Illinois?

Kit Kat: Well, this is kind of a strange story. Lynxie, as the bobcat was known, was found in a police raid  along with a convicted felon named Philip Giese. Police received a tip that Giese had guns in an office in Orland Park, Illinois. It turns out he illegally had 2 loaded handguns and 100 rounds of ammunition. Drug paraphernalia was also found, as well as some suspicious substances which were sent to a crime lab for identification. He was also charged with alleged possession of a wild animal. There was no evidence that Giese had mistreated Lynxie, but he was declawed and was living in a 6’x6’ room in the warehouse, surrounded by cat toys. There was a large litter box and a climbing tree for him in the building.

Fortunately, for Lynxie, he is now being cared for by the Illinois Department of Natural Resources. Investigators are trying to find out if Lynxie belonged to Giese or someone else. It is not illegal to own a bobcat in Illinois, if the person has a permit from the US Department of Agriculture. Giese had no such permit. Montana and a few other states allow their possession.

According to a Google search, a bobcat kitten normally sells for about $1,700 each. While it may make good dinner conversation, I would not advise keeping a bobcat as a pet. Adult males range in weight from 14-40 pounds. Even without claws, that would be a formidable-sized pet. Wild animals should be allowed to roam free. (Howard Ludwig, “Lynxie the bobcat lived in office with cat toys, giant litter box, police say,” The Virginian-Pilot, p. 7)

 

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, March 16th, 2018. Filed under Senior Law News.

Penny Wise but Pound Foolish

By Letha Sgritta McDowell, CELA

As part of an elder law practice, we assist with a large number of estate plans.  Typically, an estate plan is designed to plan for disability and death and the options for planning are quite numerous.  There are will-based plans, revocable-trust-based plans, and plans which may involve a number of trusts, all with different purposes.  Many individuals use trust-based plans as a means to protect assets for their desired beneficiaries.  This may be due to the desire to minimize estate taxes, because of a beneficiary’s special needs, or due to a desire to protect from unforeseen creditors or a divorce.

While clients desire trust-based planning and the asset protection that goes with it, they often want to minimize fees and opt for individual trustees rather than a corporate or professional trustee.  While it may seem beneficial to minimize fees, there are a number of benefits to using a corporate trustee.

Some of those advantages include:

  • Experienced in managing trusts, they are less likely to make inappropriate distributions
  • Experience in investing and developing an appropriate investment policy for trusts
  • Methods for properly accounting for trust property and reporting to beneficiaries
  • Objectivity in making distributions
  • Experience in filing fiduciary income tax returns
  • Liability protection in the event of mismanagement

It is important to emphasize the value of experience in understanding and managing trusts.  Recently I met with the surviving spouse of a client who was both the trustee and beneficiary of a trust created by her deceased husband.  The trust was created to act in a specific manner at the husband’s death and included provisions that had to be specifically followed in order to preserve certain tax benefits for the surviving spouse.  At her husband’s death, on the advice of friends and family, she had not returned to the attorney who drafted the document.  Instead, she simply continued to write checks off the trust account to pay her expenses and had undertaken no formal trust administration process.  In her words, she “was the beneficiary, so why did the formalities matter?”  The result is that the assets were available to creditors (unforeseen at the time of her husband’s death) and, in the future, there is the likelihood that her estate will pay an additional million dollars or more in estate tax at her death.

In another instance, a family member was made the trustee of a special needs trust for the benefit of a person with a disability.  The family member wrote checks from the trust to the beneficiary’s favorite charity and to several family members as “gifts.”  Once discovered, the checks, totaling less than $1,000, caused the beneficiary to lose health insurance and her source of income.

In both cases, a corporate trustee, while perhaps costing some in fees over time, would have saved the beneficiaries millions of dollars over their lifetime.

 

Kit KatAsk Kit Kat – Babies in the Wild

Hook Law Center: Kit Kat, what should someone do if they see a baby wild animal alone and not tended to by its mother?

Kit Kat: Well, first you need to assess the situation and determine whether or not the baby animal is truly in distress. Some species intentionally leave their baby offspring alone for long periods during the day, and come back at dusk or dawn to feed them. That is the case with deer and rabbits. According to John Griffin, director the urban wildlife section of the Humane Society of the United States (HSUS), fawns are left unattended to protect them. The mother stays away because she is a tall, visible target. So if you see a fawn by itself, first observe it. ‘If the fawn is quiet and in a ball and hiding, don’t do anything. But if he’s running around vocalizing like crazy, that’s when something is going on.’

Rabbits do the same. If you see an unattended nest, don’t panic. You can cover the nest with twigs or yarn in a tic-tac-toe pattern. Come back in 12 hours. If the things you laid over the nest have been disturbed, you’ll know they have been cared for by the mother. If there is any doubt, consult your local wildlife rehabilitation center. They can give valuable advice.

In contrast to the above animals, are birds and squirrels. Their parents tend to be more attentive and watchful. However, if you do see a baby bird on the ground, try to observe its condition. If it appears to look almost like an adult except without long tail feathers, it’s a fledgling that is just learning to fly. Leave it alone. They will figure it out because they can fly. If it has few feathers, it’s probably a nestling, and it may need some help getting back in the nest. Contrary to popular belief, a mother bird will not abandon her baby if humans have handled it. Gently place it back in the nest. The same can be done for squirrels.

In summary, Mr. Griffin has 3 pieces of advice regarding helping wild babies in perceived distress.  ‘Don’t put yourself in danger. Don’t feed them. And don’t remove them without knowing where you’re going to take them.’ When in doubt, contact your local wildlife rehabilitation center. They’re the experts. They can advise you how to transport the injured animal should that be necessary. Some sort of carrier or container will be needed for your safety and the animal’s. Good luck, and have fun watching the endless cycle of life. (Kelly L.Williams, “First do no harm,” All Animals, March/April 2018, p.14-15)

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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, March 12th, 2018. Filed under Senior Law News.

Determining How Much of Your Social Security Benefits are Taxable

By Amanda Richter

Over the years, clients have often asked whether or not their Social Security benefits are taxable. The answer is that it typically depends on your other income. In the worst case scenario, 85% of your Social Security benefits would be taxed when you file your tax return. Don’t worry, this does not mean that you have to pay 85% of your benefits back to the government, it merely means that up to 85% is includable in your adjusted gross income and taxed at your regular income tax rates.

To determine how much of your benefits are taxable, you must first determine your other income, including certain items otherwise excluded for tax purposes (i.e. tax exempt interest). You must also include your spouse’s income, if you file jointly. To this add half of the Social Security benefits you and your spouse received during the year. The figure you come up with is your total income plus half of your benefits. Once you have done this, you then apply the following rules:

  1. If your income plus half your social security benefits is not above $32,000 ($25,000 for single taxpayers), none of your Social Security benefits are taxed.
  2. If your income plus half your Social Security benefits exceeds $32,000, but is not more than $44,000, you will be taxed on:

(1) one half of the excess over $32,000, or

(2) one half of the benefits, whichever is lower.

Example (1): John and Jane have $20,000 in taxable dividends, $2,400 of tax-exempt interest, and combined Social Security benefits of $21,000. So, their income including the tax-exempt interest plus half their benefits is $32,900 ($20,000 plus $2,400 plus 1/2 of $21,000). They must include $450 of the benefits in gross income (1/2 ($32,900 − $32,000)). (If their combined Social Security benefits were $5,000, and their income plus half their benefits were $40,000, they would include $2,500 of the benefits in income: 1/2 ($40,000 − $32,000) equals $4,000, but 1/2 the $5,000 of benefits ($2,500) is lower, and the lower figure is used.)

For taxpayers that file as Single, the following rules apply:

  1. If your income plus half your benefits exceeds $25,000 but is not more than $34,000, you will be taxed on:

(1) one half of the excess over $25,000, or

(2) one half of the benefits, whichever is lower.

Example (1): Jane has $20,000 in taxable dividends, $2,400 of tax-exempt interest, and Social Security benefits of $9,000. So, Jane’s income plus half Jane’s Social Security benefits is $26,900 ($20,000 plus $2,400 plus 1/2 of $9,000). Jane must include $950 of the benefits in gross income (1/2 ($26,900 − $25,000)). (If Jane’s Social Security benefits were $3,000, and her income plus half of the Social Security benefits were $30,000, Jane would include $1,500 of the benefits in income: 1/2 ($30,000 − $25,000) equals $2,500, but 1/2 the $3,000 of benefits ($1,500) is lower, and therefore the lower figure is used.)

  1. If your income plus half your benefits exceeds $44,000 ($34,000 for single taxpayers), the computation in many cases grows far more complex. Generally, however, unless your income plus half your benefits is fairly close to $44,000 ($34,000 for single taxpayers), if you fall into this category, 85% of your SocialSecuritybenefits will be taxed.

If you know your social security benefits will be taxed, you can voluntarily arrange to have the Federal tax withheld from the payments by filing a Form W-4V. Otherwise, you may have to make estimated tax payments. Below is a sample of the 2018 IRS form W-4V. Please note that you can may only elect to have Federal tax withheld and not also State withholding.

 

Kit KatAsk Kit Kat – Humane Society of US Gains

Hook Law Center:  Kit Kat, what can you tell us about some of the accomplishments of the Humane Society of the Unites States (HSUS) in 2017?

Kit Kat: Well, I am pleased to say that there are many. It goes to show that organized advocacy can accomplish a lot. I will highlight a few. First, HSUS made the life of chickens at Perdue farms much better. In June of 2017, Perdue agreed to add natural light in the chicken houses, increased  space per chicken, the addition of perches, and even breeding other breeds besides only the quick-growing ones, who experience much pain because they are growing unnaturally fast.

Second, it worked to change where pet stores can obtain animals for sale. HSUS went undercover and  exposed an unethical pet store in NYC, who lied about their acceptance of dogs from puppy mills. The store was shut down. In California, its advocacy resulted in a new law which bans the sale of pets from commercial breeders in pet stores. It is the first state to do so. Now, in California, only pets from local shelters or rescue organizations can be sold in pet stores.

Third, HSUS has promoted dining options which are meat free. It has partnered with universities and hospitals around the country to offer meat-free menu items. Aramark and Compass Group, two of the largest food service companies in the country, have pledged to offer more plant-based menus and to market the new food choices.

Fourth, it has worked on behalf of horses. In Pennsylvania, horses have joined the ranks of cats and dogs, so that cruelty to all three classes of animals is a felony, rather than a summary offense or what other states call misdemeanors.

The list goes on and on. We do owe HSUS a great thank you! They have accomplished much, and they will continue to tirelessly work on behalf of these wonderful creatures, great and small. (“Our Work in 2017,” All Animals, January/February 2018, p. 22-23)

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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 Thursday, March 1st, 2018. Filed under Senior Law News.

AMBROSIO V. WOLF: A Will Contest Cannot be Brought Until After the Testator has Died

By Shannon Laymon-Pecoraro

In June 2012, Nancy D’Ambrosio (“Nancy”) suffered a stroke that resulted in a need for 24-hour care services. She subsequently executed a power of attorney naming her son, James, as agent. A year after executing the power of attorney, she signed a will (the “Will”) leaving everything to her two daughters, Jane and Electra, and shortly thereafter a medical power of attorney naming James as the agent.

Nancy’s daughters, as a result of their relationship with James, filed a petition to appoint a guardian and conservator for Nancy and to void the power of attorney. After numerous amended pleadings from both sides, a mutually agreed upon order was entered by the trial court that ultimately appointed a neutral third party as guardian and conservator of Nancy.

After Nancy’s death in 2015, the Will was probated and James filed a complaint to impeach the Will. Jane and Electra filed a responsive pleading to have James’s action dismissed, claiming, in short, that during the guardianship proceedings James not only asserted that Nancy had capacity during the time the Will was executed, but also that he could have asked the Will be invalidated at that time. The trial court found in favor of Jane and Electra. James appealed to the Supreme Court of Virginia.

One of the legal concepts addressed on appeal was claim preclusion, which essentially involves the inability to re-litigate claims that arise or could have arisen in an earlier suit. Jane and Electra contented that in the course of the guardianship proceeding, James could have challenged the Will, and by failing to do so, was barred from doing so now. James asserted that because the Will was not effective until the death of Nancy, he had no injury until her death and therefore no standing to make such a claim. The court agreed with James and found that because the Will was revocable until Nancy’s death, James had an expectation of what would occur, but that no cause of action could be brought prior to Nancy’s death.

As elder law attorneys, we often see demands made by family members to see the provisions of various estate planning documents. We also see family members who attempt to receive lifetime gifts via the attempt to enforce the provisions of a Will during the life of the maker. This case was an important reminder that a will is not effective until the maker of the will dies.

Kit KatAsk Kit Kat – Cockroach Ingenuity

Hook Law Center:  Kit Kat, what can you tell us about the ingenuity of cockroaches?

Kit Kat:  Well, these creatures have a few characteristics that might be useful for humans. The cockroach’s body and skeleton are amazing! Scientists have long been intrigued by their flexibility when colliding with objects like walls. How could they do this without, seemingly, losing any momentum? Normally, a cockroach can travel up to a speed of 3.4 miles per hour. Also, they are escape artists when pursued, as anyone knows who has encountered one. So Dr. Kaushik Jayaram, a biologist at Harvard University, decided to find out exactly why. He became the lead author of a study which was recently published in the Journal of the Royal Society Interface.

The questions Dr. Jayaram was seeking answers to revolved around the issue whether or not cockroaches were banging into things on purpose or whether there was strategy involved. So they filmed the actions of 18 male American cockroaches, and studied the results through viewing the film in slow-motion. What they found was that 80% of the time, the roaches were banging into things, with no-slowing when approaching an object. 20% of the time, they did seem to slow down to minimize impact. In both cases, they were surprised to learn that either strategy was just as  effective, with no negative consequence to the roach’s exoskeleton. In other words, their exoskeleton is so flexible, that it could withstand direct hits. It wasn’t necessary for think about what they were doing; just to keep moving.

Dr. Jayaram and his colleagues think that there are implications not necessarily for humans, but for robots which help us accomplish many tasks today. In the future, ‘small robots can be built with simple, robust, smart bodies to safely bump into obstacles instead of using complex and expensive sensing and control systems.’ Who knew that the lowly cockroach could tell us so much!

(Douglas Quenqua, “How Cockroaches Crash Into Walls and Keep Going,” The New York Times (Trilobites section), Feb. 13, 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 Tuesday, February 27th, 2018. Filed under Senior Law News.

Protecting an Inheritance from Divorce

By Sarah Schmidt

One of the most common questions estate planning attorneys receive is the proverbial, “Should I have a will or a trust?” Although the answer to that question must be given in light of each client’s individual circumstances, one primary consideration in creating an inter vivos trust is the protection that it can afford beneficiaries upon death. One of those protections, for example, is the protection from future creditors or divorce.

This planning tool was recently highlighted in an unpublished opinion by the Court of Appeals of Virginia.  In Montgomery v. Montgomery, wife in the divorce proceeding was a beneficiary of her parents’ trust and the survivor of her parents had recently passed away. Notably, the trust, at the death of both of the parents, provided that the assets should be distributed outright per stirpes to both kids, but the court found that it could not be attributed to wife in awarding spousal support because the trust granted the trustees the discretion to retain investments “for as long as the Trustee may deem appropriate, whether or not such assets satisfy the prudent investor standard, produce income or represent an over concentration in one investment.” The court found that because the distributions had not yet been made and the wife, who was only a co-trustee of her parents’ trust, had no authority to direct or require the distribution, the future beneficial interest was insufficient so as to be imputed to the wife as income in the divorce proceeding. The wife had not yet “inherited” the property and  “the circuit court lacked the authority to reach into the trust to force wife and [the co-trustee]—who is not a party to th[e] divorce litigation—to dispose of trust property or to impute income to wife based upon undistributed trust assets.” You can view the opinion at this link.

In considering using a trust as an estate planning tool, clients should consider the likelihood that a beneficiary—even a remote or contingent beneficiary—will get divorced. The statistics and data collected showing the rate and number of marriages that end divorce are remarkable.

While the trials and tribulations that a beneficiary may have to endure in life are, of course, most often unforeseen and unpredictable, proper estate planning can truly not only protect an inheritance for a beneficiary so as to sustain them in times hardship, but also to sustain an inheritance to benefit future generations.

Kit KatAsk Kit Kat – Elephants & Bees

Hook Law Center:  Kit Kat, what can you tell us about elephants and their fear of bees?

Kit Kat:  Well, this is extremely interesting! It has long been known that the mighty elephant is very fearful of the tiny bee. One-on-one, the bee is not a threat to the elephant, but in swarms, they can be extremely annoying, especially if they get in the elephants’ trunk, mouth, or eyes. So with this knowledge, scientists have decided to turn this fear to the elephant’s advantage.

Elephants are at risk from farmers when they wander into fields and feast on certain crops. So instead of using electrified fences to keep the elephants out, scientists are conducting experiments in which beehives, alternated with fake hives, are strung every 20 meters around a farm’s perimeter. The success rate of keeping the elephants away is around 80%. There’s an added bonus in that the fences with beehives are significantly less expensive than electrified fences. Save the Elephants, a non-profit conservation group, estimates that the beehive-loaded fences cost 1/5 the cost of an electrified one. It’s also been discovered that a totally fake beehive fence doesn’t work. The elephants can detect that. There have to be some live bees buzzing to remind them of the danger. It turns out that elephants are quite intelligent!

The above discussion primarily refers to African elephants. Asian elephants behave a little differently. Scientists are not sure if that’s because the bees in Asia tend to be less aggressive. However, the fences are being tried on both continents. Dr. Lucy King of Oxford University in Great Britain, who is working on this project comments, ‘When I first started, I had to really persuade people to try it. They thought I was absolutely insane. Then they thought, well, she’s giving us free beehives, so whatever. Now people are queuing up to do it.’ If scaring away the elephants doesn’t work perfectly, they can at least make some money on the side with the sale of honey! It’s a win-win for everyone! (Karen Weintraub, “Elephants Are Very Scared of Bees. That Could Save Their Lives.” The New York Times (Science section), Jan.26, 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, February 19th, 2018. Filed under Newsletter.
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