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

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

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

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

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

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

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

Ask Kit Kat – Virginia Honeybees

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

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

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

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

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.

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

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

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

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

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

Ask Kit Kat – Don’t Feed the Horses

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

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

If you live in that area and want to help, you can put a sign in your yard saying “Don’t feed the horses!” They are available at the Corolla Wild Horse Fund museum and gift shop in Corolla. Other great citizens have helped by financing a billboard on their own property on US 158. Karen and Mac Quidley gave the space. R.O Givens Signs paid for installation, and Terry Douglas, a graphic artist from Richmond, did the design for free. What a wonderful community effort to protect the beautiful wild horses of the Outer Banks! (Jeff Hampton, “In NC, billboard pulls no punches on safety of horses,” The Virginian-Pilot, June 29, 2018, pg.3)

Upcoming Seminars

Distribution of This Newsletter

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

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

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

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

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

Ask Kit Kat – Koko Passes

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

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

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

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

Upcoming Seminars

Distribution of This Newsletter

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

As your parents age, you may be realizing that they need more and more help with their daily activities. Perhaps your mother may be forgetting to take her medication, or your father may be having a hard time getting in and out of the bath. All of these changes are upsetting, but perhaps the most disturbing change can be your parent’s sudden inability to drive safely.

Obviously, many seniors are unwilling to give up their independence in any way, and having a car and being able to drive is a major part of that. Your parent may not realize how unsafe it is for them to be behind the wheel, and they may resent you if you tell them they can no longer drive or if you take their driver’s license away.

However, the dangers of continuing to drive when it is unsafe to do so are all too real. In 2014, a 79-year-old woman killed three people and injured four others at a church when she accidentally put the car in reverse instead of drive. Unfortunately, these situations are becoming more frequent. According to the U.S. Census, the number of Americans over the age of 70 is set to increase greatly in upcoming years, from 28.5 million in 2011 to 52.7 million in 2030. Statistics show that drivers over the age of 75 have higher crash rates, including higher rates of fatality behind the wheel, than the average driver.

There are many signs that it may be time to reevaluate whether a loved one should drive. Signs of impaired driving include unexplained dents and scrapes on a vehicle, frequent “close calls” when driving, drifting in and out of traffic lanes, difficulty working gas versus brake pedals, and a delayed response to sudden changes in a traffic pattern.

Before you put away the keys for good, it may be worthwhile to make it easier for your loved one to continue driving. For example, many types of medications can cause delayed response times and drowsiness – see if any of those medicines can be reduced or eliminated altogether. Also, you may want to make sure that older drivers avoid driving in high-traffic areas, especially during rush hour. Mom may be able to drive to church or the grocery store, but driving on the highway could be a whole different story.

So how can you approach this difficult topic with a loved one who possibly should not continue to drive? One way to avoid being the “bad guy” in this situation is to ask your parent to take a driver’s test at your local DMV or driving school. If they cannot pass a simple driving test, this might help them to accept that it is not safe for them to be behind the wheel. Your loved one may be more willing to hear the opinion of a neutral third party than the opinions of family members.

No matter what you do, it is important to make sure that your parent will not be able to hurt themselves or anyone else by driving unsafely. Giving up independence is never easy, but sometimes the hardest thing to do is often the best thing for yourself and your family.

Ask Kit Kat – Raccoon Update & Nocturnal Animals

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

Kit Kat: Well, first, let’s talk about the raccoon. It turns out it was a female, and she was quite healthy. On the same day that she was trapped on top of the 25+ story bank building after scaling the entire facade, she was taken to a wooded area and released on private property near the suburb of Shakopee. According to Suzanne MacDonald, a raccoon expert at York University in Toronto, “Raccoons don’t think ahead very much, so raccoons don’t have very good impulse control.” Phil Jenni, director of the Wildlife Rehabilitation Center of Minnesota, hypothesizes, that she just got scared, and so reverted to what raccoons normally do—they climb when stressed. Whatever the reason, the story has a happy outcome.

Now, on to the 2^nd topic of how more mammals are becoming nocturnal as a reaction to dealing with the encroachment of humans in their habitat. According to a new study published recently in Science magazine, “Humans’ presence alone can cause animals across continents—including coyotes, elephants and tigers—to alter their sleep schedules.” It turns out, mammals have been regulating their activity for centuries, depending on external threats. For example, after the dinosaur period, they became more active during the day. Now the reverse is happening, according to Kaitlyn Gaynor, an ecologist and graduate student in environmental science at UC-Berkely, who led the study. They used data from 76 studies about 62 species living on 6 continents to come to their conclusions. Therefore, “an animal that typically split its activity evenly between the day and night would increase its proportion of nocturnal activity to 68 percent of total activity near human disturbance.”

Humans may not be actively threatening the mammals, but the mammals feel stressed nonetheless. Coyotes in the Santa Cruz mountains of California, for example, are becoming more active at night merely because of biking and hiking in the area. Tigers in Nepal are behaving likewise. As their favorite trails are used more often by humans, they too, have changed their habits, and shifted to a more nocturnal schedule to be active. Future research will investigate how these changed patterns will affect mammals’ diet and reproductive patterns. (Steve Karnowski, “St.Paul Raccoon Set Free after Scaling 25-story Tower,” The Associated Press as published in The Virginian-Pilot, June 14, 2018/ Julia Jacobs, “Mammals Go Nocturnal in Bid to Avoid Humans,” The New York Times, June 15, 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.

This is the third article in a three-part series discussing Elder Abuse, Neglect and Exploitation. In Part One, we discussed the definitions for elder abuse and the prevalence of it in our society. In Part Two, we discussed what to watch for in detecting the signs of elder abuse as well as identifying the situations in which our elderly citizens are most vulnerable to abuse. We also discussed what the Federal Government and the State of Virginia are doing to help combat the problem. In this Part Three, we will discuss what you can do to protect yourself, your loved ones, and/or your clients from elder abuse, neglect and exploitation.

The Virginia Department for Aging and Rehabilitative Services (DARS) oversees two programs that are helpful in the investigation and remediation of elder abuse, neglect and exploitation: the State Long-Term Care Ombudsman Program and Adult Protective Services. The Ombudsman Program is mandated to receive, investigate, and resolve complaints made by persons in nursing homes and assisted living facilities, as well as those receiving community based long-term care services. If you need help resolving a problem of this nature, contact your local Ombudsman by calling 1-800-552-3402. Adult Protective Services investigates reports of abuse, neglect and exploitation and local family services specialists arrange for a wide variety of health, housing, social and legal services to stop the mistreatment. Their 24-hour toll-free hotline is 1-888-832-3858.

There are also civil and criminal remedies available through the Courts. Even though Virginia does not have a specific statute creating a cause of action for financial exploitation, those civil remedies that are available include actions for breach of fiduciary duty, negligence, assault and battery, theft by conversion, fraud, rescission of transactions, restitution, and/or an accounting of the actions of a fiduciary. Criminally, a person can be found guilty of larceny for financially exploiting a vulnerable adult. In addition, there are penalties for failing to make a required report of elder abuse ranging from $500 to $1,000.

Often the best remedy for elder abuse is the prevention of elder abuse, and some prevention can be done with the drafting of legal documents and the selection of the right fiduciary to act on your behalf. Some of the legal documents that we recommend our clients have are a General Durable Power of Attorney for financial matters, an Advanced Medical Directive for health-related matters, and a Trust. The most important decision you will make, however, is not to have these documents drafted, but who will serve as your agent or Trustee. To prevent abuse, it is imperative that your agent be someone you can trust. Sounds simple, right? Your agent should be organized, efficient, able to open mail, balance a checkbook, make calls in the business world; have good credit, no bankruptcies, and a proven track record for fiscal responsibility; and must be of high moral character, honest, trustworthy and free of active addictions.

There are also things that professionals who work with elderly clients can do in their everyday practice to prevent and/or be able to detect abuse. The first thing to do is to clearly identify the elder as your client. Regardless if the elder is accompanied to an appointment by family members, friends or other advisors, the professional should have a private conversation with the elder to identify which other individuals are authorized to receive information. It is also important to meet privately with the elder so you can assess their capacity and whether they are being unduly influenced. By the same token, professionals should also have frequent meetings with clients. As their client’s capacity diminishes, the professional should shorten meetings, discuss few topics during each meeting, and meet more frequently. After each meeting, the professional should send a letter to the elderly client with a written summary of the meeting.

Finally, here is a list of some of the other resources available:

1. National Center on Elder Abuse: ncea.acl.gov
2. Virginia Adult Protective Services: State Hotline: 888-832-3858
3. Virginia Family Violence Hotline: 800-838-8238
4. VA Coalition for the Prevention of Elder Abuse: vcpea.org
5. Virginia Department for the Aging in Richmond – provides information for local area agencies – https://www.agingcare.com/local/virginia-department-for-the-aging-richmond-area-agency-on-aging-va
6. Caregiver Resources: http://www.pbs.org/wgbh/caringforyourparents/handbook/caringcaregiver/supportgroups.html

Ask Kit Kat – Raccoon on a Ledge

Hook Law Center: Kit Kat, what can you tell us about a raccoon that was stranded on the ledge of a building in St. Paul, MN?

Kit Kat: Well, this is another tale of you humans encroaching on the territory of the animal world. No just kidding. But seriously, more and more wild creatures are appearing in urban areas. This story has a happy ending, fortunately.

On June 12, 2018, a raccoon was spotted in downtown St. Paul climbing the UBS building. The windows don’t open, so bystanders and office workers could only watch helplessly. It is thought this same raccoon was seen on another downtown building a few days earlier, perhaps looking for a source of food like baby pigeons. Nevertheless, the building which is more than 25 stories high, has the perfect surface for climbing. It has a rough surface and there were ledges at each window. So the raccoon took all day in its ascent to the top. It never considered going down, only going up. It rested at the 12^th floor, the 22^nd floor, and the 23^rd floor. Then there was a wide lip of rough surface around the top. In the early hours of the following morning (June 13), it made it to the top. Waiting for it (sorry, don’t know the gender) were several live traps with wet cat food which were supplied by animal-control authorities. The plan worked, and it was trapped safely.

Soon the raccoon will be relocated to a more suitable area. While I’m sure the people in downtown St. Paul were mesmerized by this little creature, the pictures showed it scared and tired. It’s wonderful that this one little creature will get another chance to exist, hopefully, in a more appropriate environment. (Karen Brulliard and Keith McMillan, “Raccoon triumphs over skyscraper in a climb that captivated the internet, celebrates with cat food,” The Washington Post, (Animalia section), June 13, 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.

The role of an executor or trustee is often misunderstood by lay people who have never served as an executor or trustee. Beneficiaries of an estate often litigate or argue over who should serve as the executor, administrator or trustee. Lawyers, and those who have served in such a capacity, know all too well that being an executor is a difficult job which comes with a great deal of obligation and responsibility. If not handled properly, it can even subject the executor/trustee to personal liability.

I always tell my clients, colloquially, it is not fun to be an executor. Your mother, father, or close friend most likely named you as an executor, because you are responsible and someone they trust, but they did not do you a favor by naming you. You will be charged with paying final debts and expenses, filing final tax returns, properly distributing any assets according to law, and filing inventories and accountings with the Commissioner of Accounts who, by the way, will oversee all of your work.

Because executors are a fiduciary and held to that standard under the law, it is of the utmost importance that, if you are serving in such a capacity, you seek the advice of legal counsel as to your actions.  The best course of action for a great majority of issues you will face can be easily explained by a trust and estate attorney. And where the law is unclear, a trust and estates attorney can assist you in seeking guidance from the court concerning the best course of action.  The Virginia Supreme Court has explained, “in all cases of doubt as to what the law is, and what their conduct ought to be under it, [trustees] are entitled to direction and instruction from the court.” Gooch v. Old Dominion Trust Co., 121 Va. 29 (1917).

If you’re currently serving as an executor or trustee, I highly recommend you contact an attorney to seek out advice and counsel regarding your duties and obligations. As an executor, administrator, or trustee, it is best to ask for permission, rather than forgiveness.

 

Ask Kit Kat – Pet Trusts Update

Hook Law Center: Kit Kat, what can you tell us about pet trusts and some things to include so they are done the correct way?

Kit Kat: Well, yes, it can be difficult to plan for the care of one’s pet after one has died. However, with some planning, your pet can be taken care of as you have instructed. Legal experts recommend a pet trust. It has several advantages to just leaving instructions as part of a will. Probating a will can be a lengthy process, during which time, the pet’s care would be in limbo. With a trust, provisions can be made for care of the pet to begin immediately upon incapacitation or death. According to Judy Mandell, an author on the subject of pet trusts, “A pet trust is a legal way to provide for your pet and is the option that allows you to directly give pets anything, since many states consider them personal property, no different from your fine jewelry, antiques, computers, or cars.” In addition she continues, “With pet trusts, a trustee is appointed to hold property and cash and make payments for the benefit of the pet upon the disability of the grantor. Trusts continue for the life of the pet or 21 years, depending on which comes first, although rules may vary by state.” As a cat, I would say we cats would be in favor of the up-to-21-year-provision, since we tend to live longer than our canine friends. My parents had a cat who lived to age 19, and I myself will be 15 in August.

The only caveat for a pet trust is to make sure you have secured a trustee who is willing to assume this responsibility. Also, include in the trust, direction as to what should be done with any remaining money in the trust, after the pet dies. Many decide to leave any balance in the trust to an organization like the Humane Society or the ASPCA.

Some have gone to extravagant lengths to care for their pets. In one situation, a home in Texas valued at $1 million was left as the residence for the deceased’s 10 cats. The appointed caretaker was given a salary of $50,000 per year to live in the house and take care of them. In another, a New York attorney was asked to ensure that the deceased’s cat would be buried in a custom-made wooden coffin.

So whatever your wishes, incorporate them in a pet trust. Your pet will thank you! (Judy Mandell, “The Pets Are All Right (Even Though You’re Gone), The New York Times, May 24, 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.

It is no secret that American families come in all shapes and sizes.  Gone are the days when a family consisted of a husband and wife who have only been married once and their children from that marriage.  Much research has been done on blended families at any age but not much information exists on older adults and relationship.  Indeed when the issue arises, many families (adult children and grandchildren) are shocked that romantic relationships are a concern.  Yet, romantic relationships and the resulting intimacy and companionship can vastly improve the quality of life for many older adults.  However, the relationship may also require some legal planning to protect all involved.

There are trends with relationships among older adults which may surprise many (especially their children).  One such trend is a coupling where the partners cohabitate but choose not to get married.  In times past, this arrangement may have been seen as unusual at best and judged harshly at worst.  However, since 2007 there has been a 75% rise in the number of couples where the parties are 50 or older in the United States who live together but who choose not to get married.

The reasons for the choice vary widely.  For some, the possible loss of pension benefits or health insurance benefits from a prior spouse provide a financial incentive to avoid remarriage.  For many who have been divorced, they look at cohabitation, commitment, and personal happiness as more valuable than the ceremony.  In addition, there is less risk in that they are not legally responsible for the debts of their cohabitating partner, but they would be responsible for the debts of a spouse.  For many, women in particular, cohabitation offers financial stability in that there is a combination of incomes to support the household, but no risk of loss of assets which were accumulated with a prior spouse.

In addition, to the many couples who choose to cohabitate, there is a trend emerging known as “living apart together.”  This refers to couples in loving and committed relationships who desire to remain committed but who do not want to get married or cohabitate.  Unlike the dating relationships of most younger adults, where dating is a step on the way to marriage, these couples see no need for anything beyond the commitment.  As for those who choose to cohabitate, the reasons for this vary widely.  Some have been through devastating divorces and do not want a similar entanglement.  Others don’t want the crowded feeling that accompanies another living in the same space and they want to maintain separate social circles and events.

From a legal perspective much emphasis is placed on careful planning for married couples.  However, for couples in alternative arrangements, planning may be even more important.  For many older adults in alternative arrangements, they want their non-spouse partner to make medical or financial decisions for them in the event of an incapacity or they may wish for their partner to make medical decisions but other family members to make financial decisions.  Whatever the desire, appropriate legal documents must exist so that wishes are clearly expressed.  It can also be helpful to let all parties, especially adult children who may expect to take on certain roles, to know the express wishes of the individual prior to a medical crisis or incapacity.  Failure to do can result in negative feelings between parties or, in some cases, contested litigation over who should be allowed to make certain decisions.

Being an older adult does not preclude a romantic relationship and, if you are an older adult in an alternative relationship, you are not alone.  Relationships can take on a variety of appearances, all of which can contribute to a happy and positive old age.  However, some legal planning is recommended to protect all involved.

 

Ask Kit Kat – Retired Chimps

Hook Law Center: Kit Kat, what can you tell us about retired chimps living at a sanctuary in Georgia?

Kit Kat: Well, this is an interesting story. A refuge for retired research chimpanzees has been established in Blue Ridge, GA. Naturally, it is called Project Chimps. Currently, there are 40 chimps living there who were once used in research projects. Most have come from the New Iberia Research Center in Louisiana. There are 173 more awaiting placement. This relatively new effort at retiring research chimps began in 2015 when chimps were classified as endangered by the U.S. Fish and Wildlife Service (USFWS). USFWS had been in litigation with the Humane Society of the US (HSUS) which forced the re-classification. It’s an expensive proposition. Chimps usually live into their 50s, and costs approximate $22,000 per year to care for each chimp.

Lucky are the chimps who are being cared for in Georgia. Their habitat is a 236-acre wooded area comprised of large yards and four villas. Initially, males and females are kept apart. Males have been sterilized, and females are given oral contraceptives as an added precaution. Socialization is done gradually and very carefully. Males and females are allowed to interact, but always under supervision, at least at the beginning. Emma and Eddie when they met, did so under the watchful eye of a supervisor, who lifted a series of gates, until they finally were allowed to hug and groom each other out in the open.

Another example are twin sisters—Buttercup and Charisse—who frequently display a rocking motion, even when given something to eat. Other chimps in their yard rush out and grab lettuce leaves when they’re offered, but not these two. They rock back and forth in stages, before they separate and take the lettuce. This behavior is not seen in the wild, so their caretakers hypothesize that is done as a comforting behavior. They were raised by their mother in captivity, but their mother was not raised by her mother, so they are not sure how nurturing their mother was.

All 40 chimps are considered individually and carefully as to their needs. If you would like to donate to the chimps’ care, you may do so at www.projectchimps.org or mail your gift to Project Chimps, P.O.Box 2140, Blue Ridge, GA 30513 with “All Animals” on the check memo line. (Emily Smith, “It’s their time,” All Animals, May/June 2018, p. 18-21)

 

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.

On April 30, 2018, the Social Security Administration (SSA) released new Program Operating Manual System (POMS) provisions, which are essentially a set of guidelines utilized by eligibility workers processing claims for Social Security benefits that directly relate to special needs trusts. Although we received a peek into what the POMS might look like at the Special Needs Trust Conference last October, advocates were uncertain what the final provisions would be. Much to our delight, the new POMS promote flexibility. Understanding that there were a number of updates, I have incorporated some of the highlights I believe my clients will most appreciate:

GOODS AND SERVICES

A key element of a special needs trust is the “sole benefit rule.” Essentially, the SSA has held that all distributions must be for the sole benefit of the beneficiary, and those receiving an incidental benefit must contribute a pro rata share. POMS SI 01120.201.F.3.a now establishes a new “primary benefit” rule, thus recognizing that others will inherently receive an incidental benefit and that such incidental benefit is acceptable provided the purchase was for the beneficiary. The examples provided by SSA indicate that others may reside in a home owned by the trust, but that a car purchased by the trust, which is titled in the name of a non-beneficiary, used by the non-beneficiary daily, but also used to transport the beneficiary twice a month would not be considered for the primary benefit of the beneficiary.

FAMILY CAREGIVERS

One controversial inconsistency among the various regions has been the treatment of caregivers. The POMS now clarifies that a caregiver may be a family member, a non-family member, or a professional agency and that such a caregiver may provide companion services.  A special needs trust may compensate such individuals for services and pay related expenses incurred by the provider during the course of service. The example provided by the SSA is payment for an admission ticket to a museum when accompanying the beneficiary.  Additionally, the POMS were updated to clearly indicate that SSA should not request evidence of training for, or the income tax information of, family caregivers.  Payment for such services shall be considered “reasonable” based on the time, effort, and prevailing rate of compensation for similar services within the geographic region.

DEBIT CARDS

SSA has consistently held that distributions to a pre-paid debit card owned by a beneficiary are treated like cash. The new POMS, however, clarifies that if the pre-paid debit card is owned by a special needs trust and controlled by the trustee such that the trustee is able to prevent the use of the card for food or shelter-related items, then distributions will be permitted. Although there may be a number of companies that have “administrator-managed prepaid debit cards,” the most commonly used by advocates would be True Link Financial.

TRAVEL

For years, the payment of non-beneficiary travel expenses, to include transportation, lodging and food, were unclear. Under the POMS, SSA has permitted that payment of non-beneficiary travel expenses when the attendance of the non-beneficiary is necessary to permit the beneficiary to travel. This would be applicable in the situations where a minor cannot travel unaccompanied, as well as beneficiaries that require extensive medical care.  The ability for such care provider to pay his or her own travel expense is irrelevant in determining the reasonableness of the travel expense.

Additionally, the trust may pay for a non-beneficiary’s travel expenses when such travel is necessary “to ensure the safety or medical well-being of the trust beneficiary.” As a result, there is now clarification that travel expenses may be paid for by the trust when the non-beneficiary is traveling to oversee beneficiary’s living arrangements within some sort of facility or supported living arrangement. Additionally, the trust may pay for travel expenses of a trust fiduciary to ensure the welfare of the beneficiary when the beneficiary does not reside in an institutional setting.

 

Ask Kit Kat – Vets in Rural Alaska

Hook Law Center: Kit Kat, what can you tell us about how rural Alaskans receive veterinary care for their pets?

Kit Kat: Well, thanks to an organization called Pets for Life, Alaskans in certain parts of the state receive free veterinary care for their pets. As you may know, many parts of Alaska are in extremely, isolated areas. Therefore, many receive pet care through Alaska Native Rural Veterinary (ANRV), a Fairbanks-based nonprofit. Because ANRV could not handle all of the vast state’s needs, it formed a partnership with Pets for Life (PFL), another nonprofit devoted to pet care. The area chosen for service for the 2 organizations is in the Yukon-Kuskokwim Delta, about 400 miles west of Anchorage. There are 3 villages that were chosen—Napaskiak, Napakiak, and Kwethluk—none of which is on a road system. Located on arctic tundra, they rely on snowmobiles in cold weather, airplanes, or a network of raised wooden platforms during warm periods when the tundra becomes a soupy mess. Napaskiak’s population is 425. It’s a largely Native American population who lives in the area, and sources for employment are few. Residents mostly rely on hunting and fishing to supply their needs. There is not a lot extra for pet care.

The vets that serve usually do so in teams of 3. One will prep the animals for anesthesia, one does the surgeries, and one provides dental cleanings. When they come to town and use a school which is not in session, the electricity is not even turned on. They have to pay in advance at the general store to pre-pay the bill, before they have power. Over the course of 3 days, they will perform 106 surgeries, give 295 rabies shots, and give 176 dogs de-wormer pills. Cats are a rarity, but there are some. PFL tries to go in several times a year to get the location caught up on the pets’ veterinary needs. After that, they can come less frequently as a community goes into maintenance mode.

This is a tremendous effort for a very worthy cause. The ASPCA and the HSUS help, too, by providing some ancillary support staff who cart animals to the care site, prepare areas for surgery, etc.  By working together, all the organizations make a big difference in the lives of these pets and their owners. (Kelly L. Williams, “Doing the work—Pets for Life brings free veterinary services to rural Alaska, All Animals, May/June 2018, p. 22-27)

 

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.

For the most part, property you inherit is not included in your income for tax purposes. However, items which are considered “income in respect of a decedent,” or “IRD” may be taxable to you or a portion thereof.

First, let’s review what IRD actually is. IRD is income which the decedent (person from whom you inherited the property) would have included on his/her individual tax return, except the income was earned/received after their death. Some examples of IRD include but not limited to: Compensation-related benefits paid after death (vacation pay), benefits from an individual retirement account, stock dividends, interest income, stock sales, etc.

Now that we understand IRD, let’s review a decedent’s estate. A decedent’s estate is a separate legal entity for federal tax purposes and comes into existence at the time of death of an individual. A decedent’s estate figures its gross income in the same manner as an individual. However, there is one major distinction, which is that an estate is allowed an income distribution deduction for distributions to beneficiaries. The income distribution deduction determines the amount of any distributions taxed to the beneficiaries. For this reason, a decedent’s estate is sometimes referred to as a “pass-through” entity. The beneficiary, and not the decedent’s estate, pays income tax on his or her distributive share of income. Schedule K-1 is used to notify the beneficiaries of the amounts to be included on their individual income tax returns. Regulation section 1.651(a)-2 discusses income required to be distributed currently and reportable to the beneficiaries. Also, Code section 662 provides information on inclusion of amounts in gross income of beneficiaries of estate and trusts accumulating income or distributing corpus.

The distributable net income is calculated by taking the total IRD received for the estate in that year less expenses in respect of a decedent. The remaining net amount is the estates taxable net income before any distributions to beneficiaries. Distributions to a beneficiary(ies) can then be deducted on the estate’s fiduciary tax return, which decreases taxable income and helps to minimize any tax liability.

A beneficiary in most cases is not being taxed on 100% of the income from the estate’s tax return. Property and principal assets of the estate (which includes cash from the decedent’s bank accounts) are not taxed to the beneficiary since this is not included in IRD. Only the portion of the distribution you received from the DNI that is from the estate’s taxable income is taxable to the beneficiary and then reported on Schedule K-1.

Here is an example: At John’s death, $50,000 of IRD items were included in his gross estate, $10,000 of which was paid to Sally. There were also $3,000 of deductions in respect of a decedent, for a net value of $47,000. Sally will include in her income the $10,000 of IRD she receives from the distributable net income of the estate. The $10,000 will be reported on a Schedule K-1 and must be reported on Sally’s individual tax return for that year. The decedent’s estate return will then be taxed on $37,000 ($50,000 IRD – $3,000 expenses – $10,000 of distributions to Sally).

Since Estates have a higher tax bracket in most instances, it is usually more beneficial to record distributions to beneficiaries so that the Estate can receive a deduction for the distribution and will result in less taxable income.

 

Ask Kit Kat – Reviving Brook Trout

Hook Law Center: Kit Kat, what can you tell us about brook trout in Virginia?

Kit Kat: Well, this is truly a heartening tale! Apparently, brook trout used to be very common in Virginia and could be found in almost all parts of the state. However, today because of farming, foresting, mining, and development pressures, their range has been greatly reduced. In fact, their reduction represents a 38 percent complete disappearance from prior levels, and a 34 percent reduced presence in other areas of Virginia.

Now enter students from the Students for Environmental Action club at James Madison High School in Vienna, VA. They had an interest in raising brook trout and seeing whether they could re-introduce them in certain favorable areas and whether or not their lives could be sustained there. Fortunately, at their school, they had an excellent resource—a faculty adviser who in his 2011 dissertation for George Mason University rated streams that were suitable for brook trout habitation in Maryland. Using this information he and the club created a rating scale which could be used to evaluate streams in Virginia. A score of 80 or more on a 100-point scale indicated that brook trout could be sustained there. The club then checked out various streams in the Shenandoah Valley and northern Virginia and rated them. Their club had raised brook trout fingerlings, and they were looking for a place to launch them. They settled on Catharpin Creek in northwest Prince William County. It had a great score of 87.5, but it had one drawback of a summer water temperature being a little high. So their adviser, Kirk Smith, diverted a spring to cool down the area. They also decided to plant trees along the banks of the creek to lower the temperature of the area during the day. So state officials gave permission for the club to release 50 trout fingerlings, as the young are called, last spring in 2017. They then checked back in December 2017, and they found at least one survivor. That gave them the incentive to try again this spring with 55 more fingerlings.

Time will tell how well their endeavor will succeed. No matter the outcome, this club’s efforts will definitely yield a lot of great information, so that one day in the future the brook trout can be once again a live symbol of its status as being the freshwater fish of Virginia. (Peter Cary, “Budding scientists try to revive state’s once-thriving brook trout,” The Virginian-Pilot, May 7, 2018, p. 1 & 9)

 

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.

As the ease of managing accounts and finances online continues to increase, many of our clients wonder which documents, records, and papers they actually need to keep around the house. Not having certain documents on hand can be frustrating and can cause a delay in getting the legal services you need, especially if you’re thinking about funding a trust, applying for the VA Aid & Attendance Pension, or applying for Medicaid. Another good reason to keep these documents in a safe place and in an organized format is to make it easier for your children or loved ones to find and interpret your financial and personal information after you pass away or become incapacitated. No one wants to be a pack rat, but it can be even worse to discard documents that you’ll end up needing later on. If you’re looking to de-clutter but you’re worried about discarding an important document, use the following list as a guide as to which documents are important to keep around:

• Previously filed income tax returns. Not only should you keep the past seven years’ worth of tax returns in the event that you are audited, but these documents often prove to be an important source of information about your income and expenses when you begin to plan for long-term care.
• Pensions and social security statements. If you meet with an estate planning and elder law attorney for the purpose of getting an income-based benefit, such as Medicaid or VA Aid and Attendance, you will need documentation of what benefits you already receive in order to determine your eligibility.
• Documents regarding prepaid funeral and burial arrangements. This paperwork will be something that your children will need to see after you pass away. Additionally, information about prepaid funeral plans can be useful information for your estate planning attorney to have, especially if they are looking into crisis planning techniques in order to preserve your assets from a Medicaid spend-down.
• DD-214. If you served in the military, you know that a DD-214 serves as proof of your military service. It is the document that you receive upon your separation from the military. If you plan on applying for VA benefits, you’re going to need a copy of this document to prove that you are eligible for the benefit.
• Proof of financial accounts, even those closed within the previous five years. These documents are important so that your attorney can determine your eligibility for Medicaid benefits, as well as for estate planning purposes.
• Originals of estate planning documents, including your last will and testament, any trust that you may have executed, general durable power of attorney, advance medical directive, medical power of attorney, and HIPAA authorization. It is important to keep these documents in a secure area such as a fireproof safe or safe deposit box so that your loved ones can access them and your wishes can be carried out if you become incapacitated or after you pass away.

If you have all of these records, it is important to keep them organized in a filing cabinet or safe where they will be easily found and interpreted if something were to happen to you. Always make sure that your loved ones know which documents you have and where to find them so that they can access them if they need to. When the time comes to destroy important documents, it is always best to shred them in order to avoid the possibility of identity theft and to prevent others from learning confidential information about you.

Remember, most of these documents can be replicated or found somehow if you accidentally discard them, but that is not always the case. Additionally, the time it takes to find these documents, as well as the cost to replace them, can be devastating. If you are ever in doubt about whether to keep a specific type of paperwork, contact your estate planning attorney before you put it through the shredder.

 

Ask Kit Kat – Outer Banks Ospreys

Hook Law Center: Kit Kat, what can you tell us about ospreys in the Outer Banks of North Carolina?

Kit Kat: Well, this story is a pleasant one. Apparently, ospreys have been nesting near power lines along the Wright Memorial Bridge which crosses Currituck Sound in North Carolina for years. Of course, they like to perch high, and would make their nests on the power line poles or wooden platforms constructed by Dominion Energy that lie next to the bridge. When the platforms were rotting from age, Dominion Energy replaced the wooden platforms with aluminum ones. Experts weren’t sure how it would affect the ospreys, but apparently it hasn’t affected them much at all! There are four nests this year—an improvement over last year when there was only one on the aging, wooden platforms.

Ospreys are quite common in the area, and they provide good viewing for people on their way and back from the Outer Banks. Dominion Energy learned a long time ago that it made sense to help their avian friends, rather than fight them. So they decided to build nesting platforms for the ospreys on older, concrete poles which were no longer in use. This way their wings and feet would not destroy or interfere with power transmission, as sometimes previously happened.

Jill Hailey, an operations engineer for Dominion Energy, said the new aluminum platforms should last for decades. The platforms have to be quite substantial as nests can weigh up to 600 pounds. Ospreys mate for life and have a life span of about 20 years. While they winter in the Caribbean and Central and South America, they return year after year to the place of their birth, and so the cycle continues with a new babies each spring.

We are lucky to have such beautiful creatures in our midst. They are graceful and skillful hunters, catching fish every fourth attempt. Watching their comings and goings is pure delight! (Jeff Hampton, “Ospreys nesting on new aluminum platforms along Wright Memorial Bridge,” The Virginian-Pilot, May 3, 2018, p. 3)

 

Upcoming Seminars

Distribution of This Newsletter

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