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

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

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

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

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

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

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

Ask Kit Kat: New to the Zoo

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

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

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

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

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

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

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

Ask Kit Kat: Counting Squirrels

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

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

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

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

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

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

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

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

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

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

Ask Kit Kat: Lone Wolf

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

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

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

We often hear from family members who are unhappy with the terms of a loved one’s current Will. The issue is often laced with problematic family dynamics where multiple people claim undue influence or lack of capacity. This intricate web of issues can lead to expensive litigation.

As an attorney, the most important factor when creating a Will for a client is obtaining their goals and objectives. There are a number of reasons why dispositions under a Will may treat one or more persons more favorably than another, and there may be a number of reasons why one or more persons are disinherited. The reasons are personal to each family and at the end of the day, it is for the client to determine.

The unfortunate part of an attorney’s role is that we are unable to monitor the client’s daily interactions. As a result, while we can assess whether a client has testamentary capacity to create the will, we often will lack knowledge regarding the conversations the client has had with various family members so as to determine the degree of undue influence such persons may have over the client. While we try to uncover such influences, the conversations outside the attorney’s office are unknown and therefore claims of undue influence are prevalent.

In some cases, in particular cases of undue influence, litigation is appropriate. The issue, however, is the timing of such a claim. Since a will operates at the time of someone’s death, the will is revocable by the maker, and the contest of a will cannot be brought until the maker of the will has died. Any attempt to impeach a will prior to death would be barred by the court.

Ask Kit Kat: Motivating Your Dog

Hook Law Center: Kit Kat, what can you tell us about the best way to train your dog? What do the experts say?

Kit Kat: Well, the experts have chimed in, and it’s good to know that good old common sense is alive and well. By that, I mean, what the average person would probably guess is the best motivator for training one’s dog is true—it’s food! But now it’s based on research. According to the American Kennel Club, “Using treats during training is the best way to guarantee that your dog will repeat the behavior you want.” Other methods can work—like spending time with your dog or talking to him/her in soothing tones–but none works faster than food. Erica Feuerbacher, an assistant professor in the Department of Animal and Poultry Science at Virginia Tech, echoes this statement when she says, “They’ll work harder and respond faster for food than social interaction.”

This finding should not be a surprise. Would you as a human keep toiling away at your job if you weren’t paid? The same thing applies to dogs. Food is their payment for doing what you ask of them. Other findings by Dr. Feuerbacher reveal that praising a dog is no better than ignoring them. They stay beside you for the same amount of time in both situations.

So, it appears that food is a strong motivator for training dogs. Fear is also a motivator, but that has negative, and potentially long-lasting side effects. Dr. Feuerbacher also says that, if you find your dog doesn’t respond to a food treat, it may be that your dog is overfed. If you are going to use food as a training tool, make sure you figure in those calories in his/her daily diet. Also, she says, vary the type of treat. Just like humans, they appreciate variety. “Break out the spray cheese or liverwurst—people may need to be creative.”

Good luck—dog lovers! You now have a proven way to make your companion happy and responsive to your requests! (Linda Lombardi, “Food rewards: Way to a dog’s heart IS through its stomach,” The Virginian-Pilot (Daily Break), Oct. 3, 2019, p. 11)

A recent study by the Associated Press NORC Center for Public Affairs research found that almost 40% of Americans feel confident in their retirement savings. This appears to be a positive statistic given that 10,000 Americans reach 65, traditional retirement age, every day. However, some experts argue that the confidence may be faulty, or, may have an overall negative impact, because it may result in people being less disciplined in planning for retirement.

While almost every working American plans to retire, very few have actually considered what retirement looks like, both financially and psychologically. The freedom to go where one wants at their leisure, without having to check in with an employer, seems liberating. However, for adults who have spent their entire lives getting up and going to work every day, retirement leaves them with a tremendous amount of free time. Gradually, that free time is filled with something other than work. Hobbies such as travel, gardening, painting, photography, etc. will eventually fill up all that spare time. Yet, many fail to budget for the fact that those all have a cost. So, while many believe they will expend less in retirement than they did during working years, the reality is that spending often doesn’t decrease in retirement.

In addition, very few retirees will have guaranteed income in retirement, other than Social Security. In 2019, the average Social Security Retirement check is only $1,461. Average household spending in retirement is approximately $3,900 a month which leaves a deficit of $2,439 per month or $29,268 per year. The factors which affect how long a person lives in retirement vary greatly based on gender, age at retirement, longevity, and overall health; however, 20 years in retirement is a reasonable assumption. Based on a shortfall of $29,268 per year, a minimum of $585,360 would be needed.

In addition to a shortfall based on average spending, there are other factors which affect retirement savings. An active lifestyle will result in an increased deficit. In addition, market conditions will have a major impact on savings. However, nothing will affect retirement savings more than a need for long-term health care. Someone who has reached age 65 has a 70% chance of needing long-term care. On average, women need approximately 3.7 years of long-term care, while men average 2.2 years. The national average cost of nursing care in a semi-private room is $88,348. For a couple who both need long-term care, this would result in a need for an additional $521,253 bringing the need to fund retirement and long-term care to a total of $1,106,613.

Therefore, in today’s dollars, the average retired couple will need over $1 million to retire. However, a 2017 Government Accounting Office study showed that Americans between the age of 55 and 64 only have around $107,000 in retirement. For those who are close to retirement and who haven’t amassed a million or more in savings, there are still planning options available. Long- term care insurance may be an option to ensure payment of a long-term care stay. For some, a part- time job is the answer to monthly shortfalls. For others, a simple investment review and account rebalancing may be the answer.

So, while 40% of Americans feel confident in their retirement savings, the reality is much different. Saving for retirement requires advanced planning and discipline; however, with advanced thinking, planning for a comfortable retirement is achievable.

Ask Kit Kat: Rescuing Wildlife Babies

Hook Law Center: Kit Kat, what can you tell us about how rehabbers rescue and care for wildlife babies, so that they can eventually return to the wild?

Kit Kat: Well, the people who care for these little critters are indeed miracle workers. They tend to all sorts of wildlife—like baby badgers, bobcat kittens, and gray fox kits—but not in such a way that these babies lose their wild instincts. For example, The Fund for Animals Wildlife Center in Ramona, CA trains their staff to avoid imprinting. That is when wild animals become accustomed to humans which prevents their successful return to the wild. So staff follow strict routines, so that the babies do not associate humans with comfort. Talking to the babies is limited, and they try not to cuddle them too much during exams with the vet. In the case of a baby badger, they supplied his enclosure with dirt and branches—things he would need to build a den. They also buried some of his food, so he’d have to learn to dig for it.

Most sanctuaries can house certain animals long-term, but as much as possible, they try to return them to the wild. Especially in the case of bobcats and coyotes, which are difficult to maintain in enclosures as adults, they try very hard to help the animals maintain their wild instincts. Staff want them to be wary of people when they are released, because most people who would see such an animal approaching them, would be scared and possibly harm the animal, as a precaution.

It is wonderful that sanctuaries exist. Those operated by Humane Society of the US affiliates are the one in CA mentioned above, one in Oakland, OR, one in Murchison, TX, and one in Ft. Lauderdale, FL. We owe them our sincere thanks! (Kelly L. Williams, “Hands-off Help,” All Animals, Sept/Oct 2019, p. 13)

According to the National Endowment for Financial Education, financial education efforts aim to provide financial information to help people “take control of their circumstances, improve their quality of life, and ensure a more stable future for themselves and their family.”[i]  Financial psychology uses a variety of techniques designed to facilitate “emotional activation” to help clients make better choices.  Emotion activation involves eliciting either a positive or negative emotion through the use of outside stimulation.  Which approach do you think has a greater impact on financial behavior? Education or Psychology?

A study published by the Journal of Financial Planning[ii] sought to answer that question by studying the effects of both approaches on an individual’s savings behavior.  Participants in the study were divided into two different sessions: (1) a session that employed traditional instruction in personal finance; and (2) a session that used financial therapy methods and a personal nostalgic item to maximize emotional engagement. In the first session, known as the financial education session, the participants were shown a power point presentation on the financial planning process, statistics regarding the unpreparedness of American households to fund retirement, the time value of money, healthy savings goals, and the different savings vehicles.  In the second session, known as the sentimental savings session, participants were asked to bring a sentimental item or a photograph of one, and participated in exercises designed to help them recall how and where they received their sentimental item, identify the feelings and values attached to their sentimental item, identify their top savings goals, and identify how similar feelings and values linked to the sentimental item can be applied to enhance their motivation to save.  Savings behaviors were measured prior to the sessions and at a three-week follow-up.

Probably not surprisingly, the study found that participants in the sentimental savings session reported significantly greater improvements in their financial behaviors three weeks following the session.  While participants in the financial education session reported a 22 percent increase in their savings rate, participants in the sentimental savings session reported a 73 percent increase.  These findings make a strong case for the role of emotionality (specifically sentimentality) in savings behavior.  “Logical awareness of the advantages of saving and ways to do so effectively clearly play a role, but providing opportunities for people to access and experience the emotional advantages of saving seems to motivate behavior much more profoundly.”[iii]

If you have a strong desire to change your financial behaviors, perhaps choosing a financial professional who embraces financial psychology would be a wise move.  In conversations with these professionals, be prepared to describe your financial planning goals in significant visual detail.  Instead of talking about “retirement” as your goal, be ready to answer questions like, “How old do you see yourself being?” “Where do you picture yourself living?” “Who are you with?” “What do you see yourself doing?” “How does it feel?”[iv]  Healthier financial decision making will take some additional work, but it would appear to be worth your while.

[i]See nefe.org/about.

[ii] Klontz, Bradley T., Faith Zabek, Colby Taylor, Alexander Bivens, Edward Horwitz, Paul T. Klontz, Derek Tharp, and Meghaan Lurtz. 2019. “The Sentimental Savings Study: Using Financial Psychology to Increase Personal Savings” Journal of Financial Planning 32 (10): 44-55.

[iii]Id. at 53.

[iv]Id. at 54.

Ask Kit Kat: Fighting Dogs Redeemed

Hook Law Center: Kit Kat, what can you tell us about dogs rescued from Michael Vick’s dogfighting operation and how they are faring today?

Kit Kat: Well, this is a tremendous story with a happy ending. 47 pit bulls were rescued 12 years ago when NFL quarterback Michael Vick’s fighting/betting operation was discovered in Suffolk, Virginia. I’m sad to say, but that is one town over from where I live in Chesapeake, VA. Nevertheless, tremendous good has come from this tragedy. Previously, fighting dogs would have been euthanized when they’d be discovered as adults. But this time, it was different. Animal welfare experts decided to try an experiment, and see if dogs brutalized by being made to fight, could transition to normal lives. The experts were astounded when they realized, such dogs could transition successfully to normal living arrangements. Animal welfare has been profoundly altered as a result. Now when a fighting group is discovered, the dogs are evaluated individually to determine their suitability for home placement. Frank Battista of Best Friends Animal Sanctuary says, “While Michael Vick was a deplorable person in a lot of ways, the fact that he was the one that got caught was a really big boom for this whole topic and for these animals. It just catapulted it into the public eye.”

The Washington Post looked into how each of the 47 dogs recovered from Vick were doing today. They found they were spread across a large geographic area ranging from Rhode Island to California. Some of the dogs are still struggling with trauma, but they were either living in homes or in sanctuaries or are deceased. Best Friends Sanctuary in Kanab, Utah took 22 of the most difficult cases. Each of the dogs were given a name to begin the humanizing process. A few will be described. Layla, who died in June of this year, lived with a family successfully, but when she ate, she had to have her collar removed, because the clanging of her tag on the food bowl, brought back bad memories. Shadow, also placed with a family, is a loving companion, but he is terrified of ladders. His family doesn’t think he ever did actual fighting, but he associates the ladder where fighting did occur on the 2^nd floor of a shed. A ladder was the way up to the 2^nd floor.

Today’s Vick’s property in Suffolk is a sanctuary for chained and penned dogs. It is called “Dogs Deserve Better.” The sheds from past dog-fighting days are preserved, and there are trees planted for each dog that was rescued. It is a peaceful place that attests to the resiliency of all beings, both large and small. (Emily Giambalvo, “A second chance,” The Washington Post, Sept. 18, 2019)

Check your mailbox because you might have a check waiting for you from the State of Virginia. Now through October 15, 2019, tax relief refunds are being sent out to eligible taxpayers. This Virginia refund is the state legislation’s response to the Federal Tax Cuts and Jobs Act that was passed in December 2017. (See our previous publication on the TCJA for more information pertaining to significant individual income tax law changes.) Eligible taxpayers can receive refunds up to $110 for a single taxpayer and $220 for married couples filing joint.

To determine if you are eligible for the refund you must have filed a 2018 Virginia income tax return by July 1, 2019 and had a Virginia tax liability. If you filed a resident Virginia income tax return, Form 760, the tax liability is reported on line 19 Net Amount of Tax. The amount of your refund may be reduced by any credits that you received. Credits can include the Virginia Earned Income Credit, or credits for tax paid to other states.

If you did not receive your refund by October 15^th and you believe that you are eligible for it, contact the Virginia Department of Taxation at 804-367-8031 for more information pertaining to your account. Please keep in mind that any tax refund, including this one, can be withheld to payback your outstanding tax liability including debts to the IRS, local governments, courts, or state agencies.

Ask Kit Kat: Rescued Tiger

Hook Law Center: Kit Kat, what can you tell us about a tiger rescued in Texas from an abusive situation?

Kit Kat: Well, this is a sad tale, which has a happy ending. Loki, as he is now known, was found in Houston, Texas in February 2019 in an unlocked cage in an abandoned house. Someone looking for a quiet place to smoke marijuana just happened to stumble upon him. Fortunately, the person was not hurt, but the situation could have ended badly had it been a tiger, other than Loki, who is very gentle. Statistics show that, since 1990, 24 people have been killed and almost 300 injured, by exotic pets which were not properly housed. According to Debbie Leahy, Humane Society of the United States (HSUS) captive wildlife manager, “These are incredibly dangerous animals, and when people keep them in flimsy backyard cages—or in the case of the Houston tiger, in a flimsy cage inside an abandoned home—it poses a significant danger to the community.”

Exotic pets, unfortunately, are so cute when small, and many are bred for photo shoots and traveling zoos. Once they grow beyond the cute stage, they are then likely to end up in inappropriate situations such as Loki did. Also, those taken from their mothers too early, can have problems in socialization. If the tigers do not have proper living quarters, problems can develop with their foot pads from standing on concrete for long periods. Improper diet can cause bone disease, and even limb deformities.

Loki has found himself to be in quite a nice situation now, however. He will live out the rest of his life at the Cleveland Amory Black Beauty Ranch, run by a HSUS-affiliate in Murchison, Texas. He has a large pen and has access to trees, pools of water, and other natural vegetation. His former owner has been charged with animal cruelty, and he lost his rights to Loki. Efforts are underway to protect future abuse of large animals via the proposed federal Big Cat Public Safety Act (H.R.1380). It was reintroduced in February and would prohibit individuals and unqualified exhibitors from breeding and possessing big cat species. Thank goodness there are organizations like HSUS which work to protect animals who cannot protect themselves. (“The tiger next door,” All Animals, Sept/Oct 2019, p. 8-9)

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.

Ask Kit Kat: Squirrels & Bird Cues

Hook Law Center: Kit Kat, what can you tell us about squirrels and how they listen to bird chatter?

Kit Kat: This is such an interesting subject! Squirrels regularly perch outside my kitchen window, and I see them all the time, with their tails in constant, irregular motion. It’s almost as if they are being shocked by some invisible source. Anyway, scientists at Oberlin College in Ohio took an interest in them, and wanted to examine whether or not their behavior could be influenced by certain sounds. Keith A. Tarvin, a biologist at Oberlin, and his students decided to find out in a formal study. Dr. Tarvin says, “I’ve been interested in alarm calls for a while. Even some lizards that don’t make their own vocal sounds eavesdrop on some other animals like birds.”

Their experiment led to classifying squirrels’ behavior as having 6 types foraging, preening, resting, standing, freezing, and fleeing. The latter 3 types—standing, freezing, and fleeing– were subcategorized as vigilance states. By using devices they had designed for the experiment, they played a menu of different recordings at one bird feeder over different times of day. One selection was of a screeching hawk followed by bird chatter, another of a hawk screeching with no bird chatter afterward, one with just bird chatter, and one with background noise but having no bird chatter. The experiment took place in winter when leaves could not obscure the observer’s view over the course of a couple of years.

Results of the data collected reveal some fascinating insights into how squirrels respond to sounds around them. They definitely are more relaxed when not hearing the sound of a screeching hawk, but they relax the most when birds are doing their normal chatter. There is a calming effect to the bird chatter. Other background noises just can’t compete with that of birds. Dr. Tarvin and his assistants conclude that this lends support to the idea that squirrels are smart and clever, but also that bird chatter may be one type of the “public information networks that exist in ecological communities.” How man-made sounds may affect this communication highway is not yet understood. Further study will be needed to shed light on that topic. (James Gorman, “Squirrels Relax When They Hear Birds Relaxing,” (the New York Times (Trilobites), Sept. 4, 2019)

When you execute an estate plan, chances are you’re enthusiastic about how well your plan is going to work for you and relieved to have what is often an unpleasant task out of the way.  Once you get home, you may place the estate planning portfolio in your safe or a safe deposit box at the bank, so that the documents are accessible and won’t be inadvertently destroyed.  Unfortunately, that is often the last time that most people give serious thought to their estate plan.  While most people may not need to update their estate plan every year or even every two or three years, it is important that you review your plan on a regular basis to make sure that it does not need to be changed or updated.

There are many factors that can cause someone to need to update their estate planning documents.  For example, if you have children, you will need to change your will to appoint a guardian who would care for your child if you and your spouse were to pass away. If you go through a divorce or separation, you will obviously need to change your estate plan to protect your assets from your ex-spouse. If you are older and have grandchildren, you may want to update your plan to include your grandchildren (or even great-grandchildren).

Surprisingly, many of our older clients come to us with estate plans that they executed twenty or more years ago when their children were little.  When they come to us, often their children are not only grown, but have children of their own.  If these clients have a will appointing guardians for their children, their estate plan is not only out-of-date but includes unnecessary provisions.  This framework will no longer work to accomplish the goals and serve the needs of our clients.

Aside from inheritance issues, which can usually be fixed with a simple change to an already established estate plan, some estate plans may need to be reworked entirely.  If you made your estate plan when you were younger, chances are you were not concerned about qualifying for Medicaid or veterans’ benefits.  However, if you are retired or approaching the age of retirement, you may want to consider an irrevocable trust in order to protect your assets from a Medicaid spend-down.  This type of estate plan is much more complex than having a simple will, which is the most common type of estate plan, and requires a reworking of the way your assets are titled as well as a change to almost all of your estate planning documents. 

Additionally, if you signed your estate planning documents in the 1990s, you may have a trust that was drafted with the goal of allowing your estate to avoid estate tax. In the 1990s, the estate tax exemption was $600,000. That means that anyone with an estate worth $600,000 or more would have an estate subject to estate taxes. Many attorneys crafted unique estate plans and complex trusts to allow their clients’ estates to avoid having to pay estate taxes. However, in 2019, the estate tax exclusion is $11.4 million per individual and $22.8 million per married couple. This means that a great number of people currently do not have to plan for the avoidance of estate tax, because they do not have what is called a taxable estate. For people who had complex trusts drafted to avoid estate taxes, their estate plan is likely much too complicated for what they currently need. These documents should be updated to reflect the current law.

The final reason that an estate plan would need to be updated is if there is a major change in the law that would change the way certain documents operate.   For example, in 2010, Virginia passed the Uniform Power of Attorney Act. This act created a new format for durable powers of attorney that was designed to make these documents more readily acceptable by financial institutions.  If it has been a few years since you executed your estate plan, it is important to verify that there have been no changes in the law that would warrant a change to your estate plan.

While some changes, such as death and divorce, make it obvious that your estate plan needs to be updated, there are other issues, such as changes in the law, of which you might not be aware. Having an estate plan that is outdated or no longer accomplishes your goals can be almost as bad as not having an estate plan at all. For these reasons, it is important to contact your estate planning attorney on an annual basis to make sure that your plan is still working the way you wanted it to and that no changes need to be made.

Ask Kit Kat: Bahamas’ Heroine

Hook Law Center: Kit Kat, what can you tell us about the woman from the Bahamas who rescued 97 dogs during Hurricane Dorian?

Kit Kat: Well, this truly is a remarkable story. While it was not an unusually large house, she managed to cram 79 of them in her master bedroom. The rest were in other areas of her house. She had a few dog crates donated by neighbors for those who were really scared or sick and needed to be left alone. Her name is Chella Phillips. She had help from her brother. He slept only an hour during the worst of the storm, and Chella didn’t sleep at all.

During the initial parts of the storm while she still had electricity, she played music, had the TV on, as well as air conditioning. Eventually, she, too, lost power. Her house, which was already a refuge for stray dogs before the hurricane, started to flood. Attempting to keep the house and the dogs dry was quite an effort! While she still had power, she communicated with people through Facebook. Her concern was always for the dogs, “I pray for the other islands who have unimaginable damages and I don’t see how any dogs or any living being could have survived outside. My heart goes out to them.”

Ms. Phillips operates a shelter in Nassau, Bahamas called “The Voiceless Dogs of Nassau, Bahamas.” In August, long before there was any knowledge of Dorian, she had raised $63,000 for her shelter. This surpassed her original goal of $20,000. She has taken in close to 1,000 dogs since its opening. She is truly a heroine in every sense of the word! (Hannah Natanson, “This woman took 97 rescue dogs into her Bahamas home to protect them from Hurricane Dorian,” The Washington Post, Sep.3, 2019)

Much has been written and contemplated about the care that an individual needs to age successfully, and even more has been written on how to pay for the care for chronic illness which is often needed as one ages. However, not much thought has been given about who will provide care. Our country is aging at a rapid rate. 10,000 baby boomers reach the age of 65 each day and, by the year 2035, it is projected that the number of individuals over the age of 65 will outnumber the number of individuals under the age of 18. In the year 2020, there will be 3.5 working adults for every person over the age of 65 but, by the year 2060, that number falls to 2.5 working adults for every person over the age of 65.

The result of this is that it is likely going to be difficult, if not impossible, to find enough elder care workers. Many who are tasked with finding appropriate care for loved ones find it difficult to find, and keep, good care providers. The job of aiding an older adult with their care needs can be both physically challenging as well as mentally exhausting. Care activities include tasks from shopping and meal preparation to medication monitoring to housekeeping to aiding with physical activities such as bathing. Not only can the job of caregiving be taxing, it is often low-paying.

Low-paying difficult jobs result in caregivers who begin the job and then leave to find other work, or caregivers who will leave agencies for small increases in pay or benefits. For individuals who choose to hire caregivers privately, the same issues apply without a backup. This means that, when a caregiver calls in sick, there isn’t an agency who can send a replacement for the day.

The challenges with locating and managing care providers can, in turn, become burdensome on family members and friends who have chosen to accept the responsibility to organize care. Much in the same way parents are often left in a lurch when a child is sick and cannot attend school or daycare, loved ones coordinating care cannot simply leave an aging person with chronic illness at home alone. However, unlike a small child with an illness, an older adult with a chronic illness is not portable and cannot easily be passed from one family or friend’s home to another. 

The challenges with caregiving and coordinating care exist today and result in lost work time, lost vacation time, lost contributions to retirement plans, and in some cases, lost promotions and lower pay. With the trend of reduction in the number of able bodied care providers as well as the increase in the number of individuals needing care, the effect on a working adult coordinating care of a loved one will be significantly greater.

In years (and generations) past, many individuals did not live into old age as we do now. Or, for those lucky enough to reach old age, they did not suffer the same chronic illnesses we live with today. In cases where care for chronic illness was needed, often a family member was not working and was able to be a care provider. Today, life expectancies are greater than ever. In addition, household demographics (and thus cost of living) have changed drastically. In 1960, less than 50% of households had both spouses working, yet in 2010, more than 65% of households had dual incomes. Therefore, the cost of living has increased along with household income. This means that the loss of income which may result from providing care could be disastrous financially.

How exactly the care crisis will play out in terms of finding available paid caregivers remains to be seen. Even more challenging will be determining how the potential inability to find paid caregivers will affect the economy and the workforce. What does seem clear is that finding caregivers for an aging population may be just as challenging as finding a method to pay.

Ask Kit Kat: Donkey on an Island

Hook Law Center: Kit Kat, what can you tell us about a donkey that was stranded on an island in California for 2 years before being rescued?

Kit Kat: Well, this is an interesting tale. The donkey’s name is Hillary, and she has a lovely grey coat. She is considered wild, and she got stuck on some high ground in Mariposa County, CA about 2 years ago. At that time, there was severe drought, and the lake bed was completely dry. Near the middle of the lake was some high ground. When heavy rains filled up the lake bed, Hillary was left stranded in the area which now appeared to be an island. Somehow others in her herd got to higher ground before this happened. She stayed there for 2 entire years! People in the area brought her hay and other food on a regular basis, but they were stumped on how to rescue her. Being wild, she was not exactly cooperative.

Finally, the Department of Fish and Wildlife decided to intervene. At first, they tried using a large cage with watermelon as an enticement. Hillary didn’t even go near the cage, and geese finished off the watermelon. They finally decided that she’d have to be tranquilized by darts in order to transport her. This was successful. She was not reunited with her herd, because they discovered that she had a leg injury. Because they feared her herd would reject her after such a long absence, she has been sent to a wildlife sanctuary. She is quarantined for now, as they begin to evaluate and treat her. Eventually, she will be introduced to a herd at the sanctuary who have special needs. It likely that she will stay there for the rest of her life.

Hillary is one lucky lady, and we wish her the best! (Hilary Hanson, “Hillary The Donkey Finally Rescued After 2 Years Stranded Alone On Island,” The Huffington Post, August 26, 2019)