Internal Revenue Service (“IRS”) Form 8379 Injured Spouse Allocation is a form that can be submitted with the jointly filed individual tax return when it is anticipated that the refund will be used to offset past-due obligations of the other spouse. By filing this form, the injured spouse (non- debtor spouse) is requesting the IRS to not have his/her share of the refund applied to the other spouse’s debt obligation.

When married couples file a joint individual tax return, under the principle law of joint and several liability, both the taxpayer and spouse are held responsible for the tax liability and certain debts. Some examples of debts susceptible to being seized by the IRS are:

• Federal income taxes
• State income taxes
• Unpaid child support
• Delinquent student loan debt
• Unpaid spousal support
• State unemployment compensation

This form can be filed with the tax return or filed separately. If Form 8379 is filed separately, it is important to remember to attach a copy of all Forms W-2 and 1099’s that report Federal withholding. If not attached this can result in delays for the IRS to process the form.

The due date for filing Form 8379 is three years from the due date of the original tax return (April 15^th) or two years from the date the tax refund was applied to the debt obligation. This form must also be filed each year the non-debtor spouse is requesting relief.

If you have any questions regarding this information or belief that you may be entitled to an injured spouse allocation, please contact our office at 757-399-7506 to further discuss your situation.

Ask Kit Kat: Forward Food Team

Hook Law Center: Kit Kat, what is the Forward Food Team, and how does it help animals?

Kit Kat: Well, the Forward Food Team is a project of the Humane Society of the United States (HSUS). It fosters training in preparing food which is meatless, yet tasty. A prime example is its partnership with the U.S. Military. A sweet potato and black bean burrito recipe created by the HSUS has been approved by the Department of Defense (DOD) to be served on military bases. This is a huge achievement for HSUS, because DOD has some very strict nutrition regulations. HSUS also has developed recipes for lasagna and tacos using a plant-based meat substitute. Soldiers are apparently enjoying the food. 90% have reacted positively to the menu changes. Stefanie Heath, a HSUS food and nutrition specialist, says, “As long as it tastes good, they’ll eat it.” In addition, military chefs are being trained in plant-based nutrition on several bases and at Fort Lee, an Army base in Virginia, which is an important culinary training center. Gradually, there will be more and more plant-based options on the menu.

HSUS’ Food Forward also partners with universities, K-12 school districts, hospitals, and other groups to include plant-based menu options. In all, 2000 chefs have been trained nationwide. That translates into 10.3 million animal lives saved. Kudos to HSUS to all the institutions who are willing to experiment with their menu options to provide tasty food which is at the same time animal-friendly. (Kelly L. Williams, “Meatless in the mess hall,” All Animals, March/April/May 2019, p. 11)

In a previous newsletter article, I mentioned that choosing the right Social Security claiming strategy could increase your retirement income by as much as 9%.  This article will discuss the simpler concept of just choosing when to start taking Social Security benefits.  The more complicated claiming strategies will be saved for a future article.

Most Americans know that they can begin taking Social Security benefits as early as age 62, however, nearly 40% of Social Security beneficiaries do not realize that if they claim benefits before their full retirement age, they will receive a permanent reduction in benefits.  Some beneficiaries believe that, if they take their benefit early at 62, the benefit will increase at full retirement age. This is not the case.

The first thing to know when making your decision is what your full retirement age is.  If you were born after 1960, your full retirement age is 67.  If you were born before 1960, you can find your full retirement age below:

The next thing you need to know is how much you lose by claiming benefits early and how much you gain by waiting until sometime after your full retirement age.  The reduction in benefit amount is equal to five-ninths of 1% for each of the 36 months immediately preceding your full retirement age, plus an additional five-twelfths of 1% for each month before that. The increase in benefit amount if you wait to claim benefits until after your full retirement age is two-thirds of 1% for each month you delay, up until age 70 when the benefit amount reaches its maximum.

While waiting to take benefits may seem like a no-brainer, you will also have to consider the fact that you will be missing years’ worth of benefits and calculate your “break-even point” – the age at which the sum of your higher benefits adds up to the amount you missed out on by claiming late.  If you expect to live after your break-even age, then you will be wise to delay taking benefits until your full retirement age as long as it is financially feasible for you to wait.

The following chart shows the reduction or increase in benefits compared with a full retirement age of 67, based on the age at which you claim benefits. It also shows the number of years you would need to receive benefits to break even, compared with claiming at age 62. It is based on the average monthly benefit of $1,404 at full retirement age.[1]

You can visit www.ssa.gov/myaccount/ to find out what your projected retirement benefits will be at your full retirement age, age 62 and age 70.  Based on your expected benefit at full retirement age, you can use the formulas described above to determine what your benefits will look like in the year you choose to claim benefits, and you can also calculate your break-even point.

Of course, determining when to begin taking Social Security benefits is just one piece of a very large and complex puzzle.  Every person has a unique situation affecting their retirement decisions, so general guidelines are meant to be just that – general.  We recommend that you consult with an advisor who can take a holistic look at your goals and resources to determine a retirement strategy and the Social Security claiming strategy that is right for you.

[1] https://www.fool.com/investing/2018/01/16/the-1-chart-you-need-to-decide-when-to-take-social.aspx

Ask Kit Kat: Pet Allergies

Hook Law Center: Kit Kat, what is the best way to handle pet allergies?

Kat Kat: Well, I suppose the simplest way is to not adopt a pet in the first place, if you know you have pet allergies. However, many people are not satisfied with that response, so they go ahead and deal with the allergy, rather than denying themselves the pleasure of a pet. Fortunately, there are degrees of being allergic to pets, so some with mild allergies can, with some precautions and medications, make it work. However, those with severe allergies should not probably not take the risk. If pet fur sends you into an asthma attack and to the emergency room, then perhaps you can satisfy your desire to interact with pets through volunteering in fundraisers for pets or by becoming a member of groups such as the US Humane Society or the ASPCA.

If you have decided to have a pet despite an allergy, Kenneth Mendez, chief executive of the nonprofit Asthma and Allergy Foundation of America (AAFA), recommends keeping “pets out of the bedroom, avoid carpets in the home, and use products certified as asthma and allergy friendly.” Olivia Lanes of Pittsburgh, PA is one such person who plunged ahead with pet ownership despite her allergy. She has 2 cats—Cupcake and Sophie, as well as a dog named Nova. She sneezes a lot and often has congestion, but she wouldn’t give up her pets for anything. Tracy Spiering has a 20-year old cat named Oatmeal Cookie, and 2 other cats. She requires bi-monthly shots to keep her allergies in check, but to her, giving her cats away is not an option. “It would be like giving away your kid.”

Even though some pets cause fewer allergic reactions than others, Mr. Mendez of the AAFA says there’s no such thing as a 100 % hypoallergenic animal. Another suggestion by an American Kennel Club spokesperson is to try out a pet by interacting with the specific pet for a few times to see if they cause an allergic reaction. Ashok Wahi of Basking Ridge, NJ has developed a non-prescription gel called NasalGuard which sells for $14.85. It can be applied to the nasal passages, and helps reduce allergic reactions. He should know. He developed it for his daughter, so she could keep her cat Ebony.

In summary, the decision to proceed with pet ownership despite an allergy is an individual one. Don’t feel guilty if you decide it just won’t work for you. There are other ways to support animal welfare. (Khadeeja Saafdar, “My Cat Allergy Is Killing Me, but Cupcake Stays,” The Wall Street Journal, March 28, 2019)

In December 2014, the Achieving Better Life Experience Act (ABLE) was signed into law, allowing persons with a disability onset prior to age 26 to establish tax-advantaged savings accounts. ABLE was designed to promote the health, independence, and quality of life of individuals with disabilities by allowing families to fund an account in which such an individual can secure funding for disability-related expenses. Similar to a special needs trust, the individual with the disability will have a beneficial interest, and the purpose is to supplement and not supplant other benefits. A qualified disability expense is defined as “any expenses related to the eligible individual’s blindness or disability which are made for the benefit of an eligible individual who is the designated beneficiary, including the following expenses: education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, funeral and burial expenses, and other expenses, which are approved by the Secretary .” While the treatment of ABLE accounts for the Social Security and Medicaid programs was established with the promulgation of ABLE, other means-tested benefits programs needed to clarify how they would treat ABLE accounts.

Many people with disabilities rely on assistance received through the U.S. Department of Housing and Urban Development (HUD) for housing. This assistance is most frequently received through public housing or rental assistance programs. As a general rule, eligibility is based on annual gross income, with established income limits based on area and family size. The individual receiving housing assistance will be responsible for rent, which is set at the highest of 30% of the monthly adjusted income, 10% of monthly gross income, welfare rent, or a $25-$50 minimum rent set by HUD. In calculating a household’s income, HUD will impute income to assets at the higher of actual income or calculate income from the asset based on the passbook savings rate, which is currently .06%.

HUD recently released guidance for the treatment of ABLE accounts for HUD assistance programs, clarifying that HUD will disregard amounts held in an ABLE accounts. In doing so, HUD states that under ABLE legislation, the account balance is specifically disregarded when determining an individual’s eligibility for federal means-tested programs, and that ABLE exclusion applies to HUD programs in determining a family’s income. As a result, the balance of an ABLE account will be excluded in the household’s assets, and there will be no actual or imputed income to such an account. Further, distributions from the ABLE account will not be treated as income. This favorable treatment is, however, not without limitations since HUD will continue to treat all wage income received as income, regardless of whether the income is paid into an ABLE account.

Ask Kit Kat: Tail-Tied Squirrels

Hook Law Center: Kit Kat, what can you tell us about the baby squirrels who got their tails tied together when they were in their nest?

Kit Kat: Well, this is almost unbelievable, but it really did happen. The squirrels in question were 5 baby Eastern gray squirrels. Their nest or drey was inside a tree in Milwaukee, Wisconsin. In the confined space of the nest, and with the fine hair of the babies’ tails coupled with the grasses the mother squirrel had used to line the nest, the babies’ tails became a gnarled mess. Someone rescued them and brought them into the Wisconsin Humane Society. Scott Diehl, Wildlife Director, was charged with untangling them. They resembled a star with 5 points that were pulling in all different directions. They were quite agitated, as one might expect. They had to be sedated using a tiny amount of ketamine and xylazine. Once that was done, he placed them on a heating pad. Then he set to the task of untangling them using a tiny, sharp-pointed scissors. In about 20 minutes, he got the job done. He said, “It was like untangling a ball of Christmas lights.” Because the tips of the tails had been deprived of circulation, 3 of the little ones lost a portion of their tails.

In another state (Nebraska), a similar situation played out. This time there were 6 tangled baby squirrels. Laura Stastny, Executive Director of Nebraska Wildlife Rehab, worked by herself. It was night, and she could not locate a veterinarian to do the sedation, so she wrapped them in a towel to keep movement to a minimum. She said, “I had them wrapped like a squirrel burrito.” It took her 90 minutes. 5 of the 6 squirrels ended up losing part of their tails, too. But, that’s not really a problem—tails are not essential.

Somehow, both stories got publicity through the Associated Press, and news of their feats even reached Europe! The important thing is that the tiny babies were relieved of their suffering. As Scott Diehl said, “For us, it all goes back to our mission. The mission of the Wisconsin Humane Society is to build a community that values animals and treats them with respect and kindness.” (John Kelly, “What do you do when five baby squirrels accidentally tie their tails together?” The Washington Post (Local Perspective), April 17, 2019)

When a parent or loved one is diagnosed with dementia, the diagnosis is devastating not only for the person who has dementia, but also for their friends and family. Because many types of dementia are degenerative, meaning they will continue to worsen with time, a dementia diagnosis often changes the landscape of family relationships. While Dad may have always handled the finances, if he is diagnosed with Alzheimer’s disease and Mom is unable to learn how to manage their money, a child or other caregiver may need to step in and begin handling these things for them. Or if Mom has always loved to drive to her monthly hairdresser appointments and weekly grocery store trips but suddenly finds herself getting lost on the two-mile drive there, it may be time for her to stop driving. How can you tell whether a loved one is suffering from dementia in the first place, and what can you do to help someone who is suffering from the early stages of this disease?

If you suspect that your loved one may suffer from dementia, the first step is to take them to the doctor to get that diagnosis confirmed. The doctor can help develop a treatment plan based on your loved one’s specific medical diagnosis, and having a specifically tailored plan can often slow the progression of the disease. This diagnosis, although difficult to hear, may also help your loved one realize that they need help (at least in the beginning stages of the disease). Although Mom may seem perfectly capable of handling her finances, research has shown that the judgment needed to make financial decisions is impaired even during the early stages of dementia. Even if Mom looks and feels fine and is acting relatively normal, her state of impaired judgment may not allow her to see that something is a scam. Something that she would have easily recognized as a rip-off before her diagnosis may now seem like a good idea to her. Armed with the knowledge of her diagnosis, Mom and her family members will be better equipped to handle these types of situations.

Not only can this impaired judgment make someone vulnerable to abuse from outside parties, but it can also make it easier for unscrupulous family members to prey upon those with dementia. If Dad needs help writing checks and a dishonest family member offers to “take care” of everything for him, Dad might agree to that in a moment of weakness. The same is true of personal decisions, such as whether to move into a nursing home or with another family member. Often these types of situations result in an abuse of power and financial exploitation or elder abuse by family members. Although it is illegal, cases of financial exploitation can be extremely difficult to prosecute. In fact, thousands of cases of financial exploitation of seniors each year go unreported or are not investigated. For these reasons, it is important to make sure that your parent has a strong estate plan in place that is designed to prevent issues from arising when he/she no longer has the capacity to make his/her own decisions.

It is vital that this step be taken as soon as possible – if you wait until your loved one no longer has the capacity to sign legal documents, it may become necessary for a judge to appoint a guardian and conservator to make those decisions for them. When someone does not have a power of attorney, anyone can petition a judge to be appointed conservator for them, so they can manage their finances. In contrast, a financial power of attorney allows you to decide who will make financial decisions for you, and it can also set the stage for Medicaid planning in the future if that becomes necessary. An experienced elder law attorney will draft a financial power of attorney that will give your agent the authority to rearrange your assets and manage them in a way that will allow you to qualify for Medicaid in the future if you need that benefit to cover the cost of long-term care.

Additionally, if someone does not have a healthcare power of attorney, anyone can petition a judge to become guardian over that person, so they can make their personal decisions for them. These decisions include whether they should live in a nursing home, what their course of medical treatment should be, and much more. Not only is this an expensive and public process, but the person the judge appoints  may not have been the same person that your loved one would have wanted managing his affairs, if he/she had been able to make that decision on his/her own. In contrast, an advance medical directive often includes a living will as well as a healthcare power of attorney. A living will allows you to state your wishes for end-of-life care. If you were in a terminal state with no hope of recovery, would you want to be kept alive artificially through a ventilator, respirator, or feeding tube? This document helps make your wishes clear to your doctors as well as your loved ones.

If a loved one has recently been diagnosed with dementia, it is important that they consult an experienced elder law attorney as soon as possible in order to get their affairs in order. Most people in the early stages of dementia have the capacity to sign legal documents, but that can change very quickly as the disease progresses. Do not wait until it is too late to have these important discussions with your loved ones.

Ask Kit Kat: Brave Canine

Hook Law Center: Kit Kat, what can you tell us about the dog in Thailand who ended up seeking refuge on an oil rig that is 135 miles from shore?

Kit Kat: Well, this truly is a remarkable story! Somehow a brown dog, resembling a hound to me, but which was identified as an aspin, a breed from the Philippines, ended up near an oil rig, which was 135 miles from the nearest shore off the southern coast of Thailand. No one is sure how he got there. He may have fallen off a ship; nonetheless, he made his way to an oil rig in the middle of the ocean. Fortunately, he was spotted by one of the workers, Vitisak Payalaw, because the water was extremely rough. At first, Payalaw tried extending a pole, but that really doesn’t work for a dog with only front paws to grip it. So, with the assistance of 3 others, a rope loop was devised after some discussion about what was the best way to proceed. The crew was ecstatic when the device worked. Payalaw said, “His eyes were so sad. He just kept looking up just like  he wanted to say, ‘Please help me.’ At that moment, whoever saw this, they would just have to help.” Once rescued, they fed him some water and meat. They also named him “Boonrod,” which means “he has done good karma and that helps him survive.”

On April 15, 2019, Boonrod was transported back to the mainland (Songkhla, Thailand) where he was examined by a veterinarian. He appears to be in good condition. He will stay in Thailand a while to regain his strength. Payalaw has volunteered to adopt him, if he is not claimed by anyone in the near future. This is one lucky dog, who never gave up trying! His story could have ended tragically, but perhaps he does have good karma and deserves to have a few more days on this earth. (Kyle Swenson, “ ‘His eyes were so sad’: Oil rig crew rescues a dog swimming 135 miles off Thailand,” The Washington Post, Morning Mix section, April 17, 2019)

A recent study from Rush University analyzed whether decreased awareness to scams was an early indicator of dementia.  The study included more than 900 seniors in their 70s and 80s and their ability to detect scams and fraud. Researchers then examined whether there was a link between susceptibility/awareness of scams and fraud to Alzheimer’s disease or other cognitive impairment. The seniors studied had no obvious signs of dementia or impairment at the outset.  Of those studied, more than 400 later were diagnosed with Alzheimer’s disease or cognitive impairment.

Science has determined that before symptoms of cognitive impairment become obvious, there are changes to the brain which seem to impact executive function.  Many have wondered if an impaired executive function (judgment and reasoning) leave a person open to scams and fraud, especially with the prevalence of Elder Abuse.  The study from Rush University appears to be the first to study a link between the two. Participants in the study who were later diagnosed with Alzheimer’s disease or cognitive impairment demonstrated a higher likelihood of being susceptible to scams or fraud prior to the diagnosis.

It is important to note that the study is not conclusive, and some people who were not diagnosed with dementia were unable to detect scams, and some with cognitive impairment were not victims.  Instead, the study demonstrated an increased possibility that someone unable to detect fraud or a scam may have an increased likelihood of later being diagnosed with a cognitive impairment. The study is both good and bad. Elder abuse is underreported in many cases due to concern by the older adult that he or she will be perceived as being impaired. However, many caregivers want to protect their older adult loved ones and want to prevent them from being victimized. Also, getting an early diagnosis and care for changing cognition may be beneficial in the long term with regard to the elder’s later functioning.

If you are concerned about being the victim of a scam or are concerned about a loved one falling victim, there are some resources available to assist. The Financial Industry Regulatory Authority (“FINRA”) has created a risk meter for individuals to determine their risk factors for investment fraud.  The questions range from whether you live alone to have you considered buying stocks in tech or start-up companies or which sell for less than $5 a share to have you attended an investment seminar with a free meal? Answers to these questions lead to a score on a scale from low to high along with a description of what makes an individual more likely to fall victim to scams.  Interestingly, age is not a factor on FINRA’s risk meter, but whether you live alone is something to be considered.

FINRA has also created a test to determine if you’ve been scammed and asks questions about where you learned about the activity and what sort of guarantees were provided. The results of the “scam meter” show red flags warning of scams and why they are red flags. In addition, FINRA provides additional resources about avoiding fraud and a hotline to help answer questions about investments and investment opportunities and to file complaints if they have been victimized.

Again, a lower than average ability to detect a scam or fraud is not a guarantee of a later diagnosis of dementia.  Instead, it can be an early warning sign which allows the individual and their loved ones to be vigilant and prepared.  The study from Rush University is also a good reminder of the prevalence of elder abuse, ways that seniors can protect themselves, and options for families and friends to keep loved ones safe from predators.

Ask Kit Kat: Canine Hero

Hook Law Center: Kit Kat, what can you tell us about the dog who became a hero saving his family?

Kit Kat: Well, this is truly a remarkable story. Zero, as the family named him after a ghost dog in Tim Burton’s “The Night Before Christmas,” proved himself to be a loyal and faithful family member. The Martinez family found Zero, a Great Pyrenees, on a Texas highway when he was only a month old. He was in terrible shape, and a veterinarian the family consulted recommended that he be put down. The family resisted, and they’re glad they did—he saved their lives by giving his own. Even before the incident in which he saved their lives, they had begun calling him—Zero the Hero—because of his attentive, calm personality.

Here’s what happened. Zero, by this time, was almost 3 years old. On March 10, 2019 the family was celebrating their daughter’s 12^th birthday with an outdoor cookout. There were more than a dozen children at the party. Then, a family friend pulled up in the driveway, and Laura Martinez had an uneasy feeling. Just the day before, she had confronted the young man, Javian Castaneda, about his possibly having broken into her house and having stolen cash and jewelry. An argument ensued, and Castaneda started shoving Laura and hitting her in the face. When one of Laura’s sons joined in the melee, Castaneda pulled out a gun. No one in the family was expecting that at all—Castaneda was one of the son’s friends and had even spent overnights at their house. He fired 9 times. The first shot hit the garage door. Then, Zero was hit, but Zero still managed to lunge at Castaneda. Another shot landed on one of Laura’s son’s foot. One hit Laura in the leg. Another hit Zero’s ear. Zero lunged again. The final shot hit Zero in the stomach. After all this, Castaneda fled the scene. He was arrested a few days later, and he is in jail with a $90,000 bond.

Unfortunately, Zero had to be put down. He was paralyzed, and such a large dog could not live like that. Zero earned his name that day. He truly was a hero. Laura said, “I can honestly tell you there’s no way we would be here without Zero. The reason all our wounds are below the waist is because every time Zero jumped… it kept (Castaneda) from being able to aim.” (Reis Thebault, “A family rescued a dog from certain death. Years later, he died saving their lives in a shooting.” The Washington Post, (Animals section), March 26, 2019)

Taxpayers must use one of five filing statuses when filing their individual tax return. Your filing status determines your income tax rate and the amount of your standard deduction. When selecting a filing status, you may qualify for more than one status. You will want to select the filing status that results in the lowest tax.

In the year of your spouse’s death, you can still file a joint tax return. It is your responsibility to file a final return for your deceased spouse. While you can’t file a joint return for a tax year after the year in which your spouse died, you can continue to use the joint return rates for two more years if you qualify as a “surviving spouse.” The joint return rates are more favorable than the single rates or the head-of-household rates. A surviving spouse also receives a larger standard deduction than a single taxpayer or head of household.

To qualify as a “surviving spouse,” you must meet all of these requirements:

• You have a child who qualifies as your “dependent” for the tax year.
• Your spouse died during one of the two years immediately preceding the tax year for which the return is being filed.
• The child lived with you for the entire year, except for temporary absences.
• You paid over half the cost of maintaining your home.
• You were eligible to file a joint return with your deceased spouse for the tax year of the death (even if you didn’t actually file jointly).
• You have not remarried before the end of the tax year for which the return is being filed.

If you do not meet the requirements for surviving spouse status and you do not have a qualifying dependent, than you will file as Single for the tax years after your spouse’s death.

Adjusting income tax withholding. As a result of your spouse’s death, you may be have to adjust the amount of income tax you have withheld or make quarterly estimated tax payments. To ensure that the correct amount of tax is withheld, you should check your withholding and, if necessary, submit a new Form W-4 with the revised information.

Remarriage. If you remarry, you won’t be able to file as a surviving spouse, but you’ll be able to file a joint return with your new spouse.

Ask Kit Kat: USDA and Cat Experiments

Hook Law Center: Kit Kat, what can you tell us about the USDA and their decision to end experiments using cats?

Kit Kat: Well, in my opinion, this decision was long overdue. The announcement was made on April 3, 2019. “The agency said cats will no longer be used as ‘part of any research protocol in any ARS (Agricultural Research Service) laboratory’ and the remaining cats in its labs are in the process of being adopted by USDA employees.” This is a huge victory for cats! As the White Coat Waste Project, an animal advocacy group, has revealed, cats used in research by the USDA were in some cases injected with parasites to learn of ways to control certain diseases like toxoplasmosis in both felines and humans. Afterwards, they were put to death once the research had been completed.  Though the goal was laudable, the means were not.

There were 14 cats remaining at USDA-ARS labs which had not been infected with parasites, and these will be adopted. It took advocacy by several animal rights organizations as well as by the US Congress to accomplish this result. It’s great to see advocacy that results in permanent change. The saying “You can make a difference,” is certainly true. (Hilary Hanson, “USDA Ends Deadly Cat Experiments, Plans to Adopt Out Remaining Cats,” The Huffington Post, April 2, 2019)

For those of us still in our working years, there are two things we are good at from a financial planning perspective: earning income and saving some of that income.  What we are not so good at as we head into our retirement years is figuring out how to turn all of that hard work and savings into an income stream that will help us live comfortably in our retirement years.  While we are working, we have a couple of things going for us. We are contributing to Social Security. Some of us (and our employers) are saving to an employer retirement plan. And some of us are saving over and above our employer retirement plans into personal savings and investments. Where many of us miss the boat is coming up with a plan to turn all that we had going for us during our working years into a secure retirement income.

Granted, there are many variables to contend with as we enter retirement. Where are we going to live? How long are we going to live? What is happening with the stock market? How high is inflation going to be? When should I begin taking Social Security? How on earth are we going to pay for health care? Fortunately, a secure retirement doesn’t necessarily require a crystal ball.  What most of us need is a financial plan that not only incorporates our income needs, contingent expenses, and legacy goals, but also addresses things like longevity, inflation, long-term care, and market risk. Being in a position to make informed decisions can improve your income dramatically. For example, just choosing the right Social Security claiming strategy can increase your retirement income by 9%.[1]  Social Security benefits can be claimed between the ages of 62 and 70, with credits provided for those who wait. Nearly one-half of Americans claim Social Security benefits at age 62, presumably because they haven’t been counseled otherwise. With the right advice and the ability to make an informed decision on when to take Social Security, you can maximize the benefits that you will receive over your lifetime.

Similarly, planning for a tax-efficient withdrawal of your assets can increase your income by an additional 3.2%. Instead of keeping the same asset allocation for both tax-deferred and taxable accounts, and withdrawing proportionately from each account during retirement, a better approach may be to spend down taxable accounts first and let the tax-deferred assets continue to grow.  Finally, instead of relying on the “4% rule” by taking 4% of your portfolio at retirement and increasing that amount by inflation in the following years, consider going through an annual process of determining the maximum withdrawal rate based on your asset allocation, time horizon and a desired probability of success. This “dynamic withdrawal strategy” could increase your retirement income by an additional 10%.

In summary, there are many important decisions to be made at retirement to turn savings into income that will last. A good financial advisor and/or financial plan will help you make informed decisions that will increase your income and improve your odds of financial success.

[1] https://www.forbes.com/sites/wadepfau/2016/05/05/the-value-of-sound-financial-decisions-from-alpha-to-gamma/#6aeaf2f655df

Ask Kit Kat: Baby Panda On the Way?

Hook Law Center: Kit Kat, what can you tell us about a baby panda watch at the National Zoo in Washington, D.C.?

Kit Kat: Well, we’ll keep your fingers crossed. Mei Xiang, a female panda at the National Zoo, was artificially inseminated on March 30, 2019. However, the zoo won’t know if the procedure was a success for 3-6 months. The zoo didn’t want to leave things to chance, because the window of fertility for a female panda is only 24-72 hours each year. Also, Mei Xiang is 21, and nearing the end of her reproductive life, perhaps. Zookeepers had been watching her hormone levels since about mid-March, because she had begun acting like she was ready to breed. She was restless, vocalizing more than normal, playing with water, and marking her scent around her pen—all typical for a female panda that was ready to mate. A male panda named Tian Tian, had also noticed. The two share a “howdy window,” which enables them to socialize, but still maintain their separate areas. He was very attentive, and didn’t want to lose sight of her. However, Mei Xiang didn’t respond to his advances in the way the zookeepers had hoped. Therefore, they took the matter into their own hands. They used his sperm, and they artificially inseminated her.

Now the wait begins. The zoo staff will periodically do ultrasounds, but that in itself is a  difficult feat on a panda. The fetus tends to be small and will only weigh about a pound at birth. Also, Mei Xiang has had false pregnancies in which she acts like she’s pregnant (nesting, eating less), but she really isn’t. In 3-6 months, they’ll know for sure. Mei Xiang has given birth at the zoo, but only 3 have survived—Tai Shan, Bao Bao, and Bei Bei. Tai Shan and Bao Bao are 14 and 6, respectively, and they have been returned to China under the terms of a placement agreement. China requires that most pandas leased to the United States be returned to China at the age of 4. Giant pandas are considered “vulnerable” by the International Union for Conservation of Nature. Worldwide, there are only 500 in captivity and about 1,800 in the wild.

So let’s hope for the best, and that Mei Xiang gets one last chance to be a mother! We’ll all enjoy it, too! (Dana Hedgpeth, “Baby panda watch hits National Zoo,” appeared in The Virginian-Pilot from The Washington Post, March 31, 2019, p. 7)

The 14^th Amendment of the Constitution of the United States of America provides the right to due process attaches to anyone who is threatened with loss of liberty or property. In guardianship proceedings, an individual that is found to be incapacitated may lose all of his rights and property. The respondent in a guardianship may lose such things as his right to vote, the ability determine where he will live, and be denied access to his property. The loss of such rights is a deprivation of liberty and property for which a court is required to ensure due process protections are afforded.

Pursuant to Virginia Code § 64.2-2003, a guardian ad litem, a licensed attorney who has been vested with a number of statutory responsibilities and duties, must be appointed by a court in every guardianship matter. The guardian ad litem represents only the “interests” of the Respondent, and not the Respondent himself. In essence, the guardian ad litem serves as the eyes and ears of the court by investigating the case and making a recommendation. Such recommendation may, however, wholly ignore the respondent’s wishes, thus depriving the respondent of the due-process protections afforded to him. As a result, the respondent has a right to choose independent counsel to serve as an advocate during the course of the guardianship proceeding.

Additionally, Virginia Code § 64.2-2007 expressly provides a respondent with the right to request a jury trial and the ability to, “compel the attendance of witnesses, present evidence on his own behalf, and confront and cross-examine witnesses.” The right to a jury is often viewed as to application of the citizens’ perspective to the law. This right, combined with the other rights afforded to a litigant, help ensure that a respondent is afforded the right to defend against an accusation of incapacity and that there is a fair process.

Ask Kit Kat: Lucky Calf

Hook Law Center: Kit Kat, what can you tell us about a young calf that got loose in New York City?

Kit Kat: Well, this is the craziest story! Did you know that New York City has approximately 80 slaughterhouses? Neither did I, until I read an article in The New York Times about it. So, on March 19, 2019, one little, darling male calf managed to escape from the conveyance which brought him, and he was trotting along the Major Deegan Expressway near Yankee Stadium in the Bronx. He had a tag in his ear, and clearly looked bound for a slaughterhouse. The NYC police sought assistance, and they had the calf tranquilized. He was then transported to an Animal Care Centers facility in Harlem. Animal Care Centers are a nonprofit which provides animal control services across the city. Someone with a sense of humor dubbed the little calf, which was under a year old, Major Deegan, after the expressway where he had been found.

Major Deegan is not the first animal to have escaped the fate of being sent to a slaughterhouse. Already this year, Katy Hansen of the Police Department says, a lamb and two goats have appeared on city streets. In the case of one of the goats, someone had taken it to a slaughterhouse as a way to get rid of the animal. Fortunately for the goat, it was rejected, and the person who brought it there, apparently just let it fend for itself.  In all of 2018, there were only three goats, seven pigs, and one sheep taken into custody after being found wandering aimlessly, so Ms. Hansen is not sure why there is a sudden spike in farm animals being abandoned.

Major Deegan, like the goat and lamb that had been recently found, were then sent to Skyland Sanctuary in Wantage, NJ, where they could have a more natural setting. The other goat was sent to the Farm Sanctuary in Watkins Glen, NY. These creatures sure got lucky! (Liam Stack,  “Slaughter-Bound Calf Escapes on Expressway, Earning New Name and a Life of Leisure,” The New York Times, March 19, 2019)

If you have recently experienced the death of a loved one, you may be trying to get their affairs in order. That might include looking through their documents to see whether they had a will and determining how their assets should be distributed now that they have passed away. If you do find a will, you may be named as the executor of that will. Alternatively, if there is no will, you may have heard that you can qualify as the administrator of the estate in order to have the ability to manage the assets in the estate.

In order to serve as an executor or administrator of an estate, the person wishing to qualify must make an appointment with the probate clerk for the city or county in which the decedent lived at the time of their death. At the appointment, you will be required to disclose information about the decedent’s assets and take an oath pledging to fulfill your duties as executor or administrator. You may be required to pay certain taxes or filing fees depending on the value of the estate.

Many people think that if they are named the executor of a will, or if they are the next of kin to someone who does not have a will, they are legally required to go down to the courthouse and qualify as executor or administrator. However, this is not the case. Anyone can decline to serve as executor or administrator in favor of someone else or can simply refuse to qualify at all. In fact, there are many situations in which an estate administration attorney might recommend that you not qualify as the executor or administrator of an estate.

The Estate Is Insolvent

When you qualify as the executor or administrator of an estate, you are taking on the responsibility of making sure the debts of the estate are paid in the correct order according to the law. Debts of the estate can include mortgages, credit card balances, medical bills, loans, and any other debts that the decedent may have had at his or her death. If the debts of the estate exceed the assets of the estate, then the estate is considered insolvent. If this is the case, then by the end of the estate administration process, there will be no assets for the heirs of the estate to inherit. In many cases, because there is no possibility of an inheritance for the heirs of the estate, it does not make sense for anyone to qualify as executor or administrator of the estate.

There Are No Assets in the Probate Estate

When someone passes away, they often own assets that will have to go through the probate process before they can be distributed, but they may also own other assets that are not part of the probate estate – often referred to as “non-probate” assets. Non-probate assets can include bank accounts with a beneficiary designation, accounts that were owned jointly with right of survivorship, life insurance policies with a beneficiary listed, or retirement accounts that had a beneficiary designation on them.

Non-probate assets can be passed directly to their designated beneficiaries without the need for an executor or administrator to transfer the assets. For that reason, if all of the assets of the decedent are considered non-probate assets, it may be unnecessary to qualify as the executor or administrator of the estate.

The most important thing to remember is that, just because you are named in someone’s will or you are the next of kin of someone who passed away, it does not mean that you are legally required to qualify as the executor or administrator of an estate. Unfortunately, once you qualify and take on that responsibility, it can be very difficult to resign from that position without legal consequences. All too often, clients come to an estate administration attorney only after they have qualified. It is always best to seek the guidance of an experienced estate administration attorney before your appointment with a probate clerk.

Ask Kit Kat: Beagle Brigade

Hook Law Center: Kit Kat, what can you tell us about the beagle brigades at many US airports?

Kit Kat: Well, this is a cute story! My parents first encountered a fruit-sniffing beagle at the Honolulu airport in 1999. They were travelling back from Honolulu to Norfolk after a cruise around the Hawaiian Islands. Entering Hawaii, it had been clearly announced to bring no fruit into the islands, but no one had said anything about bringing fruit from Hawaii back to the mainland. My parents had a lovely fruit basket in their stateroom, all wrapped in clear plastic wrap, which had never been touched during the cruise. So my mom placed it in her carry-on item. Sure enough, a friendly beagle started nosing around the bag, and my mom was told to discard the fruit before boarding their plane. She was so embarrassed!

Anyway, fast forward to 2019. Atlanta’s Hartsfield-Jackson Airport and Chicago’s O’Hare Airport added beagles to their surveillance program as of mid-March. Beagles are already on the job at other border entry points across the US and abroad. Their job is to sniff out parcels or bags carrying meat and plant products. Such items can carry insects or other small pests which could hurt plants and animals in the areas to which the traveler is going. The Mediterranean fruit fly is one such pest which can severely damage citrus groves. Pork can carry African swine fever, so meats are searched for, too.

Beagles were selected for the task, because they have incredible powers of detecting different scents. Also, beagles are non-threatening, even friendly. The newest members of the beagle brigade are Chipper, Marlee, Chaze, and Cardie. They will serve in Atlanta and Chicago, and they all came from shelters. Marguerite Stetson, a Customs and Border Patrol agent who trained Chaze, said, “We try to utilize the dogs that are out there are already looking for a home and a job.” Sounds like a great plan to me! (Trisha Ahmed and Saeed Ahmed, “A brigade of beagles helps the US save billions at America’s busiest airports,” CNN, March 15, 2019)

Many clients and their families find themselves in a situation where they have had a stay in a hospital and then are discharged to a skilled nursing facility for rehabilitation and therapy.  For many this is a short-term need, and they are able to participate in therapy and return to their lives in the community.  The length of stay differs for each individual as do their needs; however, many are advised of the “100 days” for which Medicare will pay and are then shocked when they are advised 2 weeks later that they or their loved one are being “discharged,” because Medicare will not pay.

The 100 Medicare days are a rehabilitative benefit covered under Medicare Part A.  In actuality, Medicare pays the cost of skilled nursing care for the first 20 days.  After day 20, there is a daily co-insurance amount of $170.50 per day. Many individuals are never aware of the $170.50 daily cost, because their Medicare supplement plan covers that cost.  It is correct that skilled nursing care benefits under Medicare and Medicare supplements extend for a maximum of 100 days per spell of illness.  However, should the patient not meet certain standards, then the number of days of coverage may be much shorter than 100.

Unfortunately, there is a misconception among skilled nursing facilities and other providers that Medicare coverage only extends if the patient is improving or otherwise progressing in therapy.  If the patient has “plateaued,” then Medicare will no longer cover the cost of skilled nursing care.  However, this is incorrect and can and should be protested or otherwise appealed.

This incorrect “improvement standard” has been an issue nationwide for years and was the subject of a class action suit which was settled in the 2013 case Jimmo v. Sebelius.[i]  In the 2013 case, the Center for Medicare and Medicaid Services (“CMS”) agreed that the policy for Medicare payment was not an improvement standard. In actuality, Medicare should continue coverage if the patient was either making improvements or if skilled services are necessary to provide care which is necessary to prevent or slow further deterioration, regardless of the patient’s ability to improve or progress. This settlement did not reflect any change in Medicare policy; instead, it simply clarified the Medicare policy as it currently existed. In addition to the clarification, CMS agreed to revise policy direction and educate providers about the correct standard to apply.

Despite the 2013 settlement, in 2017, the issue was again brought before the federal courts. A federal judge found CMS to be in breach of the 2013 settlement agreement.  The judge required CMS to take corrective action to ensure that the appropriate standard applied, which in turn, was to assure coverage to individuals needing skilled care services and who were entitled to coverage under Medicare.  As part of the corrective action, CMS published a new web page with appropriate clarifications.[ii]      

With appropriate application, many individuals should receive care which is paid for by Medicare, regardless of their ability to “improve.” Despite this federal case and guidance issued by CMS, many clients and their families hear the term “discharge” long before 100 days of coverage.  Should this occur, there are several options to consider.  The first is whether the provider is inappropriately applying the standard.  Is the provider indicating that the patient has “plateaued” or otherwise not in need of therapy services?  If this is the case but the patient still has a skilled need such as gastronomy feeding, overall management and evaluation of a care plan, or assessment of a changing medical condition, then the patient or their family should discuss the issue with the facility or provider.  If the facility or provider refuses to cooperate, then the issue may be appealed.  The Center for Medicare Advocacy, a non-profit organization dedicated to advancing access to comprehensive benefits provided by Medicaid for older adults and people with disabilities, has developed a self-help toolkit to assist patients and their families with appeals based on this issue.[iii]

If the provider is correct and skilled care is not needed, then the patient and their family should consider what care their loved one will need.  If the loved one needs 24-hour care and they are not currently living at home, then options and settings should be considered. The patient or their family may request for them to stay at the facility in a long-term care bed.  This stay may not need to be permanent, but some individuals need additional time to recuperate from an illness, and some families need additional time to prepare appropriate living space and arrange care.  It is important to know that, whatever the patient and family decision may be, the discharge planner at every facility is required to make a safe and appropriate discharge plan.

Unfortunately, early discharge or termination of Medicare services still happens regularly.  However, patients and their families armed with appropriate knowledge may be able to extend coverage and services available to themselves or their loved ones, thus improving  their quality of life and longevity.

[i] https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Jimmo-Settlement-Agreement.pdf

[ii] https://www.cms.gov/Center/Special-Topic/Jimmo-Center.html

[iii] https://www.medicareadvocacy.org/take-action/self-help-packets-for-medicare-appeals/

Ask Kit Kat: Prairie Dogs

Hook Law Center: Kit Kat, what can you tell us about preservation activities in the West to protect prairie dogs and other animals of the Great Plains?

Kit Kat: Well, this really is a story of hard work and persistence which will pay off handsomely for many animals of the Great Plains. The Humane Society of the United States (HSUS) has a Prairie Dog Coalition which for years has worked to protect habitat for animals on the Great Plains such as prairie dogs, black-footed ferrets, burrowing owls, and others. It took seven years, but the Prairie Dog Coalition finally secured a two-year grant from the Pittman-Robertson Wildlife Restoration Act to research the animals on the Great Plains.  The grant will allow study in 12 states, Mexico, and Canada, to determine optimal soil types, types of vegetation and climate zones, so the target animals will be able to thrive in the future. With the data gathered, conservationists and planners will be able to make informed decisions based on scientific information. The grant, known as Homes on the Range, began in the fall of 2018 and will continue into 2020.

There is some urgency to the project. In the past 100 years, prairie dog numbers have declined by more than 95 percent. In turn, this has affected as many as nine species which depend on the prairie dog for survival. For example, borrowing owls use prairie dog burrows and black-footed ferrets need prairie dogs as one of their food sources. According to Sterling Krank, an environmental scientist with the Prairie Dog Coalition, “We’ve got to do better than always reacting. Let’s figure out a way to work together to create opportunity net gains on the ground. That’s where we make a real difference for wildlife.” This new grant, hopefully, will do just that!

(Emily Smith, “Team effort to conserve grasslands,” All Animals, January/February 2019, p. 15)