Comprehensive Planning. Lifelong Solutions.

New Guidance for Special Needs Trusts

By Shannon Laymon-Pecoraro

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

GOODS AND SERVICES

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

FAMILY CAREGIVERS

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

DEBIT CARDS

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

TRAVEL

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

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

 

Kit KatAsk Kit Kat – Vets in Rural Alaska

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

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

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

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

 

Upcoming Seminars

Distribution of This Newsletter

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

Posted on Friday, May 25th, 2018. Filed under Senior Law News.

I am a Beneficiary of an Estate – Why Did I Receive a Schedule K-1?

By Amanda Richter

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

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

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

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

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

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

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

 

Kit KatAsk Kit Kat – Reviving Brook Trout

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

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

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

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

 

Upcoming Seminars

Distribution of This Newsletter

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

Posted on Friday, May 18th, 2018. Filed under Senior Law News.

The Importance of Good Recordkeeping – and Which Documents to Keep

By Hook Law Center

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

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

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

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

 

Kit KatAsk Kit Kat – Outer Banks Ospreys

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

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

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

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

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

 

Upcoming Seminars

Distribution of This Newsletter

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

Posted on Monday, May 14th, 2018. Filed under Senior Law News.

Elder Abuse, Neglect, and Exploitation, Part Two: What to Watch For and What is Being Done to Combat the Problem

By Hook Law Center

This is the second article in a three-part series discussing Elder Abuse, Neglect and Exploitation. In Part One, we discussed the definitions for elder abuse and the prevalence of it in our society. In Part Two, we will discuss what to watch for in detecting the signs of elder abuse as well as identifying the situations in which our elderly citizens are most vulnerable to abuse.

You may be aware of the story surrounding the abuse of the famous actor, Mickey Rooney. Mr. Rooney suffered abuse mainly at the hands of his step-son, who physically abused him and financially abused him by misappropriating approximately $8.5 million. He did this by issuing himself majority stock in a production company started by Mr. Rooney and appointing himself as Treasurer of the company.  Before his death, Mr. Rooney testified before the Senate Special Committee on Aging that his life had become unbearable. “I felt trapped, scared, used, and frustrated. But above all, I felt helpless. For years I suffered silently. I could not muster the courage to seek the help I knew I needed,” he said.

Elder abuse does not only happen to the rich and famous, but the story shows that it can happen in any situation in which an elder adult is vulnerable. Vulnerability can come in several different forms. If an elder adult is dependent on someone for their physical or financial well-being, this can sometimes open the door for abuse. A perpetrator may threaten to discontinue assisting them in order to manipulate the elder into meeting his or her demands. If an elder adult is suffering from a cognitive impairment, they may lose both their good financial judgment and their ability to detect and prevent exploitation.  If an elder adult is in poor physical health, they may not have the time or energy to review their financial statements, making detection of financial exploitation unlikely.

So who are the primary perpetrators of elder abuse? You may or may not be surprised to learn that it is those who are closest to us: family members, caregivers and fiduciaries. Often abuse at the hands of a family members goes unreported because the older adult is fearful of being placed in a nursing home, fearful that their only caregiver (the family member) may be removed from the home, and quite simply, ashamed. Dependence on or by the family member is a key indicator of the potential for abuse. Caregivers may create reliance and dependency on their services alone and then exploit their care recipients out of the idea that they have “earned” the extra compensation. Fiduciaries, such as agents under a Power of Attorney, have been known to abuse the powers granted to them under the document. For example, by using the power to make gifts, they could gift all of the elder adult’s assets to themselves.

Some of the warning signs of physical abuse include unexplained injuries, persistent physical pain and soreness, nutrition and hydration issues, and sleep disturbances. Some of the warning signs for psychological abuse are distress and depression, learned helplessness and posttraumatic stress disorder. For financial exploitation, watch out for the unexplained disappearance of funds, valuables, or personal belongings; excessive payment for care and/or services; the sudden appearance of previously uninvolved relatives and friends; a sudden change in a person’s power of attorney or Will; and checks no longer coming to the older adult’s home.

The Federal Government has attempted to begin addressing the problem by passing the Elder Justice Act, which authorizes a specific source of federal funds to address elder abuse, neglect and exploitation, but funding for the Act has never been approved. Similarly, the Social Services Block Grant, which is intended to be used for elder abuse victims, pales in comparison to federal support for other services. It is estimated that federal funding provides only $.89 per elder abuse victim, compared to $6,000 per child victim, or $240 per domestic violence victim.

The State of Virginia has made some legislative changes over the past several years to enhance the safety and well-being of older adults. These changes include: expanding the list of professionals who are required to report suspected elder abuse; requiring Local Department of Social Services (LDSS) to refer relevant information to the appropriate licensing, regulatory, or legal authority for action or investigation; authorizing LDSS, with informed consent, to take or request relevant photographs, video recordings, or medical imaging of the adult and his environment; expanding the list of Adult Protective Services (APS) situations in which law enforcement must be notified; authorizing civil penalties for cases of non-reporting by all mandated reporters of elder abuse; making financial exploitation a criminal offense; and removing the $50,000 threshold for prompting APS to report suspected financial exploitation to law enforcement.

In the next and final part of the series, we will discuss what you can do to protect yourself, your loved ones, and/or your clients from elder abuse, neglect and exploitation.

 

Kit KatAsk Kit Kat – Canine Pair

Hook Law Center: Kit Kat, what can you tell us about the unusual canine pair of a pit bull and a blind dachshund?

Kit Kat: Well, this is indeed an unusual pair. The pit bull’s name is Blue Dozer (age 6) and the blind dachshund’s (age 12) name is OJ. Sadly, their owner became homeless, and surrendered them to the Richmond, VA Animal Care and Control shelter. The Richmond shelter had instructed the adopting person to keep the pair together, because they were a devoted pair. Blue Dozer would lead the way, and OJ would follow behind. OJ can see some shadows, but in essence, were he a person, he would be considered legally blind.

On April 22, the shelter thought they had found the right person to take the pair. Two days later, however, OJ was found wandering along the side of a road. A Good Samaritan turned him in to the Shenandoah Valley Animal Services Center near Staunton, VA. Staunton is about 2 hours from Richmond, but he was identified via microchip. When the adopting person was contacted, she said that someone had been watching OJ for them. She didn’t know how he got loose. She didn’t want to give up Blue Dozer, but she eventually reconsidered after receiving pressure to do so on social media. So the pair went back to the Richmond shelter where they are stabilizing.

The Richmond shelter will re-offer them for adoption, after a thorough screening process. Hundreds of people have made inquiries about the pair. The shelter will require the next adopter to sign a pledge that they not be separated. In the meantime, however, the two seem to be content. 10-pound OJ and 90-pound Blue Dozer, who always stay close to one another, are quite a sight! Christie Chipps Peters, director of the Richmond shelter says, they always try to find the right person to adopt a pet, however, sometimes we “cannot account for decisions that are made by citizens after adoption. In the end, we have to trust people—trust them to love the pets we have cared for and  trust them to do what is best.” (Dana Hedgpeth, “A blind dachshund and his guide dog, who were adopted then split up in Virginia, have been reunited,” The Washington Post, April 26, 2018)

 

Upcoming Seminars

Distribution of This Newsletter

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

Posted on Friday, May 4th, 2018. Filed under Senior Law News.

Should you add your child to the title of your real property?

By Sarah Schmidt

It seems as though there is a myth circulating among aging adults that it is wise or prudent to add a child’s name to the title of one’s real property. Where this myth generated, I have no idea. There is little to be gained by doing so, while the complications and problems it might impose are numerous. If you explain your objective for considering this option to an estate planning attorney, he or she will most definitely propose a way to accomplish the same objective that does not involve adding your child’s name to your title or gifting your house outright to your child during your life.

Are you worried about avoiding probate? Are you worried about protecting your house from Medicaid? Are you looking to leave the house to a particular child upon your death so as to provide him or her a place to live? It doesn’t matter. Adding your child to the title of your real property is not the best way to accomplish any of those objectives.

To list just a few examples of potential complications, if you add your child to the title of your real property, it then becomes subject to his or her creditors, bankruptcy or divorce.  If you have lived in the property for a very long time and its value has appreciated over time, gifting a portion of it now will lose your child’s ability to gain a step-up in basis as to the value of the real property at your death.  Further, gifting your home to your child outright also does not assist in any application for Medicaid, but actually may cause you to be disqualified.

Before you sign any deeds or change title to your home seek the advice of an elder law attorney who can explain the options and most effective strategies to accomplish your objectives.

 

Kit KatAsk Kit Kat – Prescient Oscar

Hook Law Center: Kit Kat, what can you tell us about Oscar, the cat, who can sense when the end of life is near?

Kit Kat: Well, this is an interesting story. Oscar, a seemingly ordinary, domestic shorthair cat, has been a resident in the Steere House Nursing and Rehabilitation Center in Providence, Rhode Island since 2005. He is mostly white, with some tabby markings on his head, back, and tail—a handsome fellow! He was brought in to serve as a therapy cat in the dementia unit. At the start, he was extremely shy, and would hide in a closet or wherever. Then, gradually, he started to come out when he sensed that someone was near the end of life. He would get in bed with the person, and, essentially, hold vigil until they had passed from life. Staff eventually caught on to what was happening when he accurately “predicted” 20-30 deaths in a row.

Oscar is now famous, thanks to a book written by Dr. David Dosa, a health researcher at Brown University and geriatrician who works part-time at Steere House. Dr. Dosa is not sure how Oscar knows when it’s the final hours for a person, but he speculates, “I think that ultimately your guess is good as mine. It (could be) likely that he’s responding to some smell when cells start to break down.” However Oscar has figured out life’s end for people is unimportant. What is important is that he models how we humans can respond at the end of a life. Comfort and just being there may seem like small things, but to the dying person, it is extremely soothing and uplifting. If you would like to learn more about Oscar, read Dr.Dosa’s book entitled Making the Rounds with Oscar. (https://www.crosssroadshospice.com/healthcare-professionals-resources/palliative-care-blog/2016/april/11/meet-oscar-the-cat-that-predicts-death-and-provides-comfort)

 

Upcoming Seminars

Distribution of This Newsletter

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

Posted on Friday, April 27th, 2018. Filed under Senior Law News.

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

By Letha Sgritta McDowell, CELA

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

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

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

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

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

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

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

 

Kit KatAsk Kit Kat – Corolla Herd

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

Kit Kat:

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

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

 

Upcoming Seminars

Distribution of This Newsletter

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

Posted on Friday, April 27th, 2018. Filed under Senior Law News.

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

By Amanda Richter

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

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

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

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

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

 

Kit KatAsk Kit Kat – Bathing Monkeys

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

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

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

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

 

Upcoming Seminars

Distribution of This Newsletter

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

Posted on Friday, April 13th, 2018. Filed under Senior Law News.

Administration of Small or Insolvent Estates

By Shannon Laymon-Pecoraro

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

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

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

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

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

 

Kit KatAsk Kit Kat – Why Curly Hair?

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

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

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

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

 

Upcoming Seminars

Distribution of This Newsletter

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

Posted on Monday, April 9th, 2018. Filed under Senior Law News.

The Surprising Things Medicaid Won’t Pay For

By Hook Law Center

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

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

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

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

 

Kit KatAsk Kit Kat – Rehoming Horses

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

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

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

 

Upcoming Seminars

Distribution of This Newsletter

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

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

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

By Hook Law Center

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

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

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

The revised Code section further states that adult exploitation includes:

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

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

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

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

 

Kit KatAsk Kit Kat – Rewilding Carnivores

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

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

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

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

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

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

 

Upcoming Seminars

Distribution of This Newsletter

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

Posted on Friday, March 23rd, 2018. Filed under Senior Law News.
Like us on Facebook
Planning Guides

Sign up for our email newsletter and get access to our free planning reports.

SUBSCRIBE NOW

Ask Kit Kat: Pet advice and wisdom as Kit Kat sees it.

ASK ME