Recent Developments In The Law
One of the great pleasures of being an attorney is attending a good continuing legal education conference. In addition to being required in order to maintain one’s standing with the Bar, it is an excellent opportunity to meet with and learn from brilliant attorneys who somehow find the time to keep up with all the changes that affect our everyday practice and our clients’ matters. I recently attended such a conference and wanted to share some of the nuggets of knowledge that might interest you.
Spousal Liability for Medical Care: Generally, spouses are jointly and severally liable for all emergency and follow-up medical care provided to either spouse. Virginia Code §8.01-220.2. However, a recent act of the Legislature has amended this law to shield a married couple’s principal residence from those liabilities so long as the home is owned by the couple as tenants by the entireties. In addition, the home cannot later be refinanced or transferred to a new owner or it will lose this protection against a judgment creditor. Why is this important? Tenancies by the entireties is a special protection given to married people that protects property held as tenants by the entirety from the judgment creditors of only one spouse. By making medical care a joint debt of the spouses, the former statute would allow a health care provider to place a lien on any property held as tenants by the entirety even if only one spouse incurred the debt. Thus, the recent amendment would allow a married couple to protect their principal residence from the judgments obtained by medical providers, although other property held as tenants by the entireties (such as bank accounts or investment accounts) would still be liable. An interesting note: If you came to one of our seminars last summer, you may remember that a statute passed last year extended tenants by the entireties protection to real property held in a married couple’s joint revocable trust and to real property owned 50% by one spouse’s revocable trust and 50% by the other spouse’s revocable trust. Virginia Code §55-20.2 However, the change in the statute with respect to the liability for medical expenses which protects a couple’s home would not apply to a home held in the couple’s joint trust or in revocable single trusts. This is because the wording of the statute protecting the home only applies to a residence “held as tenants by the entireties”. The statute passed last year extends the protection against one spouse’s creditors to assets formerly held as tenants by the entireties but does not change the title to how those assets now owned by the trust are titled.
Real Property Tax Exemption for Spouse of Military Personnel Who Die from Wounds Received in Action: Several years ago, Virginia passed a real property tax exemption aimed at protecting the surviving spouses of military personnel killed in action. However, the statute did not clearly cover military personnel who later died of wounds received in action. Virginia Code §58.1-3219-9(A) has been amended to extend that exemption to the surviving spouse of a military member who died from wounds received in action (as determined by the US Department of Defense). In a similar vein, the General Assembly is proposing an amendment to the Virginia Constitution which would provide a real property tax exemption to the surviving spouse of first responders killed in the line of duty. This proposal will be on the ballot in November.
IRS Attacks on Charitable Deduction: The IRS does not have the resources to vigorously attack the valuation of items for which charitable deductions are taken if the items are not readily valued, like publically traded securities. However, it has found a high rate of success attacking taxpayers who do not follow the rules regarding the substantiation of their charitable deductions. Section 170(f)(8) of the Internal Revenue Code requires a contemporaneous, written acknowledgment from the charity for donations in excess of $250 that contains i) the amount of cash and a description of the property other than cash contributed; ii) whether the donee organization provided any goods or services in return (in whole or in part)l; and iii) a description and good faith estimate of the value of any such goods or services provided. This must be obtained before the return is filed. Case after case after case has gone against the taxpayers who have not received the correct documentation from the charity. Hear this: your cancelled check is NOT sufficient substantiation because it does not state whether goods or services were received in exchange for the contribution. Hear this: attempts to deduct household goods as all being under $250 when made on multiple occasions were denied and the Tax Court imposed a negligence related penalty because there was no reasonable cause for the failure to obtain receipts. The IRS is winning these cases because the taxpayers, somewhat used to lax enforcement in this area, have not kept or obtained the records they need to prove their cases. The IRS is not winning on the issue of whether the non-cash item was really worth the $8,000 that was claimed: the IRS is winning because the taxpayer does not have the required contemporaneous, written acknowledgment from the charity.
The attorneys at the Hook Law Center take our professional responsibility to maintain our skills and knowledge at the highest levels very seriously. That is why you will often see us speaking at or attending conferences around Hampton Roads, the Commonwealth and the nation. I will be presenting seminars in Suffolk and Virginia Beach on May 17 and May 25, respectively, and will discuss the above topics along with even more recent developments and basic estate planning issues. If you would like information on attending one of the seminars, please contact Michaela Martz at (757) 399-7506 and she will be glad to assist you. I look forward to seeing you!
Hook Law Center: Kit Kat, what are some dangers of keeping exotic pets in residential neighborhoods?
Kit Kat: Well, exotic pets like leopards, lions, tigers, servals (medium-sized cats native to sub-Saharan Africa), chimps, monkeys, and more are wild animals who need an appropriate environment to roam and feed. Often, when they are kept in captivity by an individual, they are kept in overly small quarters often in garages, basements, and other too small enclosures. Some states have since outlawed the keeping of such pets, but one case in NY State illustrates the difficulties. Since 2005, NY has outlawed the keeping of exotic pets by individuals; however a lady near Albany, NY was in possession of 6 servals, approximately 40 pounds each. The state allowed her to keep the animals since she had acquired them before the law’s enactment. They were living in a basement in an 8’ x 12’ cage. Needless to say, the animals were not thriving in such living conditions. They were overweight and had health issues. All were declawed, so they just couldn’t be released anywhere. When the woman was no longer able to care for them because of her own health issues, the animals were rescued and taken to a sanctuary in Florida.
There they are doing well, and have lost the weight they gained in captivity when they had nothing else to do but eat.
In a well-publicized Connecticut case, a pet chimpanzee weighing 200 pounds attacked a friend of its owner in 2009. The resulting injuries were so severe, that the victim had to undergo a facial transplant and was permanently blinded in the attack. The stories abound about other incidents of close encounters with exotic animals, especially snakes. Imagine the fright of finding a king cobra snake in your laundry room or in the middle of an apartment hallway? Well, things like this really have happened. It’s not really fair to the animal or the average citizen who unexpectedly encounters one of these out-of-habitat specimens.
Fortunately, the Humane Society of the US (HSUS) is working on passing legislation to curtail and regulate the sale of exotic pets. At present, there exists a patchwork of laws. 5 states have no laws regulating possession of large, wild animals. 21 states have a complete ban, while the rest allow certain classes of wild animals or require permits to keep them. In truth, wild animals cannot be tamed, according to Nicole Paquette, Vice President of Wildlife Protection for HSUS. She continues, “…the best we can do for them is to protect their natural environments and admire them from afar.”
(Michael DiPaola & Ruthanne Johnson, “Do you know which cat is living next door?” All Animals, May/June 2016, pp.18-25)
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