Monday, November 5, 2018

Changes to VA Pension Rules

Catherine E. Sears, Esq.
On October 18, 2018, new rules went into effect involving VA Pension benefits, which are commonly called “Aid and Attendance” benefits.

The purpose of VA Pension is to provide financial assistance to medically-eligible veterans and their widow(er)s. Unlike Medicaid, which pays for the entire portion of an individual’s nursing home costs which the individual cannot afford to pay herself, Pension does not guarantee that the veteran will have sufficient funds to pay for a nursing home. Instead, it provides an additional source of monthly income which can then be used to help the veteran’s assets last longer in paying out-of-pocket for long-term care.

To receive Pension benefits, a veteran need not have been injured during his wartime service, but rather is currently disabled (perhaps, due to age) and in need of assistance with activities of daily living, such as bathing, toileting, or feeding oneself.  Additionally, to be eligible for VA Pension benefits, the veteran has always needed to have a low financial net worth.  In other words, the veteran must have less than a certain amount of monthly income, and less than a certain amount of accumulated assets.  If the veteran’s income exceeds the eligibility threshold but the veteran has a great deal of unreimbursed medical expenses, the VA will deduct those expenses from the veteran’s income in making its eligibility calculation.

Under the old VA rules, a veteran could, without penalty, give away as much of his accumulated assets as necessary in order to reduce his assets and become financially eligible for Pension. The assets could be given to a trustworthy child as an early inheritance or with the hope that the child would help pay for the veteran’s care by using that gifted money on the veteran’s expenses. Similarly, the assets could be transferred to an irrevocable trust or into an annuity so they were no longer within the veteran’s control (thus, making the veteran financially eligible for Pension), but would still be used for the veteran’s benefit.  Therefore, under the old rules, a veteran with substantial accumulated assets could simply transfer all of those assets away one day and qualify for Pension benefits the next day.

The new rules, however, will impose a penalty on assets which have been given away or transferred for less than their fair market value. This is intended as a way to maintain the purpose of the Pension program: to provide assistance to those who are truly financially needy. Therefore, a penalty period is imposed on veterans who have made transfers for less than the fair market value within three years of the veteran becoming eligible for Pension benefits.  The length of the penalty period is directly related to the value of assets which were given away.

This new policy impacts asset protection planning strategies, then, as a veteran or surviving spouse must now plan to make any gifts or transfers more than three years before expecting to need Pension benefits. However, though this is a new factor to consider in Pension planning, a “lookback period” and penalties on asset transfers are very familiar concepts in long-term care planning, as Medicaid has always had these rules.  Because Medicaid planning and VA Pension planning often go hand-in-hand, a long-term care planning attorney should already have considered the ramifications of making gifts and risking a penalty period when advising her clients.

The new VA Pension rules make many other changes regarding eligibility and medical expenses, but the lookback period will likely have the most significant impact on the majority of prospective VA Pension recipients. If you have previously engaged in any long-term care planning with the intention of qualifying for Pension benefits, you should talk to a VA Accredited attorney to make sure that these new rules will not impact your current plan, and to revise the plan as needed.

Wednesday, October 3, 2018

Tax-Free Rollovers from 529 Savings Plans to Able Accounts Now Permitted

Helena S. Mock, Esq.

In a previous blog, I wrote about the enactment of the ABLE (“Achieving a Better Life Experience”) Act, which was signed into law in 2014.  The ABLE Act is a federal law that allows states to establish a savings program for persons with disabilities.  ABLE accounts may be used to accumulate money for a disabled beneficiary.  The funds in an ABLE account can be invested and grow free from all income taxes.  The money can later be used by or for the beneficiary for purposes such as 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 “permissible expenditures.

The ABLE account is modeled after the 529 education savings plan, which allows savings for future college expenses to grow free from income tax.  You don't get a federal income tax deduction for contributions into the plan, but the earnings on the account aren't taxed while the funds are in the program.  The custodian of the plan can also change the beneficiary or roll over the funds in the program to another plan for the same or a different beneficiary without income tax consequences.  And, distributions from the program are tax-free up to the amount of the student's "qualified higher education expenses." These include tuition (including up to $10,000 in tuition for an elementary or secondary public, private, or religious school), fees, books, supplies, and required equipment. Reasonable room and board are also qualified expenses if the student is enrolled at least half-time.

Often 529 college savings accounts are established by parents or grandparents for an infant or young child before knowing if that child will ever be able to attend college.  If that child later suffers a disability such that he will not need the funds for “higher education expenses,” what happens to the funds in the 529 account?  As mentioned, the custodian can change the beneficiary.  But that money was set aside for this child.  And, this child will have other needs. Why can’t those funds be used for her other needs?

Under the law, the distribution of funds from a 529 account for any purpose other than for qualifying expenses are taxed to the beneficiary to the extent that they represent earnings on the account. A 10% penalty tax is also imposed. However, under the Tax Cuts and Jobs Act of 2017, amounts from a 529 account can now be rolled over to an ABLE account without penalty so long as the ABLE account is owned by the designated beneficiary of the 529 account, or a member of the designated beneficiary’s family.  Not only is this useful if the beneficiary himself has become incapacitated such that he will not need the funds for educational purposes, but it is also useful if the beneficiary has completed his education and there is money left in the account which can be rolled over from the 529 account to an ABLE account for the benefit of a member of the beneficiary’s family who is blind or disabled.

Certain rules and limitations apply, and therefore you should consult a qualified special needs planning attorney to discuss your individual situation before taking any action.

Monday, September 17, 2018

The Final Moments

Teresa M. Clemons
Office Manager

Last week I lost a very special man, my father-in-law. For three days, my husband (his wonderful son) never left his side and was there when he took his last breath. Being with someone you love at the point of their death is a profound experience. At times, you feel guilty for wishing it to be over but it's an understandable response to a very stressful situation and wanting them to be at peace and comfortable.

The hearing is thought to be the last sense to go in the dying process, so never assume the person is unable to hear you. Talk as if they can hear you, even if they appear to be unconscious or restless. Our entire family spent several hours with him the day before he died. We reminisced about good times, even asked questions. Though he was non-responsive, someone would answer what they thought he would say. Assuming he could hear us, I am sure he was frustrated that he could not communicate, but at the same time was laughing inside at the responses that we were all making on his behalf. He had an oxygen mask on but a couple of times I saw him yawn and thought "maybe we're boring him!" Even when unconscious or semi-conscious, yawning is a natural response to draw more oxygen into the body.

We tried to create a soothing atmosphere by playing his favorite music, particularly older country. Finding a song from that genre on Pandora, we placed the cell phone next to him and wished he could have sung along. We all gathered around his bed and prayed when the minister arrived. The last words my husband spoke to him minutes before he died, made us believe that he really could hear us. He said, "Dad, it’s okay, we are all going to take good care of mom." And with that, he took his last breath and went home.

Wednesday, August 22, 2018

Using Mindfulness and Meditation to Navigate the Waters of Care-giving

Valerie M. Hollar, Paralegal
The number of Americans that are caring for an older loved one is on the rise. According to the Family Caregiver Alliance, about 34.2 million Americans have provided unpaid care to an adult age 50 or older in the last 12 months. About 15.7 million adult family caregivers care for someone who has Alzheimer's disease or dementia. Nearly 75% of all caregivers are female, around 50 years of age and these caregivers are spending around 20 hours a week providing care. With numbers like these and tasks ranging from simple grocery shopping and household chores to complicated issues dealing with finances and medical care, it is not any surprise that caregiver burnout is on the rise. Caregiver burnout is defined as a state of physical, emotional, and mental exhaustion that may show up as signs of fatigue, stress, anxiety, depression, and a general lack of self-care. 

The questions that come to mind immediately when caring for a caregiver is how do we treat this burnout state, but also what are some ways we can prevent it. My yoga teacher training points me straight to the practice of mindfulness and meditation. I personally found this practice from being a caregiver in a stressful situation. Mindfulness is the practice of paying attention to the present moment. For example, if you are feeling a sensation of overwhelming or a tightness in a part of the body, you may need to find a focus on your breath. By doing this, you are allowing the body to find a way to help itself.

So, what does this mean for a caregiver? I know, and I’m sure those reading this who are caregivers know, that just getting through a day can feel like an impossible struggle. You are busy, you have more tasks than you feel like you can complete which lead to being overwhelmed, you’re sometimes angry for having to be in this situation, you feel a sense of resentment, and it’s just plain hard. Self-care is important. While it is not always feasible to take a vacation to get away or to even get a break for yourself, it is possible to find mindfulness and meditation and use it as respite. Meditation can be done anywhere. You can literally practice it while sitting next to your loved one. 

Mindfulness and meditation have numerous benefits. Both can help to bring acceptance to feelings regarding the changes that are happening with your loved ones. Meditating on a regular basis calms the mind, which can promote a better sleep at night. It is something you can do in a short amount of time with big benefits. It can promote stronger immunity when the body is run down from the constant hustle and bustle of caring for someone else. Meditation improves concentration and focus as well as decreasing blood pressure and cholesterol levels. So not only does it improve the health of the mind, it can also improve the health of your body!  

With the popularity of meditation on the rise, your smartphone can provide a wealth of resources when it comes to these types of exercises. Several apps come ready to guide you through different meditation exercises. Some of my favorites include Calm, Headspace, and the Insight Timer. Calm offers a variety of different options with guided and unguided meditations. Headspace is narrated by a man with a lovely Australian accent and provides options for many types of meditation for stress, anxiety, confidence, etc. The insight timer app is perhaps my favorite as it offers guided meditations from many individuals with different backgrounds, unguided sessions set to sounds that soothe, and provides podcast type interviews with those that lead the meditations. No matter what you are looking for, there is a meditation app out there for you! Take the time to make mindfulness and meditation a part of your care-giving practice.  

Want to get an idea of what a meditation session is before you try an app? Check out one of my favorite simple guided meditations below. You can read through this and practice yourself, or even share with the one you are caring for and practice together. 

First, find a quiet and comfortable spot. Sitting nice and straight, feet pressing into the floor, place your hands in your lap, palms up or down, whatever is comfortable for you. Then, close your eyes or keep a soft gaze. Take a scan of your body, noticing what you are feeling in your body and what feelings are circling around in your mind. Start to focus on your breath. Feeling each inhale and exhale. As you breathe in and out, try to focus on something. Maybe thinking of a place that you feel safe and secure. Picturing that space while continuing to breathe deeply in, and deeply out, keeping the focus where you have chosen. Stay here as long as you like. When you are ready to end your meditation, come back to focusing on your breath as you scan your mind and body again. Notice how you feel. Notice what you're thinking. Repeat as often as you’d like!

For more information:
Caregiver Statistics:
Caregiver Burnout:
Meditation Benefits Seniors and Their Caregivers:
Caregiver Meditation:

Meditation Apps:
Insight Timer -
Or search for them in your App Store

Wednesday, August 1, 2018

Accepting Death While You're Still Young

Elizabeth D. Johnson
Legal Assistant 
Growing up, you never truly think about getting old - which is strange because you obviously know that people get old. Your parents are old, your grandparents are really old, some have even passed away along with the other relatives you never got to meet. For me, I never actually felt like that was going to happen to me but I do remember the shift in reality when it finally hit me...oh damn, I'm going to DIE one day?!? That sucks!

I used to have panic attacks just thinking about death until I started my current job. In short, we prepare people for death and help those whose loved ones have passed, so I either had to come to terms with it or let my boss know I'd be in the fetal position every afternoon from 12-3. So, even though I'm only 28, I have already started to accept death. Obviously, if some voodoo doctor comes along and tells me they have a concoction for everlasting life, I will for sure gulp it down like Meryl Streep in Death Becomes Her. Considering that doesn't seem to be happening any time soon, I've decided I must to come to terms with the fact that we all have to die one day, and yeah it does suck, but what can you do?

As I'm nearing the age of 30, I'm realizing just how short life can be. Some have not been as lucky as I am to live even this far, and people take life for granted every day. I still take life for granted every day. None of the trivial things should matter. What should matter is the fact that I have all of these wonderful people in my life, who care about me. I have a roof over my head and food to eat and a car that doesn't break down constantly. While the goals that I set in the past now actually have deadlines, I should feel grateful to even have goals. No one knows what happens after you die and it is up to you what you believe, but regardless you can't put things off. You are fragile, your loved ones are fragile. Tell everyone how much you love them, or how much you hate them - just tell people how you feel!

People will leave your life all the time - whether it’s a fight that wasn't worth resolving, someone moving away, or you know…dying, so it's important to remind yourself every day that you are not invincible like your 13-year-old self once thought. Work hard at making yourself happy and making the people around you happy. Go outside more, meditate, eat carbs, and try not to die yet.

Tuesday, July 17, 2018

Vacations Are Good For The Soul

Barbara K. Armstrong

Well, here we are right in the middle of summer.  Most likely a few of you have already gone on a vacation or are planning one.  Vacations are good for the soul.  Not only do they give you quality fun time with loved ones, they also rejuvenate. Who couldn’t use some rejuvenation!

Recently, my husband and I went on a three-day excursion. Granted, it wasn’t a week vacation, but it was fun. We went zip lining and horseback riding. My husband, at 72 years old, rolled down a hill for the first time in his life! He didn’t even have that on his bucket list.  We were sitting with a few other vacationers and commented on the little children rolling down the hill and how much fun that used to be.  My husband said he had never done that.   Well, the rest was history.  The guests all stood up and clapped when he reached the bottom.  Not sure if it was because he had made it or had not seriously injured himself! 

We met some special people while we were there. We spoke with a grandfather who was there with his wife, daughter, son-in-law, and grandson.  He told us that his grandson at the age of 5 years old, had already had 6 brain surgeries and although his prognosis was favorable, they were going to do as much with him and have him experience as much of life as possible. 

My point is, take some time off for yourself.   Life can fly by in an instant and it doesn’t matter if you are 5 or 72 years old.   Enjoy all moments and take that vacation whether it be a long weekend or a month.  Vacations are good for the soul!

Thursday, June 7, 2018

Easy Gardening at Any Age

Teresa M. Clemons
Office Manager
Seniors don't need to have a huge yard or sprawling piece of property to enjoy the many benefits of gardening. Hundreds of plant species can thrive inside a home as long as they are properly cared for. Here are a few suggestions:

Recognizable by its long and vibrant leaves is the spider plant. There are many different types of spider plants, and they are often hung from windows so the leaves can cascade over the sides of the pots. Spider plants can thrive as long as they get a little bit of sunlight every day and are watered at least once a week. 

Very few indoor plants are as popular as the peace lily, and many cultures believe these flowers bring good luck into a home. They are also an excellent air purifier. To keep the petals and leaves healthy, they require indirect sunlight and moist potting soil at all times. 

Aloe vera is extremely easy to care for and also has the benefit of healing qualities. Many people make burn salves and topical pain relief creams from the gel inside an aloe vera plant. This plant doesn't need much water but it should be kept near a window to get as much light as possible.

Beautiful and delicious, try to plant some mint. This herb is easy to care for and as the leaves grow larger, you can pick a few off to throw in a cup of tea or ice water. 

Senior who are more interested in vibrant flowers might want to go with an African violet. These beautiful flowers vary in color depending on their location, but most petals are bright purple or blue. African violets shouldn't be watered until the soil is completely dry, and the leaves can't get wet or spotting will occur.

With some encouragement and assistance, even older adults with limited mobility can enjoy caring for indoor plants. 

Please be aware that peace lilies, aloe vera, and mint are toxic to dogs and cats.

Friday, May 25, 2018

Yoga For Healthy Aging

Valerie M. Hollar, Paralegal

Being an estate planning paralegal and a registered yoga teacher, I constantly meet clients and students with a common issue - worrying about injuries and finding stability and strength as they age. 

The practice of yoga is on the rise across the United States, including for those who are 65 and over. Yoga is becoming a part of a healthy aging routine that not only promotes a stronger body less prone to injuries, but also a sharper mind. University of Wisconsin-Madison professor of family medicine, Irene Hamrick, reported the number of falls in older adults dropped forty-eight percent in the six months after they began taking yoga classes! Especially practicing the style of yoga known as “Hatha”. By incorporating a practice combining postures, breath-work, and meditation, you are able to give the whole body a form of a “workout”.

These poses can be completed on the floor, standing, or even sitting in a chair. They improve flexibility, mood, and teach the mind to be more present. Among people 65 years and older, falls are the leading cause of injury leading to hospital admissions, or even death. I’m sure we all know someone who has fallen and broken a hip at an older age, and what troubles that can cause.  Yoga is a step in the right direction to helping prevent these types of events from happening! Practicing yoga will help to build core and muscle strength throughout the body, leading to more stability and balance when walking, bending, etc.

If your doctor has been suggesting you start an exercise program or if you have a loved one or relative that needs to get moving, think of yoga!  There are several studios and non-studio locations that host this type of yoga on the Peninsula. If you have any questions or would like to know where to look, please comment!

Follow the links below to learn more:

Yoga for Reducing Falls- Article:

Yoga for Healthy Aging

Relax into Yoga for Seniors

Thursday, April 5, 2018

Life Care Planning: The Best Protection for Elders and Their Families

Elizabeth D. Johnson
Legal Assistant
There’s a reason we call it "The Best Protection for Elders and Their Families."

Life Care Planning will help you make the best decisions to protect yourself later on. It can help you achieve your goals and reduce stress for yourself and for your family.

The primary goal of a Life Care Plan is to assist the senior and their family in being able to make legal, financial, and medical decisions without government or court intervention (such as a guardianship, which can be very costly), prolong the senior’s stay at home, protect their quality of life, and preserve their assets.

Over the next 25 years, it is estimated that the number of American households that are caring for an older relative will double. That means that care giving for elderly relatives will become as common as childcare. Care giving in this capacity can be costly, both for the senior citizen and for his family members. Most people want to stay at home (or with an adult child) rather than entering a nursing home. However, most people also don’t want to be a burden on their children, or their children live far away or are too busy with their own lives to provide care for their parents. 
Additionally, many people don’t have children or don’t trust their own family members to provide good care to them or make wise decisions on their behalf.  A Life Care Plan can address all of these issues and concerns.

It’s never too early to start thinking about all of this. One must be prepared for a future where you may not be in control so that your best interests and wishes are carried out properly. So often, clients come to us only when there is a crisis, at which point there are far fewer options available.  By planning early, you can establish your overall priorities and make a plan that meets your goals and adapts to you as your medical or financial situation changes.

You may ask why a law firm would be at the center of the Life Care Plan. So much of the aging process intersects with the law (estate planning, long-term care planning, probate and trust administration, etc.). Instead of stepping in when there is a crisis, a Life Care Plan allows the law firm to be part of the aging process from the start, to maximize the legal options available to the aging client when needed.

So, what is included in a Life Care Plan? First, you would meet with an attorney to discuss your unique goals, conduct a thorough analysis of your financial situation, and determine eligibility for government benefits. Then there would be a medical assessment and on-site evaluation of your current living arrangements with an elder care coordinator (ECC) who has a background in health care and social work. Finally, the attorney and elder care coordinator would work together to develop your Life Care Plan: a written assessment of your current situation and plan for implementing your goals.

The elder care coordinator will work as liaison between you, your family, and all facets of aging: financial, legal, medical, and senior resources. Your elder care coordinator will put you in contact with various senior resources to enhance quality of life, such as resources to help you age in your own home, or, eventually, find facility care that meets your needs. The average person going through the aging process for the first time likely does not know about these various resources and programs in the area, but the ECC already has this knowledge from helping many other clients age gracefully.  If you do eventually need facility care, the ECC can visit you in a facility unannounced to see how you are really being treated. The ECC will know what to look for and can identify subtle problems that your family members might not recognize.  Because the law firm is at the center of your Plan, an attorney can step in and advocate on your behalf to a long-term care facility as soon as the ECC notices a problem.

A Life Care Plan also includes a comprehensive review of your current estate planning documents, if you have them, and creating new estate planning documents for you if you do not have anything in place. Your attorney will also discuss how you plan to pay for care. Do you have long term care insurance, Medicaid, or will you be paying out of pocket? If you or your spouse is a veteran, you would want to look into veteran’s benefits. Your Life Care Plan will also provide safeguarding against financial abuse. Financial abuse and exploitation is more common than people may realize, so your attorney will go over options on how to protect yourself and your assets.

Finally, your Life Care Plan will be an ongoing relationship that adapts to your needs. We will be aware of your family dynamic and will be on the lookout for suspicious or unusual behavior. When sudden changes occur (health issues, death in the family, etc.), your ECC will not have to play catch-up, but can instead step in to solve problems as soon as they appear. We will already be very familiar with your finances and medical situation so that we can step in and help immediately.
In conclusion, proper planning for your aging can be expensive and there are many individual components to consider. A Life Care Plan combines all of these individual components into a single, cohesive plan. Providing input now lets you take control of where and how you age and takes stress off of loved ones. A Life Care Plan is a gift to yourself and your family and an investment in your future.

If you would like to learn more or schedule an appointment, please give us a call.

Monday, April 2, 2018

Medicare vs. Medicaid

Barbara K. Armstrong
I am often asked what the difference between Medicare and Medicaid actually is. So, I decided to do a little summary on the differences that I hope you will find helpful in the event that you, a relative, or a friend has questions. 

Medicare is a federal health insurance program for individuals 65 or older, under 65 with certain disabilities, or any age if they have End Stage Renal Disease or ALS. The federal government provides coverage and it is paid for from payroll tax.  The coverage depends on the type of plan you choose and may include the following:
  • Care and services received as an inpatient in a hospital or skilled nursing facility (Part A)
  • Doctor visits, care and services received as an outpatient, and some prevent care (Part B)
  • Prescription drugs (Part D)

Medicare Advantage plans (Part C) combine A and B coverage, and often will include drug coverage (Part D) as well. Medicare costs depends on the coverage that is chosen.   The costs may include premiums, deductibles, co-pays and coinsurance. Upon reaching the age of 65 years, many people are enrolled in Part A automatically.   To be sure of your eligibility, you should contact your local Social Security office.

Medicaid is a joint federal and state program that helps pay health care costs for people and families who have limited income and resources.  There are different programs that are designed for specific populations. Although Medicaid is a joint program, it is governed by the state you reside in.  Each state creates its own Medicaid programs, which have to follow federal guidelines. Mandatory benefits include, in part:
  • Care and services received in a hospital or skilled nursing facility
  • Care and services received in a federally qualified health care center, rural health clinics of freestanding birth centers (licensed or recognized by the individual state)
  • Doctor, nurse midwife, and certified pediatric and family nurse practitioner services

Medicaid costs depends on income and the rules of your state. Costs may include premiums, deductibles, co-pays and coinsurance. Certain groups are exempt from most out-of-pocket costs. Eligibility for Medicaid depends upon the state that you live in. If you think that you may qualify, you should call your State Medical Assistance (Medicaid) office to inquire.

Thursday, March 22, 2018

A Life Lesson from Harper Lee’s Death

Catherine E. Sears, Esq.

As a lawyer, I am practically required to love Harper Lee’s To Kill a Mockingbird.  As an estate planning lawyer who evaluates clients’ competency on a daily basis, the mysteries surrounding the 2015 publication of Ms. Lee’s long-lost second novel, Go Set a Watchman, and the author’s subsequent death in 2016 are as fascinating to me as Boo Radley was to Scout.  The story is also potentially as tragic as Boo’s, as it is widely disputed whether Ms. Lee – who famously shied away from the public eye after writing Mockingbird – had had the mental capacity to agree to the publication of Watchman.  Some argue that she was competent, while others worry that those she trusted manipulated her into publishing the sequel simply to increase the size of her estate which, conveniently, they would inherit upon her death only a few months later.

Adding to the suspicion was the fact that Ms. Lee’s attorney moved to have the author’s will – which had been executed only eight days before her death – filed with the local court under seal, so that the public could not see the identities of Ms. Lee’s beneficiaries.  Just last month, however, a lawsuit to unseal the will and make the document part of the public record was decided in favor of The New York Times.  Though technically a victory for the Times, the win did not reveal much more meaningful information, as it simply revealed that Ms. Lee’s will was a pour-over will that left all of her assets to her trust, which is not a public record.  Thus, the identity of the beneficiaries and the monetary scope of their inheritance continue to remain a mystery to the curious public.

Just as Atticus Finch taught his children valuable lessons in Mockingbird, we can all learn an important lesson from Ms. Lee’s estate planning.  There are significant differences between will-based estate plans and trust-based plans and, depending on your family’s financial situation and personal values, one of these options might make much more sense than the other. 

People often incorrectly assume that trusts are only for the wealthy and that “regular people” should have a will.  As a best-selling novelist, Ms. Lee was likely an incredibly wealthy woman, so one could argue that her situation feeds into this stereotype.  Certainly, by having a trust instead of a will, Ms. Lee – like anyone with a trust-based estate plan – likely saved her estate quite a bit of money by avoiding the various fees associated with the process of probating a will.  Therefore, there certainly are financial reasons to consider a trust in lieu of a will, especially depending what kind of assets you have, but this is only one consideration.

By all accounts, Ms. Lee identified by so many characteristics other than her wealth.  She is best remembered, perhaps, for her desire for privacy, as she refused to be interviewed and openly fought efforts to turn her hometown in Alabama into a Mockingbird-themed tourist trap.  Similarly, a key characteristic of a trust is the privacy it affords its grantor (the client establishing the trust).  As The New York Times discovered, trust documents are private, and, unlike a will, their contents do not become public with the court even after the grantor dies.  Many clients, even those without large estates, prefer the privacy that a trust affords as they do not want nosy neighbors or friends to be able to see what their assets are and who will receive them.

Additionally, Ms. Lee valued simplicity, as illustrated by the fact that she lived in a non-descript home with her sister and routinely shopped at the dollar store.  Having a trust also conforms with this characteristic, as a trust greatly simplifies the process of administering a decedent’s estate.  With probate, or the process of administering a will, there are numerous documents that need to be filed with the court, as well as strict deadlines dictating when these documents must be completed.  Furthermore, before the personal representative or executor can even begin filing the documents, he or she must go through a formal qualification process.  As a result, in Virginia, it can easily take over a year for even a simple will to be probated from start to finish.  In contrast, administering a trust is much faster and simpler.

Though many uncertainties remain regarding Go Set a Watchman and Ms. Lee’s death, it is indisputable that the benefits of a trust conformed with the attributes of Ms. Lee’s personality.  If you, like Ms. Lee, value privacy and simplicity, consider discussing with an estate planning attorney whether a trust-based estate plan is right for you.

Full New York Times article here

Thursday, March 1, 2018

K-9 Companions: Cute, Cuddly, and Good for Your Health Too!

Teresa M. Clemons
Office Manager

It can be a lonely life for senior citizens - whether living on their own or in an assisted living facility, or dealing with physical and/or mental conditions. Though it's not a cure for health issues by any stretch of the imagination, a dog can provide relief for many of the issues that our elderly population deals with daily. Whether dealing with the loss of a spouse or another loved one, or having a child move far away, the companionship of a furry, four-legged friend can lead to a different kind of love and friendship.

Living with dementia or Alzheimer’s can be very scary and can cause frustration and agitation.  The interaction with a puppy (holding, petting - which is also great for arthritis - or giving kisses) can have a calming effect. In some sufferers who have trouble eating on a regular basis, the company of a dog has actually stimulated their appetites. It can be hard for seniors to stay active if they do not get out much or do not have planned activities. A short walk (stopping and starting as many pooches do, as they have to sniff every blade of grass along the way) can be a nice, mild cardio workout! Sometimes it will lead to activities even when the dog is not physically there.  Owners may want to read about the specific breed, and having a topic to discuss with others can be a great way to stimulate the brain. The American Heart Association even released a study showing that owning or interacting with a dog can prevent heart disease! How amazing the power of a K-9 companion can be.  

Monday, February 19, 2018

Why Young People Need Estate Plans Too

Valerie M. Hollar, Paralegal
We can’t predict the future, but one thing is for sure, if we leave unanswered questions about how to settle our affairs, those that we leave behind may be left with a heavy burden. Simply put, yes, even the youthful among us need to take some time and get some degree of a plan in order. An estate plan doesn’t necessarily just mean deciding how your friends and family should divide your assets after you are gone, but also includes who would make medical decisions, who would pay your bills, and who would take care of your kids or your pets if something were to happen to you.

Every person, no matter their age, needs Powers of Attorney. There are two types of Powers of Attorney documents, a General Durable Power of Attorney and a Medical Power of Attorney. These documents allow someone to help take care of your business and medical decisions if you become incapacitated. Two other documents that are important are a Living Will and a HIPAA release form. A living will directs medical professionals to know how you wish to be treated if you are incapacitated and can’t make your own decisions. A HIPAA authorization form lets them know who they can release information to about your care.

Do you know the difference between a Living Will and a Do Not Resuscitate order (DNR)? A living will is a document that lets the doctors know how you want to be treated if you are incapacitated and there are no measures that can be taken to make you better. It usually allows for comfort care measures when death is near. A Do Not Resuscitate order is for when you do not want medical interventions to try and save your life. These are not the same documents, which is a common misconception.

First marriages are currently occurring later in life than in recent history. Couples seem to be in relationships longer these days before tying the knot. This is wonderful as it has led to a decline in divorce rates among millennials. But, it is creating a new issue. A relationship with someone does not automatically mean they are a family member in the court's eyes. It is important to have a plan in place so that your significant other can be the one making decisions for you, if that is what you want.

If you have young children, you need a will or a trust. Without naming a guardian in one of these documents, the state can appoint a guardian for your children from your family members, and it may not be someone that you want! Have you thought about how much money is needed for their care and education? If you have a complicated family situation, you need an estate plan. Divorce often leads to family situations that are less than pleasant. Often times when a spouse remarries it is important to protect their children’s inheritance from the ex-spouse or the new parent in the family. Wills and trusts can be set up to make sure that your children receive what you want them to, upon your death.

We all think that we are invincible and a lot of us have the “it won’t ever happen to me” attitude. Just because you are young, doesn’t mean you don’t need to plan. Taking the time and the money to set up provisions now is a great gift to leave those you love, just in case something tragic happens. Creating an Estate Plan means leaving as few loose ends as possible for those you love to have to tie up. You can never be too prepared, and it’s never too early to start.

Helpful Articles:

Reasons Millennials Need Estate Planning.

Tuesday, February 6, 2018

A Review of the 2018 Tax Cuts and Jobs Act

Helena S. Mock, Esq.
As most of you know, the Tax Cuts and Jobs Act (TCJA) signed into law at the end of 2017 made extensive changes to the tax laws that will affect almost all Americans beginning in 2018.  One of those changes will result in many fewer estates being subject to the 40% estate tax, and larger estates owing less tax. 

Before the TCJA, the first $5 million (as adjusted for inflation in years after 2011) of transferred property was exempt from estate and gift tax. For estates of decedents dying and gifts made in 2018, this “basic exclusion amount” as adjusted for inflation would have been $5.6 million, or $11.2 million for a married couple with proper planning and estate administration allowing the unused portion of a deceased spouse's exclusion to be added to that of the surviving spouse (known as “portability”). 

The new law, however, temporarily doubles the amount that can be excluded from these transfer taxes. For decedents dying and gifts made from 2018 through 2025, the TCJA doubles the base estate and gift tax exemption amount from $5 million to $10 million. Indexing for post-2011 inflation, brings this amount to approximately $11.2 million for 2018 ($22.4 million per married couple).

As a result of the large estate tax exemption amount, many estates no longer need to be concerned with the federal estate tax.  Much of the planning done prior to 2011, and even many done since then, centered on estate tax avoidance but completely ignored minimizing income tax. But with so few estates now being subject to estate tax, planning for such estates can be devoted almost exclusively to saving income taxes. While saving both income and transfer taxes has always been a goal of estate planning, it was more difficult to succeed at both when the estate and gift tax exemption level was much lower. Below are some tax planning strategies you may want to revisit in light of the larger exemption amount and other recent changes in the law.

Gifts that use the annual gift tax exclusion are one example. One of the benefits of using the gift tax annual exclusion to make transfers during life is to save estate tax. This is because both the transferred assets and any post-transfer appreciation generated on the gifted assets are removed from the donor's estate. However, because the estate tax exemption amount is so large, estate tax savings may no longer be necessary. Making an annual exclusion transfer of appreciated property carries a potential income tax cost because the person receiving the gift receives the donor's basis upon transfer. Thus, the recipient could face an income tax liability (a capital gains tax) if the gifted property were later sold. If there is no concern the donor’s estate will be subject to estate tax, then the donor must consider whether it is wise to make the gift now or wait and leave the property to the individual at death because appreciated property which passes to a beneficiary at death will get a step-up in basis that will wipe out the capital gains tax on any appreciation occurring between the date the property was acquired and the date of death.

No longer is it necessary to engage in complicated planning to equalize the estates of both spouses so that each can take advantage of the estate tax exemption amount. Generally, a two-trust plan (generally referred to as a credit shelter (bypass, family, residuary, etc.) trust and marital trust) was established to minimize estate tax. “Portability,” or the ability to apply the decedent's unused exclusion amount to the surviving spouse's transfers during life and at death, became effective for estates of decedents dying after 2010, but the concept wasn’t made permanent until 2013. As long as the election is made, portability allows the surviving spouse to apply the unused portion of a decedent's applicable exclusion amount (the deceased spousal unused exclusion (DSUE) amount) as calculated in the year of the decedent's death. The portability election gives married couples more flexibility in deciding how to use their exclusion amounts.

Estate exclusion or valuation discounts that do not preserve the step-up in basis may no longer be desirable given the excessive exemption amount. Some strategies previously used to avoid inclusion of property in the estate may no longer be worth pursuing.  Instead, it may be better to have the property included in the estate or have the property not qualify for valuation discounts so that the property receives a step-up in basis, or a larger (new) basis at death. The gap between the transfer tax rate and the capital gains tax rate has narrowed, making strategies that do not preserve the step-up in basis less desirable.

For all of these reasons, and many more which are not discussed here, if your estate plan has not been updated since 2013, it merits review.  The increased exclusion amount may have an impact on your plan.  Whether you should make any changes depends on your individual goals and circumstances.

Monday, January 15, 2018

A Millennial's Perspective to Combating Phone Addiction

Elizabeth D. Johnson
Legal Assistant 
There are many things that differ between my generation and my mother’s but the one I’d like to discuss is the well-known smart phone obsession. My mother is a very smart woman but she just doesn’t get her phone like I do (no offense, mom). Honestly, she is lucky because it’s easier for her generation to shut down and step away from their “entire world in your pocket” device than it is for mine. The average person checks their phone 110-150 times per day! So, with that being said, how do I successfully cut back on cell phone usage and not start nervously twitching? Why do I even want to do this in the first place? Well, I’d like to see if I even can plus I’ve been using a smart phone for a good 10 years at least and my anxiety/stress have only gotten worse. Coincidence? Probably not.

So how do I actually do this? Where do I even begin? First things first, I’ve got to start with social media, i.e. Instagram, Facebook, and Snapchat. I have started setting up a shortcut that with three clicks of the home button, turns my screen black and white, hopefully making social media “less attractive”. Then, I will designate a certain time in the day to check my social media accounts. For example, when I get home from work the first thing I like to do is plop on the couch and scroll through everything, so that will be my Instagram and Snapchat time. Facebook is something I care less about since it really only connects me to the people I vaguely remember from high school. So, I will delete this app from my phone and check Facebook during my lunch break on a computer.

One tip I read about and may (or may not, let’s be real) try is to not use your phone as an alarm clock. I have my phone as my alarm clock now and therefore it is the first thing I touch in the morning and I see all of my text and social media notifications and lay in bed for 10 minutes longer than I need to just to check everything. Plus, an actual alarm clock set further away from the bed might motivate me to get up instead of staring into an abyss of what activities my friend’s brother’s cousin got into last night. Another tip that I came up with on my own, inspired by being in group chats and hearing a constant buzz or beep every 3 seconds, was to completely silence my phone if I’m not expecting any important calls or texts. I don’t even have the vibration on to really keep the annoyance at bay. I also have specific ringtones for people like my boyfriend and mom so that if I hear it go off I will know who it is and whether or not it may be urgent.

I don’t have the best history with completing projects such as the time I said I was going vegan and then bought a block of cheese the next day. So, I don’t think I’m going to do great with this project but if it helps me combat even a little bit of the obsession, then it was well worth it.