“2013 Veteran COLA Passes House”

Week of July 16, 2012

The House of Representatives passed the Veterans' Compensation Cost-of-Living Adjustment Act of 2012 (H.R. 4114). 

Although this is seen by many as a formality, passing the COLA is often pushed to the end of the year. According to House Committee on Veterans' Affairs press release, taking care of this now ensures that Vets will be given the benefits they were promised without any last minute "political tug-of-war." If signed into law, H.R. 4114 would increase the annual cost-of-living rate for veterans, which goes into effect on December 1, 2012. It is estimated that this year's COLA will be approximately 1.9 percent. The legislation now heads to the Senate for consideration.

For complete guides to all veterans benefits, visit the Military.com Benefits Center.
 
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 The Law Offices of Jeremy W. Howe, LTD. are ElderLaw attorneys in Rhode Island who specialize in wills and trusts, estate planning, guardianship, probate, and Veterans Aid and Attendance Benefits.

They also are Newport Rhode Island Divorce Lawyers, Attorneys, Mediators, and Arbitrators providing services for family law issues such as divorce, child custody and visitation, support, and military family law. 

Call them today at 401-841-5700 or visit them on the web at http://www.CounselFirst.com.

TAX DEDUCTION FOR FAMILY CAREGIVER SERVICES

TAX DEDUCTION FOR FAMILY CAREGIVER SERVICES

The following Article was written by: Kim Boyer, CELA, BOYER LAW GROUP, www.elderlawnv.com and provided to our office via the Veterans Advocates Group of America monthly e-newsletter called VAGA News.
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Many times family members or friends provide care to a loved one for a fee. These family members or friends are typically unlicensed caregivers. Can the person paying for the care deduct the payments as a medical expense on their income tax return?

Medical expenses, not compensated for by insurance or otherwise, may be allowed as a deduction to the extent that the expenses exceed 7.5% of the taxpayer's adjusted gross income. Medical care can include amounts paid for "qualified long-term care services" as defined herein. The taxpayer must be certified as "chronically ill" by a licensed health care professional. The services must be provided pursuant to a plan of care prescribed by a licensed health care professional.

The U.S. Tax Court recently ruled on the issue of whether payments to unlicensed care providers were deductible. Estate of Lillian Baral v. Commissioner of Internal Revenue (July 5, 2011).

The tax court examined whether payments totaling $49,580 made by Lillian to Ms. Pzevorski and Ms. Jakubowski were deductible. Neither of them were licensed healthcare providers. Thus, the payments were not deductible as medical expenses. However, the court found that payments to them could be deducted if their services qualified as "long-term care services" as defined under the tax code.

After analyzing the tax code, the Court found that the care provided constituted "maintenance or personal care services" for a "chronically ill individual" provided pursuant to a "plan of care prescribed by a licensed health care professional." Thus, Lillian could deduct $43,273 of the payments made to the care providers (the amount paid which exceeded 7.5% of her adjusted gross income).

For Medicaid purposes the payments will be considered gratuitous when provided by a family member, unless there is a written contract. It is advisable that there be a written contract providing for reasonable compensation and specifying the nature of services to be provided.

**This article/newsletter is not intended as a substitute for VA, legal, or other professional advice. Every effort has been made to make the content of this newsletter accurate; however, neither VAGA, nor any of its founders, assume any responsibility for errors in content or damages that may occur as the result of using the information contained within this newsletter or from any associated website or e-mail links.
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The Law Offices of Jeremy W. Howe, LTD. are Elder Law Attorneys in Newport, Rhode Island who specialize in Wills and Trusts, Estate Planning, Guardianship, Probate, and Veterans Aid and Attendance Benefits.

They also are Newport Rhode Island Divorce Lawyers, Attorneys, Mediators, and Arbitrators providing services for Family Law issues such as divorce, child custody and visitation, support, and Military Family Law.

Call them today at 401-841-5700 or visit them on the web at http://www.counselfirst.com

ARTICLE: Why Care Managers Should Understand VA

We received this article as part of our monthly newsletter from the Veterans Advocates Group of America and thought our clients and colleagues would find it interesting. Visit their website at http://www.vagamembers.com for more information about their group. Please contact our office if you would like more information on Veterans Benefits available to your family members or your clients, and how we can educate you about how to qualify for these benefits.

Why Care Managers Should Understand VA

When adult children of seniors turn to a geriatric care manager for help, they are typically lost in a sea of issues, dilemmas, decisions and questions about the multitude of resources and services now advertised in our society for the elderly. Often, the very first task of the care manager is to provide emotional support to the adult child, so that the person can think logically and rationally again, as often the decisions to be made can de-stabilize the family, old conflicts can arise again and the senior also reacts to the adult child "stepping in" and taking new actions.

The next task of the care manager is to educate - about what resources/services are out there and very importantly, WHEN they are to be tapped. Knowing about Veterans Benefits is critical to so many families being able to either keep their loved one in the home safely with the in-home benefits or to move their elder out of the home with the Aid and Attendance Benefit for assisted living and personal care homes. In my experience, I have been privileged to see the utter relief of many middle class family members when the senior qualifies for the Benefit, as the financial assistance the benefit provides literally makes the move to assisted living possible.

It is key for the geriatric care manager to educate the family or point them to a resource that can educate them about the timing of many factors that must come together property to qualify for VA benefits. When the family understands the financial parameters that must be met, then the family can make sound financial decision s that support getting to the goal of financial qualification. If not, then qualifications may not ever happen.

Geriatric care managers are experts in helping educate the adult children about the physical/medical status of the senior and this is also a critical factor in deciding when to apply for the Veteran's benefits. For example, it is very common for family members to wait too long to address their loved one's situation and often the veteran may need nursing home placement by the time the family is willing to act versus acting sooner and allowing the veteran to use his or her benefit for assisting living and enjoying this more independent, less intrusive level of care for perhaps years.

With knowledge about Veteran's benefits and all the factors that influence decisions the family must make to qualify, the geriatric care manager has served that Veteran in a critical time -Our veterans deserve no less!

Mallory Long, Geriatric Case Manager
Atlanta, Georgia


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The Law Offices of Jeremy W. Howe, LTD. are ElderLaw attorneys in Rhode Island who specialize in Wills and Trusts, Estate Planning, Guardianship, Probate, and Veterans Aid and Attendance Benefits.

They also are Newport Rhode Island Divorce Lawyers, Attorneys, Mediators, and Arbitrators providing services for Family Law issues such as Divorce, Child Custody and Visitation, Support, and Military Family Law. 

Call them today at 401-841-5700 or visit them on the web at http://www.CounselFirst.com.

It Has Been a Year Since We Filed for Aid & Attendance for My Father

We thought our clients and friends would be interested in the following comment that was posted on one of the monthly newsletters we receive with regard to the Veterans Aid and Attendance Benefits.

In addition to letting people know whether they might qualify for the benefit, the advantage of speaking with us that we will also let you know what to expect if you begin to receive the benefit.

"It Has Been a Year Since We Filed for Aid & Attendance for My Father."

It has been a year since we filed for the Aid and Attendance Pension Benefit for my Father-in-law, John. He is still comfortably situated in his assisted living apartment and receiving good health care from the staff. An important document that our Veteran Consultant let us know about was a form called the “Eligibility Verification Report” (EVR) which VA sends at the beginning of the year and must be filled out every year in order to continue receiving benefits.

After my initial help with his original application John was the only one to receive correspondence from VA, so I asked him to start watching for any letters from them starting in December. He received the form in January. We gathered all of our receipts from his Assisted Living and other medical bills to sum up the correct amount that he had paid that year. The original application could only be an estimate, so this new form establishes the actual amount he is paying. We did not need to send in the receipts, but we filed them away in case VA wanted to see them for proof.

It was very helpful to have our Consultant answer any questions and make us aware of this very important form. Many people are not aware that once applied for and receiving the benefit the “EVR” has to be completed yearly to keep it. One concern to address is that if income or assets increased the past year, the benefit may be reduced or eliminated. On the other hand, if medical expenses have increased since the last year, the benefit may also increase. ....read the entire article by going to the link below.

Please go to the following URL for the entire article and previous articles: Either click on the link http://www.planforcare.org or copy and paste the following into your browser: http://www.planforcare.org


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The Law Offices of Jeremy W. Howe, LTD. are ElderLaw attorneys in Rhode Island who specialize in Wills and Trusts, Estate Planning, Guardianship, Probate, and Veterans Aid and Attendance Benefits.

They also are Newport Rhode Island Divorce Lawyers, Attorneys, Mediators, and Arbitrators providing services for Family Law issues such as Divorce, Child Custody and Visitation, Support, and Military Family Law. 

Call them today at 401-841-5700 or visit them on the web at http://www.CounselFirst.com.

Veterans Aid and Attendance Tax Consequences

Our office shares information with our clients regarding Veterans Aid and Attendance Benefits on a regular basis as part of our Estate Planning and long term care discussions.

I found the following article helpful from the Veterans Information Services, Inc. Monthly Newsletter, written by Dorotha M. Ocker at the Law Office of Douglas F. Ocker & Associates. www.TexasVAbenefits.com

Tax-Free Does Not Mean Tax-Consequence-Free: Common Tax Consequences of Aid & Attendance Planning

Many estate-planning attorneys who also dabble in veterans benefits, most commonly the "Aid & Attendance" benefit, are quite knowledgeable about estate taxes and helping their clients avoid or minimize them. However, A&A planning often has an effect on a client's personal income taxes (or as I call them, "1040 taxes") of which attorneys who work with veterans benefits need to at least have a passing understanding. Most of the time, the veterans benefits outweigh the tax consequences, but the client likes to know about the consequences up front. While an attorney can always have the standard "consult a qualified tax professional" attached to every veterans benefits plan, no attorney wants to get a call in April from a client exclaiming, "You didn't tell me that I'd have to pay more in taxes!"

Here are the most common tax consequences of Aid & Attendance planning that I see in my practice:

1: Increase in Amount of Social Security Income Taxed: Income from Social Security is taxed on a sliding scale, depending on the amount of total income a client has. Often, if the client has a relatively small amount of Social Security income, he or she is paying little to no tax on it. However, if a client enters into an annuity in order to pay his or her monthly expenses, then the taxable amount of that annuity is new income. That new income increases the amount of Social Security income that is taxed. Due to this complicated sliding scale, I often make spreadsheets for my clients and run various scenarios for them.

2: Loss of Itemized Deductions Due to "Maintenance:" A common practice for Aid & Attendance planning is for an attorney to advise a client's family to pay some of the expenses for the client. This would be "maintenance" under the VA regs, thus not counting as income to the client. However, be very careful which expenses you advise a client's family to pay. A cardinal rule of tax deductions is that you only get to deduct the amount that you actually paid. A client could lose his or her tax deductions for certain expenses if the family begins to pay for them. Common tax deductions that are lost are: (1) medical expenses deduction, (2) home mortgage interest deduction, and (3) property tax deduction. I also make spreadsheets for these deductions in order to show families which bills they could pay and which bills to let the client pay.

3: Creation of Passive Losses without Enough Passive Income: Often clients rent out their houses for a while when they first move into a senior community. Rental income is passive income and must be reported to the IRS on Schedule E. Passive income rules are extremely complex. If you don't know them, don't worry - you're not alone. The main point is this: expenses relating to a rental property can only be deducted against income from the property, not against ordinary income. That means that if a client is renting out her house to her daughter for $100 a month and the property taxes, mortgage payment, maintenance, depreciation, etc. are more than $1,200 a year, the client cannot deduct those losses from her ordinary income. It's much like Point #2, where the client is no longer entitled to take a deduction for property taxes and mortgage interest. I make sure that my clients' passive income is completely canceled out by expenses so that it is not taxable income and the client hasn't "lost" a deduction.

Taxes are complicated but very important. Making sure that your client doesn't have a surprise tax increase is something that attorneys can quite easily do by including CPAs or other tax professionals in the early stages of Aid & Attendance planning.

Written by Dorotha M. Ocker at the Law Office of Douglas F. Ocker & Associates. www.TexasVAbenefits.com
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The Law Offices of Jeremy W. Howe, LTD. are ElderLaw attorneys in Rhode Island who specialize in Wills and Trusts, Estate Planning, Guardianship, Probate, and Veterans Aid and Attendance Benefits.

They also are Newport Rhode Island Divorce Lawyers, Attorneys, Mediators, and Arbitrators providing services for Family Law issues such as Divorce, Child Custody and Visitation, Support, and Military Family Law. 

Call them today at 401-841-5700 or visit them on the web at http://www.CounselFirst.com.

Elder Law in RI

ANOTHER WAY TO “STAY ON TOP” OF ELDER-INFORMATION

We send out our monthly elder-law newsletter to keep you up to date on recent developments in the law. If you are interested in this material and also a Rhode Island resident or have “elders” in Rhode Island, you might also want to join the Senior Agenda Coalition of Rhode Island. Their website is: www.senioragendacoalitionri.org

William Flynn is the executive director and the group works very hard to educate the public regarding elder-issues including state and national events and deliberations that affect us all. For example, this week I received a copy of an article from the New York Times from October 1, 2009 (www.nytimes.com) discussing the impact of the recession on Medicaid and the problems that are likely to occur in 2010 when the stimulus money runs out. Unless things change dramatically in the near future, many states will be forced to cut benefits or provider payments.

The article states: “Medicaid is by definition, a counter-cyclical program. Demand for it is always highest at the time that (sic) states can least afford it because of slumping tax revenues.” My father often repeated the phrase: “A word to the wise is sufficient.” Monitor your local politicians closely (by joining Senior Agenda and other such groups) and consider long-term care insurance. Who knows what will be in place for us and our family members in the future?

Jeremy Howe
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The Law Offices of Jeremy W. Howe, LTD. are ElderLaw attorneys in Rhode Island who specialize in Wills and Trusts, Estate Planning, Guardianship, Probate, and Veterans Aid and Attendance Benefits.

They also are Newport Rhode Island Divorce Lawyers, Attorneys, Mediators, and Arbitrators providing services for Family Law issues such as Divorce, Child Custody and Visitation, Support, and Military Family Law. 

Call them today at 401-841-5700 or visit them on the web at http://www.CounselFirst.com.

A surviving spouse can keep the Veteran's Disability Pension payment in the month of their death.

I found the following blurb on the U.S. Senate Committee on Veteran's Affairs website, http://veterans.senate.gov/issues-benefits.cfm

I thought it would be worth noting for those that may have been affected before the administration caught up with the rule changes. I am an accredited attorney with the VA Administration and our office provides information to our clients regarding Veterans Benefits that may be available which relate to funding long term care.

If you, your parent or your spouse (even if you are a widow) is a Veteran, then call us today for more information. 401-841-5700
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Surviving Spousal Benefits—Righting a Wrong:

In November, 2008, Chairman Akaka received a letter from the widow of a veteran regarding the Treasury Department’s seizure of funds from her bank account to reimburse the government for the VA compensation check issued to her late husband the month that he died. The widow had not been notified in advance of this action. Unaware that the funds were no longer in her account, she wrote several checks to honor obligations that she unknowingly could no longer cover. Her bank responded with financial penalties.

The Treasury Department was acting on flawed instructions from VA. Under a 1996 law, surviving spouses of a veteran may, in fact, keep a VA disability or pension check for the month in which the veteran dies. After Committee staff intervention, the widow was reimbursed for the amount at issue and the bank agreed to drop the overdraft fees.

Further examination revealed that the widow’s experience was not an isolated case of poor administration, but rather the result of VA’s failure to update its computer systems and policy in this area. Many other widows or widowers of service-connected veterans over the preceding twelve years may have experienced a similar hardship after suffering the loss of a spouse.
On December 5, 2008, Chairman Akaka contacted former VA Secretary Peake to alert him to the Committee staff findings and to request that he take corrective measures. In his December 11, 2008, response then-Secretary Peake agreed to remedy this error.

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The Law Offices of Jeremy W. Howe, LTD. are ElderLaw attorneys in Rhode Island who specialize in Wills and Trusts, Estate Planning, Guardianship, Probate, and Veterans Aid and Attendance Benefits.

They also are Newport Rhode Island Divorce Lawyers, Attorneys, Mediators, and Arbitrators providing services for Family Law issues such as Divorce, Child Custody and Visitation, Support, and Military Family Law. 

Call them today at 401-841-5700 or visit them on the web at http://www.CounselFirst.com.