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Benefitting Service Members, Number of VA Loans Continues to Rise



April 16th, 2014

The number of VA-guaranteed loans reached a record high in the year 2013, with no signs of slowing down.  The steady increase represents an upward trajectory since the collapse of the housing market.  The Department of Veterans Affairs guaranteed approximately 630,000 mortgage loans in fiscal year 2013, about half of which were borrowed with the purpose of refinancing.

Reasons for the increase include not only historically low interest rates on the loans, but also the fact that service members view the loans as the most viable option compared to other alternatives in the tough lending climate of the last six years.  Another big incentive for first-time homeowners is that the VA loans do not require a down payment.  They also save buyers money by not requiring private mortgage insurance, which would otherwise add to monthly payments and thus, increase the cost to the borrower over the life of the loan.

To qualify, the loan must be for a primary residence, and the borrower must show enough monthly income after personal debts and housing costs to meet “residual income” levels, which are determined by the department.  However, this prudence pays off; according to the Mortgage Bankers Association, VA loans have yielded the lowest foreclosure rate for the last five years.

If you are a service member interested in becoming a homeowner, please feel free to contact the Real Estate Department of HoganWillig at (716) 636-7600.

2014 National Healthcare Decisions Day

Author: Linda Grear


April 12th, 2014

The 2014 National Healthcare Decisions Day is Wednesday, April 16, 2014.

Over 100 million American adults have not designated an agent to make medical decisions nor documented the type of medical care they desire. Although it is a difficult issue to address, it is important for all adults to consider who is best-suited to make medical decisions for them the event they become too ill to convey their wishes personally.

Family Health Care Decisions Act: On March 16, 2010, New York passed the Family Health Care Decisions Act. The FHCDA allows family members to make medical decisions, including decisions about the withholding or withdrawal of life-sustaining treatment, on behalf of patients who have lost their ability to make such decisions and have not prepared advance health care directives (such as a Health Care Proxy or Living Will) if the patient’s wishes can be shown by “clear and convincing evidence”.

Warning: The Family Health Care Decisions Act may give some a false sense of security and belief that written advance health care directives (Health Care Proxy or Living Wills) are not needed. That is not the case.

The legislation established a protocol for health care practitioners to determine whether a patient has decision-making capacity. When it is determined that a patient does not have decision-making capacity, the legislation requires the selection of a ‘surrogate’ from a list of individuals ranked in order of priority, including family members, domestic partners and close friends.

The FHCDA does not solve problems where individuals desire to make very specific medical decisions for themselves based upon their own personal, religious or moral beliefs. Additionally, in family disputes, there may still be issues. For example, if several siblings have differing opinions regarding medical care for a parent, there will be problems to address.

Without advanced written directives for medical care, family members are left in the precarious situation of trying to figure out what to do. The FHCDA clarifies a decision-making hierarchy that may be helpful in emergency situations; however, the FHCDA does not obviate the need for a Health Care Proxy and/or Living Will. Under the statute, the health care surrogate is obligated to make decisions based on clear and convincing evidence of the patient’s wishes. The best way for a patient to express his/her own wishes, avoid family conflicts and select one’s own health care agent is to have a written health care directive (Health Care Proxy and/or Living Will).

The failure to specifically designate an agent to carry out your wishes may create a bitter, lengthy legal battle among family members and doctors in an effort to determine what treatments you would want. If you wish to give someone the ability to refuse treatment on your behalf (such as ventilator assistance, feeding tubes or cardio-pulmonary resuscitation), it is important to leave a written document (Health Care Proxy and/or Living Will) giving an agent authority to refuse treatment on your behalf.

Health Care Proxy: A Health Care Proxy is a document which allows you to designate an agent to make health care decisions in the event you are unable to do so. Your health care agent should be a person you trust to be able to carry-out your wishes and deal with your physicians.

Living Will: A Living Will supplements the Health Care Proxy by allowing you to document your wishes concerning treatment under certain instances, such as a terminal illness, or in the event you are in a vegetative state where there is no reasonable likelihood of recovery.

Appointing a health care agent is a good idea even if you are not terminally ill. A health care agent can act on your behalf should you ever become temporarily impaired. For instance, if you are unconscious as a result of a general anesthesia or have become comatose because of an accident, your agent would be able to make any necessary health care decisions on your behalf and could also arrange for the payment of your health care costs.

You are to be commended if you had the foresight to execute a Health Care Proxy; however, be advised that privacy rules have been enacted which could have a serious impact on your designation. On April 13, 2003, the Health Insurance Portability and Accountability Act (commonly referred to as “HIPAA”) took effect. These HIPAA regulations apply to virtually every physician, dentist, nurse, and health care provider in the nation. The intention of the HIPAA legislation was to standardize the transmission of health care information and require providers to take “reasonable efforts to limit protected health information to the minimum necessary to accomplish the intended purpose of the use, disclosure or request.”

In other words, if your Health Care Proxy was executed prior to 2003 and disclosure of protected health information is necessary for your treatment, your agent could be denied access to your health or medical information, which would then have an impact upon your agent’s ability to provide care for you. Therefore, it is prudent that you complete a HIPAA authorization or execute an updated Health Care Proxy, which should include the appropriate HIPAA language to authorize your agent to make informed medical decisions as a result of having full access to protected health information.

If you have any questions about the above material, or wish to speak to an Elder Law/Estate Planning attorney, please contact HoganWillig, Attorneys at Law at (716)636-7600 or visit www.hoganwillig.com. HoganWillig’s main office is located at 2410 North Forest Road in Amherst, New York with additional offices in Lockport, Lancaster and Buffalo.

Beware of Scams During Tax Season



April 9th, 2014

Heading into April, tax season is now in full swing.  With the April 15th “Tax Day” due date quickly approaching, Americans filing their income taxes should be aware of increasingly-sophisticated scams.  Geared towards taxpayers eager to secure a large refund, the scammers employ a wide range of tricks to prey on individuals.  One practice that accounts for a significant portion of tax fraud incidence is identity theft.  A crook will use stolen social security numbers to file fake tax returns for the refunds; this usually occurs early on in the season before people have time to file themselves.  The IRS also warns taxpayers to use caution in regards to phone calls and emails from people claiming to be from the IRS or promising large refunds.  Another scam to watch out for is return preparer fraud; tax preparers may claim inflated expenses, claim fake deductions, inflate deductions, or manipulate income figures.  They, in turn, profit from the inflated returns.  If a tax preparer encourages you to exaggerate figures or sign a blank return, he or she should most likely be avoided.  Being informed about these tricks, in addition to using a trustworthy preparer, is the best defense against tax scam!

New NYS Estate Tax Law

Author: Linda Grear


April 3rd, 2014

On March 29, 2014, Gov. Andrew M. Cuomo and legislative leaders announced an agreement on New York State’s 2014-2015 budget which included several tax law changes.

As of April 1, 2014, the legislation made significant changes to the estate and gift tax law. First, there is an increase of the New York State estate tax exemption over a four year period to $5.9 Million, by the year 2019, so the NYS estate tax exemption will conform with the Federal estate tax exemption.

Before April 1, 2014, the amount an individual could leave at death without owing NYS estate tax was $1 Million and the decedent’s estate would only pay NYS estate tax (with up to 16% top rate) on assets above the $1 Million threshold.

As of April 1, 2014, the NYS estate tax exemption amount is $2,062,500, which will shield many more individuals from NYS estate taxes. However, if an individual dies with just 5% more than $2,062,500, there is a cliff taxing the decedent on the full value of the estate, not just the amount over the exemption amount. This is a significant change in the estate tax law.

Updated NYS estate tax exemption schedule:
For deaths as of April 1, 2014 and before April 1, 2015, the exemption is $2,062,500.
For deaths as of April 1, 2015 and before April 1, 2016, the exemption is $3,125,000.
For deaths as of April 1, 2016 and before April 1, 2017, the exemption is $4,187,500.
For deaths as of April 1, 2017 and before January 1, 2019, the exemption is $5,250,000.

Commencing January 1, 2019 and later, the NYS exemption amount will be linked to the Federal amount, which the IRS sets each year based on inflation adjustments (projected to be $5.9 Million in 2019). The top NYS estate tax rate remains at 16%.

In addition to the cliff, there are other problematic issues with the new law. There is no portability provision, such as under the Federal law, allowing a surviving spouse to use their predeceased spouse’s unused estate tax exemption to shelter twice as much.

Significantly, the new law includes a three-year look-back for taxable gifts for gifts made on or after April 1, 2014 and before Jan. 1, 2019 (those gifts are pulled back into your estate). The value of any taxable gifts made in the three years prior to death will increase the state estate tax due.

If you have any questions about the above material, or wish to speak to an Estate Planning attorney, please contact HoganWillig, Attorneys at Law at (716) 636-7600 or visit www.hoganwillig.com HoganWillig’s main office is located at 2410 North Forest Road in Amherst, New York with additional offices in Lockport, Lancaster and Buffalo.

CVS Lawsuit could Pose Major Changes to Tight Severance Contracts



March 29th, 2014

When companies downsize, they rely on severance agreements to shield themselves from the threat of lawsuits.  Among other legal components, severance contracts typically include a general release of claims, a non disparagement clause, and a covenant not to sue.  By agreeing not to sue their former employer, the departing individual receives money and/or other benefits.

However, some argue that these contracts are too tight; more specifically, the Equal Employment Opportunity Commission is pointing the finger at CVS, the country’s second-largest drugstore chain.  The EEOC, which is a federal agency mandated to enforce laws against bias in the workplace, is suing CVS for having an “overly broad” and “misleading” severance agreement, which according to the EEOC could impede workers from exercising their rights under job discrimination laws.

Regardless of whether or not an employee has signed a separation agreement, he or she still has the right to file a complaint with the EEOC if discrimination or wrongful termination occurred.  Further, a severance agreement cannot prevent a former employee from participating in an EEOC investigation.  The point of issue in this case arises where the EEOC believes that the misleading language contained in CVS’s severance contract discourages departing employees from exercising these rights, and that agreements of this nature can be very confusing to individuals who are stressed about job loss.  For many, there exists a conflict between a non disparagement clause, and the desire to bring charges with the EEOC.

If the Equal Employment Opportunity Commission wins this case, companies will undoubtedly be forced to take another look at the language within their severance contracts.

If you have questions regarding your rights as an employee, please contact HoganWillig at (716) 636-7600.

Cuomo’s Estate Tax: Maybe New York Won’t Be One of the Worst Places to Die

Author: Leah Adamucci


March 22nd, 2014

Forbes has dubbed New York one of the worst places to die in 2014. The reason for the moniker is the estate tax which is a tax on your right to transfer property at your death. New York, along with only thirteen other states, still levies the tax. The state estate tax is in addition to the federal estate tax. The liability threshold in New York is $1 million dollars, whereas the federal threshold is $5 million – indexed for inflation to $5.34 million. In New York, the estate tax can be up to 16% of an individual’s taxable estate. To determine if an estate tax return is due in New York, the gross estate must be determined. The New York State Department of Taxation and Finance defines the gross estate to include all property that a person owned, had control over, or had an interest in on the date of his or her death. It is not just limited to what a person leaves, or bequests, in their will. It can include life insurance policies, half of the house one owned with their spouse, a stock portfolio and beyond.

At first blush, one may consider this threshold would not apply to them, perhaps believing that if annual income does not exceed $1 million their estate will be exempt. In actuality, individuals subject to the estate tax are not just the big annual wage earners, but those who have more than $1 million in assets, no matter the source. New York had 429,153 households with $1 million or more in 2013, that composes 5.79% of all households in New York State, the 12th largest share of any state. The report is based on liquid assets and does not include real property. The number is underestimated as real estate has risen in value over time owned. This is especially true in and around New York City where owning an apartment or home worth close to $1 million may only get you 900 square feet on the Upper West Side.

As a result, New York has seen its residents establish domicile, or permanent residence, in a state that has more favorable estate tax treatment. Florida is a perfect example of this, as Florida has no estate tax liability. Those that have often been referred to as ‘snowbirds’ not only avoid the harsh New York winters, they may also have another motivation for compiling significant time in states like Florida. An individual can avoid the inhospitable estate tax as well (provided the steps taken to change residence can withstand a New York State Department of Taxation and Finance tax audit).

New York State may be catching on. This year has seen a strong proposal from Governor Andrew Cuomo to raise the estate tax to match the federal threshold by the year 2019. There would still be an estate tax, just at a higher threshold and a lower percentage. Not only would it match the federal level of $5 million, indexed for inflation, the top tax rate would be reduced from 16% to 10%.

As one can imagine, this incites strong opinions from both sides of the fiscal coin. There are those who purport the only people who would benefit are the wealthiest 2% of New Yorkers, and others who say it would incentify New Yorkers to keep and invest their wealth in their home state. Although the outcome is difficult to predict, it is clear that raising the New York State threshold would permit New Yorkers to have more control over a greater value of their assets upon death in New York. Fear not if there is no Boca condo, for there are numerous estate planning techniques that can permit an individual to retain their assets for distribution to the people and things they value that do not include relocating to another state. However, a higher estate tax threshold in New York may serve to lessen the time one has to sit down and think around the problem by eliminating it.

Long Term Care Institutionalized Medicaid Planning Guidelines – 2014

Author: Linda Grear


March 17th, 2014

Medicaid is a joint federal-state Social Security program. The laws governing Medicaid vary depending on whether the applicant is single or married, receiving services in the community or in a nursing home, and under or over the age of 65. Disabled individuals of any age, and medically needy individuals over the age of 65 are eligible for Medicaid as long as they meet the financial criteria.

Eligibility
Medicaid allows an “institutionalized person” (meaning anyone confined to a nursing home or other facility) to retain only $14,550.00 in resources (“resource allowance”), $50.00 per month in income, plus retain life insurance with a face value of $1,500.00 or less, while qualifying for Medicaid benefits. The “resource allowance” includes all resources, including bank accounts, cash value of life insurance policies, savings bonds and investment accounts. The Medicaid applicant may also establish an “irrevocable trust” pre-need burial fund with a funeral home.

Community Spouse
In the event the Medicaid applicant is married and the spouse continues to live in the community, the spouse will be allowed to possess resources totaling $74,820.00, a house with an equity value up to $750,000.00 and a car of any value.

Any assets beyond the allowable limits must first be spent-down or applied towards the cost of the nursing home care before Medicaid will cover those costs. In addition, the community spouse may keep up to $2,931.00 per month income.

There are ways to protect the community spouse during the spend-down period. For example, there is no penalty period imposed on the transfer of assets to a spouse. Also, the couple is entitled to spend funds on anything for which they receive a fair market value prior to an application to Medicaid. Therefore, when there are excess resources, it is strongly recommended that the community spouse pay off any outstanding debts, make repairs and improvements to the home, update appliances, purchase a new car, prepay for burial arrangements, or even take a vacation.

There are also important planning considerations for the community spouse after Medicaid eligibility is established for the institutionalized spouse. This includes special attention to beneficiary designations and the way his/her assets are titled and planning ahead to address the possibility that the community spouse’s health may deteriorate and he/she may need long term care themselves.

If you have any questions about this article, or wish to speak to an attorney, please contact HoganWillig at 716-636-7600. HoganWillig is located at 2410 North Forest Road in Amherst, New York, with additional offices in Buffalo, Lancaster and Lockport

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