Proposed VA Rules to Impact VA Aid and Attendance Benefits

Important changes are coming that will impact Veterans and their families who apply for the Aid and Attendance (AA) pension.  Although the public comment period has expired, it is not yet known when these changes will take effect.  Some of the changes involve significant departures from prior regulations and will require advanced planning before applying for benefits.  If you or a loved one are considering applying, it is best to do so now before these new changes commence.    

One of the proposed changes involves new asset and income limits in order to qualify for AA benefits.  The proposed net worth limits will track that of Medicaid, which is $119,220.00 for 2016.  Both income AND assets will be added together when determining whether an applicant qualifies for benefits.  An important excluded asset is a claimant’s home, provided it is a primary residence in a residential lot not to exceed 2 acres.  If the primary residence is more than 2 acres, unless the additional acreage is not marketable, the additional acreage could cause a claimant to be over assets and disqualify him/her for benefits.  In addition, annuities and trusts are deemed “covered” assets, meaning the value of them can be included in the asset/income calculation to disqualify a veteran or spouse. Likely the most notable change involves the addition of a look back period, similar to Medicaid.  However, the look back for the VA is three years (36 months), versus five years for Medicaid.  If there are improper transfers during that period of time, the VA may impose up to a 10 year penalty period.  Here, like with Medicaid planning, careful attention must be paid to asset transfers within the 36 month look-back period because the VA has proposed a short window to remedy an issue if a penalty is imposed. 

In another proposed regulation that is similar to Medicaid, provided a claimant meets all of the requirements to qualify for AA benefits, the VA has proposed that all pension beneficiaries complete annual Eligibility Verification Reports (EVR) to verify their income.  This means that the VA will monitor recipients of the pension benefit to ensure ongoing qualification

Lastly, the VA has proposed regulations that seek to define covered medical expenses.  To receive reimbursement for custodial care the claimant must require either regular assistance with two or more activities of daily living (ADL’s) or custodial care and assistance because a mental disorder makes it unsafe for the veteran or surviving spouse to be left alone.  ADL’s include bathing, showering, dressing, eating, toileting and transferring.  Payments to facilities will only be paid if the primary reason for the veteran or surviving spouse to be in the facility is to receive health care services or custodial care that the facility provides.  If the care is not for health or custodial care related services, it will not be considered an allowable medical expense.    

The above list is not exhaustive and only highlights some of the proposed changes that the VA intends to implement.  If you are thinking of applying for these benefits or have questions, you should contact an experienced attorney to assist you before these new regulations take effect.

If you have any questions about this or any Aid and Attendance pension matter, contact the attorneys at Brown, Paindiris & Scott at 860-659-0700 or klenda@bpslawyers.com. 

Short Sale Deficiency Forgiveness Extended through 2016

During the subprime mortgage crisis, beginning in 2007, short sales became a common way for homeowners to dispose of their property.  In a short sale, the bank allows you to sell your property for less than what is owed.  The difference between the amount owed and the sale price, also known as the deficiency, would normally be considered taxable income under 26 U.S.C. 61(a)(12).  For example, if a homeowner owes $200,000 on a home, and the bank receives $150,000 from the short sale, the difference of $50,000 would be considered taxable income to the homeowner, because it is money owed to the bank that the homeowner does not have to pay. This creates a large tax burden and is extremely problematic for people who are in the position of needing to short sale their property.

In response, Congress passed the Mortgage Forgiveness Debt Relief Act (MFDRA) in 2007.  The MFDRA amends the IRS code to essentially exclude any short sale deficiency from counting toward an individual’s taxable income.  In other words, that $50,000 owed to the bank that the homeowner does not have to pay will no longer be taxable as income to the homeowner.  There are of course, exceptions, and it generally only applies to the short sale of principal residences where the deficiency is $2 million or less.

The MFDRA originally applied to short sales completed through December 31, 2014.  Pursuant to the Protecting Americans from Tax Hikes Act of 2015 (PATH), it has now been updated to retroactively apply to short sales made in 2015 and to short sales made in 2016.  Further, PATH allows the MFDRA to apply to short sales “subject to an arrangement that is entered into and evidenced in writing before January 1, 2017.”  This means that taxpayers will not be taxed on the discharge of indebtedness related to a short sale completed in 2015 or 2016, or on a short sale agreed to in writing in 2016 but which doesn’t close until 2017.   

If you have any questions about this or any other real estate matter, contact the real estate attorneys at Brown, Paindiris & Scott at 860-659-0700 or rvongootkin@bpslawyers.com.

26 U.S.C. 61: https://www.gpo.gov/fdsys/pkg/USCODE-2011-title26/pdf/USCODE-2011-title26-subtitleA-chap1-subchapB-partI-sec61.pdf

Mortgage Forgiveness Debt Relief Act of 2007, 110 P.L. 142, 121 Stat. 1803: https://www.congress.gov/110/plaws/publ142/PLAW-110publ142.pdf

Protecting Americans from Tax Hikes Act of 2015, 161 Cong Rec E 1821, Sec. 151: http://docs.house.gov/billsthisweek/20151214/121515.250_xml.pdf

Attorney Cody Guarnieri Appointed as Connecticut Bar Association Presidential Fellow

The law firm of Brown, Paindiris & Scott would like to congratulate Attorney Cody N. Guarnieri on his appointment as a Connecticut Bar Association Presidential Fellow. The Presidential Fellowship is a prestigious distinction and is related to a CBA program in its inaugural year. Attorney Guarnieri's Presidential Fellowship is with the Criminal Justice Section of the CBA. As a Presidential Fellow, Attorney Guarnieri is an ex-officio member of the executive committee of the Criminal Justice Section and is expected to be an ambassador to younger and transitioning lawyers in engaging with CBA and Criminal Justice Section programming and professional opportunities. His two year term began on September 18, 2015.

Attorney Guarnieri graduated with honors from the University of Connecticut School of Law in 2012. His legal practice focuses primarily on representing adults and children accused of crimes, defending professional licenses as well as in personal injury and workplace injury matters. He is also the current President of the Hartford Rotary Club. He lives in South Windsor with his wife and son.

Class Action Lawsuit Filed for Volkwagen “CleanDiesel” Emissions Fraud

Attorneys Bruce E. Newman and Cody N. Guarnieri commence class action lawsuit against Volkswagen Group of America and its Parent Company Located in Germany.

Cody Guarnieri and Bruce Newman have filed a class action lawsuit on behalf of Drew Mizak of Plainfield, Connecticut, and others similarly situated nationwide, against Volkswagen Group of America, Inc., and Volkswagen Aktiengesellschaft, located in Wolfsburg, Germany. This lawsuit follows the discovery and release of those companies having defrauding consumers worldwide. It is alleged that Volkswagen intentionally misled consumers regarding their "CleanDeisel" automobiles models sold in the United States from 2009 to 2015, including the VW Jetta, VW Beetle, VW Golf, VW Passat and Audi A3, all of which included 2.0L Turbocharged Diesel Injection engines ("TDI"). The German carmaker is claimed to have marketed and sold these models as both highly efficient and emissions reducing. In reality, Attorneys Newman and Guarnieri allege, Volkswagen installed a "defeat device" in the form of sophisticated software was installed in these models which only suppressed emissions to comply with the Clean Air Act when subjected to federal testing. Under non-test conditions, these automobiles are alleged to have emitted up to 40 times the allowable emissions under federal standards.

This is believed to be the first and only claim brought in the Federal District of Connecticut to date, and one of few in New England, as well as which incorporate claims against the German parent company of Volkswagen. Up to 500,000 cars are believed to be effected in the United States, as well as more than another 10.5 million worldwide.

If you are an owner or lessee of an affected car or have questions, call Attorney Guarnieri at (860) 522-3343 or Attorney Newman at (860) 583-5200.

WNPR: http://wnpr.org/post/plainfield-connecticut-teacher-sues-volkswagen-over-clean-diesel-cars

Hartford Courant: http://www.courant.com/business/hc-volkswagen-lawsuit-brown-pandiris-20151003-story.html

National Law Journal:http://www.nationallawjournal.com/id=1202738747122/VW-Hit-with-Onslaught-of-Class-Actions-Across-32-States?slreturn=20150905113157

International Business Times: http://www.ibtimes.com/volkswagen-emissions-scandal-us-vw-owner-sues-company-joining-long-list-suits-filed-2124517

Norwich Bulletin:http://www.norwichbulletin.com/article/20151002/NEWS/151009878

JD Journal: http://www.jdjournal.com/2015/10/05/nearly-200-class-action-suits-filed-against-volkswagen/

"Secret" Probate Lien Went into Effect Oct. 1

Connecticut Public Act 15-05 Introduces a New Unrecorded Probate Fee Lien Upon the Death of the Owner of Connecticut Real Estate

Upon the death of an owner of Connecticut real property, Connecticut General Statute §12-398(d) creates an inchoate estate tax lien in favor of the state. Often called a “secret” lien, it is not recorded on the title but a release must be obtained and recorded before the new owner can convey clear title to a buyer.

Now, with the passage of Section 454 of Public Act 15-05, there is a new inchoate or “secret” lien to be aware of when a property is being sold by an estate or beneficiary. This section creates a lien in favor of the State to secure the probate fees payable by the estate. Similar to the inchoate estate tax lien, any person buying real property from a title successor is charged with notice of its existence even though it is not recorded.

This lien will impact all real estate practitioners who represent a buyer in a real estate transaction from an estate or beneficiary of any estate. In addition to requiring the release of the Connecticut estate tax lien, counsel will now also need to require from seller a release of the lien for probate fees from the probate court. This process will represent another step that may require some lead time and it is best to be mindful of the logistics involved in this new process. 

If you have any questions about this or any real estate matter, contact the real estate attorneys at Brown, Paindiris & Scott at 860-659-0700. 

David Rintoul was interviewed today on the Ray Donovan Show   on WTIC regarding President Obama’s recent announcement that the regulations of the Fair Labor Standards Act will be changed so more employees will be eligible for overtime.  Many employees who make less than $50,400 annually will now be eligible for overtime.   Previously, the limit was set at $23,600, less than the federal poverty level for a family of four. Employees who made more than this only qualified for overtime by satisfying a complex and arcane test dependent on the duties they performed.  The change will give both employees and employer more certainly about who is entitled to overtime.  David discussed the effect on workers and employers in Connecticut President Obama’s overtime changes.   If you have any questions about overtime pay in Connecticut, send David an email at drintoul@bpslawyers.com, or go to his profile at here

Home Sweet Home: The Perils of Co-Ownership for Unmarried Couples

You found the perfect home, well, not perfect but it has potential.  You and your partner can scrape up enough for the deposit and your combined income will allow you to manage the hefty mortgage payments.  So why are you anxious?  It’s not buyer’s remorse, it’s your common sense reminding you of one important fact: you and your partner are not married.  Perhaps you are both previously divorced.  Maybe you have philosophical objections to marriage.  Whatever the reason, your marital status is a relevant factor in this transaction and you should consider the risks carefully.

What happens if you part ways or if one of you dies?  The law often does not provide clarity for such situations.  But if you both sign a mortgage note you will both be liable for the full amount of the loan until it is paid in full, often thirty years from now.

Let’s imagine the worst case scenario.  Fast forward five years and your situation could be vastly different.  Your relationship has soured and you want out of this situation.  Your partner is uncooperative about selling the property, refuses to move out and cannot afford to pay the monthly expenses associated with the property on their own.  All conversations with your partner have become emotionally charged and heated.  What is your liability?  What is your recourse?  

Your legal exposure can be significant, especially considering that in most areas buying a home involves borrowing several hundred thousand dollars.  If the mortgage goes into default the lender will eventually foreclose, seriously jeopardizing your credit and leaving you subject to a possible deficiency judgment for the difference between the value of the property and the debt when the foreclosure occurs.  Any investment you made in the property is at risk of being lost, as foreclosure actions can quickly eat up some or all of your equity.  You may also have personal responsibility for other expenses associated with the property such as association fees, taxes and utilities that are in your name. 

What are your rights?  Can you force your partner to move out?  Can you force them to contribute monthly to the carrying costs?  Only with a court order.  And what’s the legal authority that allows courts to enter such orders?  That is where it gets tricky.  Co-habitation cases, as they are often called, are a newly evolving area of the law.  There is not a lot of legal precedent for these types of cases, therefore, not a lot of certainty exists in terms of the possible outcome.  There may also be unique tax consequences for unmarried couples.  One thing you will know from the outset is that it will be expensive, with the legal costs of each side capable of escalating quickly into tens of thousands of dollars. 

Co-habitation cases are not cookie-cutter court actions similar to no-fault divorce actions where judges routinely divide up a couples’ property according to well-established legal principals.  Co-habitation cases are civil actions, each with their own unique factual claims, such as who put in how much, who paid the mortgage, who paid for improvements, what was the “deal” at the outset.  And while the law will continue to evolve in this area, it may take decades to become somewhat uniform and the specific circumstances of each case will still be subject to dispute and interpretation.  So how do you protect yourself now, before you commit?  You invest in a pound of prevention.  Consult with an attorney who has experience in drafting co-tenancy agreements.  Have a contract drawn up which recites in detail how the deposit is being paid, how closing costs are being paid and how the monthly expenses going forward are to be paid.  Address how improvements you make to the property will be managed.  Consider how you will hold title, as tenants in common so that your respective estates will take your share if you pass, or as joint tenants with rights of survivorship.  If one or both of you have children from a prior relationship you may feel conflicted about allowing what may be your most significant asset to go to your current partner.  You can remedy this by each taking out a life insurance policy on one another that would let you “buy out” the other persons estate if one of you should pass.  The agreement should address what happens if one person moves out, including how the monthly carrying costs should be paid and whether either partner has a right to buy the other out and, if so, how the buy-out price will be calculated and paid.

If you are uncomfortable raising this suggestion with your partner consider the fact that a co-tenancy agreement can benefit both parties.  A home is a serious investment with many responsibilities. You owe it to each other to handle it in a responsible way.  Think about it, you would not let your automobile insurance lapse, risk losing your health insurance benefits or gamble with your retirement fund.  Why?  Because you know the possible cost for taking such risks could be more than you can afford to absorb.  So why take unnecessary risks when buying a home?

For most people housing is their largest recurring expense and sharing that expense with your partner can be financially beneficial.  Co-ownership may be the best choice for you, but it’s important that you and your partner discuss your expectations and, ideally, reduce it to writing with the assistance of legal counsel.  It’s always best to be informed, and whenever possible, prepared.  You cannot provide for every possibility, but at least you can address the most obvious sources of potential conflict.  Address this issue before closing and you can move on to more pleasant topics, such as what color to paint the kitchen.

Questions? Comments? Contact Attorney Bridget Gallagher at 860-659-0700 or bgallagher@bpslawyers.com.