HOBBIES ARE GOOD FOR YOUR HEALTH

Do you have a hobby? Hobbies can give meaning and purpose to your life in retirement. As Robert Putnam points out in his book, Bowling Alone, it’s easy to discount the importance of hobbies and social engagements. Putnam details the widespread decline in civic engagement, from PTA memberships to neighborhood potlucks and bowling leagues. Over a couple of generations, Americans have misplaced the concept of free time.

SPECIAL PLANS FOR YOUR SPECIAL PEOPLE

Lily is a beautiful, active and full of personality toddler who happens to have Down syndrome. Lily’s parents and I have been friends for years and I have the continuing pleasure of watching Lily and her siblings grow up. While Lily is becoming a physical therapy rock star and hitting all her milestones in a timely fashion, her parents have started planning for the future.

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WHY WE ENJOY OUR HOBBIES

The Merriam-Webster dictionary defines a hobby as “a pursuit outside one’s regular occupation, engaged in especially for relaxation.” Hobbies include anything from playing a musical instrument to gardening, bird watching or sewing. A hobby is a way of focusing on something you enjoy just for the sake of that enjoyment. It may also be a way to clear your mental palette. You could be stressed out by a situation at work or the challenges of raising children and need an escape.

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Trusts and Annuities

If assets are transferred to a trust or used to purchase an annuity, it will not create a penalty as long as the claimant has retained the right to liquidate it (i.e., a revocable living trust). If the claimant has given up the right to liquidate the trust or annuity (i.e., an irrevocable trust), it would create a penalty. This also pertains to IRAs that have been annuitized and are not liquid for the claimant UNLESS the annuity was created prior to Oct. 18, 2018.


Unreimbursed Medical Expenses (UME)

Relating to non-nursing home facility costs, the full facility cost will be UME if the facility or a third party is providing assistance with at least two activities of daily living OR if the claimant or dependent’s doctor affirms in writing the person must live in such a facility due to the need for “supervisions because an individual with a physical, mental, develop- mental or cognitive disorder requires care or assistance on a regular basis to protect the individual from hazards or dangers incident to his or her daily environment” 38 C.F.R. §3.278(b)(7).


These new regulations have presented new challenges in planning for VA benefit qualification. Additionally, strategic planning for VA Aid and Attendance qualification also should take into account possible planning for Long Term Medicaid qualification as well. Both agencies have vastly different ways of viewing assets, income and transfers for eligibility.

Multiple changes have been made in regulations affecting non-service-connected pension claims. These changes came in a final rule action on Sept. 18, 2018 and went into effect Oct. 18, 2018. There are 30 pages’ worth of changes. The following are just some highlights:


Net Worth Allowance

The net worth limit will be equal to the Community Spouse Resource Allowance (CSRA), which is currently $123,600. This amount is subject to change in December every year. Family vehicles and personal items used on a regular basis are exempt. Assets set up to be held jointly after Oct. 18, 2018 can no longer be used in VA planning to reduce net worth.


Net Worth Calculation

The fair market value of countable assets PLUS total household countable gross income (both spouses) MINUS total household countable unreimbursed medical expenses (UME) equals the total net worth (see net worth limit above).


Household Exemption

The primary residence will remain an exempt asset unless it is sold. Then the proceeds from the sale will be countable towards net worth beginning Jan. 1 of the next year. The big change is the addition of a limit to the exempted attached property.

BIG CHANGES MADE TO VA REGULATIONS REGARDING AID AND ATTENDANCE

Two acres surrounding the primary residence will be excluded. Any additional acreage will count towards the net worth. This change can be detrimental to those residing on a family farm.


Transfers (Gifts)

A look-back period of 36 months has been added to the time immediately preceding the date on which the pension claim is submitted or a new pension claim has been filed. Only the transfer of non-exempt assets is penalized if that asset effects the CSRA.


Transfer Penalty

The penalty period is calculated by dividing the transferred amount by the monthly maximum rate for Aid and Attendance (currently $2,169). This gives the number of months of the penalty, which then will be rounded down to the closest whole number. The penalty period begins the first day of the next month after the last transfer and will not exceed five years.


The new regulation is currently unclear as to how the VA will look at a widow’s situation when they file a claim within one year of the veteran’s death regarding transfers made by the veteran during the veteran’s life-time.    

KATIE E. FINNELL

Katie received her J.D. from Northern Kentucky University,  a Legal Masters (LL.M.) in Estate Planning and ElderLaw from Western New England University and joined Bluegrass ElderLaw after several years as a sole practitioner.

more articles by katie e. finnell