Law Office of Donald D. Vanarelli Blog

Lately, I have seen a deceptive business practice beginning in New Jersey and the Northeastern states which, until recently, was largely confined to California and other western states. That is, the practice by certain companies of presenting themselves as non-profit organizations dedicated to assisting veterans by offering to prepare a veteran’s application for Aid and Attendance pension benefits for free when the real goal is to sell annuities and other insurance products. I’ve seen it work like this: if a family member in an assisted living facility asks for a referral for assistance in preparing an application for Aid and Attendance benefits and submitting it to the Department of Veterans Affairs (VA), the family member may be given a referral to an insurance agent, whose company’s name often sounds much more like a non-profit organization than an insurance agency. The care facility often does not know that the purported non-profit is actually an insurance agency. These companies often offer “free” services (out of the goodness of their hearts?), and only after they have gained the trust of the veteran and his or her family, do the annuity sales pitches begin. Unfortunately, it appears that assisting veterans with Aid and Attendance applications has become the new “bait and switch” lead generator for some insurance agents throughout this country. In fact, I have heard that there are companies who have developed “turn-key” systems that agents can use for this purpose.

Of course, the majority of insurance agents are honest, and the majority of insurance agencies do not employ deceptive business practices. But in my opinion some agents are less than forthright in their dealings with veterans. For example, I recently searched the website of one company which offered free services for veterans with a company name that suggested it was a non-profit organization. Interestingly, the company’s website did not disclose the names of any of the members or employees of the organization. This omission alone raised questions about the validity of the company. But, I investigated a little further. I ran a Google search of the company’s address and telephone number and found that the address and telephone number of the purported non-profit appeared to be the same as another company claiming to be in the health care business. The website of the health care business listed the owner’s name. Another Google search revealed that the owner of the health care company was a licensed insurance agent. Does this prove the first company, the purported non-profit, which claimed to assist veterans for free was engaged in deceptive business practices because the company’s actual goal was to sell annuities? No, but it makes me wonder.

The take-away for veterans and their families is this: Be careful when dealing with companies claiming to provide free services for veterans, especially when those free services involve the filing of applications for Aid and Attendance benefits. The company’s goal in providing the free services could be to gain the veteran’s trust in order to make a sale of unneeded annuities. The take-away for assisted living facilities is this: companies that present themselves as non-profits and offer to provide veteran residents free services may be manipulating the truth in order to gain the trust of their veteran clients in order to sell annuities. These companies are dangerous. They are typically not accredited by the VA. If the management of an assisted living facility truly wants to provide a benefit – a long lasing benefit – to their residents, they should refer residents who are veterans only to an Accredited Veterans Attorney or directly to the VA.

In case you missed any of them, here are our most popular blog posts from last week. The original post date, along with a short summary of the content of each post, are included after each hyperlinked title.

Gift Tax Annual Exclusion Amount Unchanged In 2010 – October 31, 2009. The subject of this post was quite simple: The gift tax annual exclusion amount available to taxpayers in 2010 will remain unchanged at $13,000. Period.

Certain “Blue Water” Navy Vietnam Veterans Now Eligible For Agent Orange Presumptive Service-Connected Compensation Benefits – January 23, 2010. This post describes a recent change in VA policy permitting certain “blue water” navy Vietnam veterans with designated diseases to receive compensation benefits and medical care from the VA without having to prove exposure to Agent Orange during their military service.

Medicaid Eligibility Denied Based Upon A Home Transfer To A “Caregiver Child” Who Was Employed Full-Time – December 15, 2009. This post summarizes the A.N. v. Division of Medical Assistance and Health Services and Passaic County Board of Social Services case, administrative appeal which affirmed the denial of Medicaid benefits, after the Medicaid applicant, A.N., who I represented in the case, transferred his home to his son T.N., a caregiver child, who was employed full-time outside the home.

New Tax Basis Rules In Estate And Elder Law Planning – January 14, 2010. This post briefly summarizes the tax law changes that became effective on January 1, 2010 and affect estate and elder law planning. The changes include the elimination of the stepped-up tax basis for assets and the repeal of the federal estate tax.

Top 10 New Jersey Family Law Cases Decided In 2009 – February 3, 2010. This post summarizes each of the top 10 family law cases decided by New Jersey courts in 2009.

Have you noticed the enormous growth in the user base of the internet and social media? Hard to miss it, I know. The numbers of friends and neighbors, even strangers apparently, who regularly use the internet and social media such as Facebook, Linked In and Twitter is staggering, and the growth rate in the past few years has been astounding. This great increase in online activity has already had a tremendous impact on how clients find professional service providers. For example, I can personally report a significant increase in the number of clients who find me solely through my website after an internet search, without any other prior contact with my law firm or me, either by the client or anyone else. That is very different from prior years when most new clients were referred by prior clients. Yet, despite the many indications that change is rippling through society as a result of internet and social media use, I know many lawyers in New Jersey who dismiss anything about the internet or social media as a timewaster for “kids.” This unwillingness to change seems shortsighted, particularly in light of statistics showing the growth in use of the internet in 2009, fueled in part by the surge in participation in social media:

• 1.73 billion internet users worldwide as of September 2009, which is an 18% increase in total internet users since previous year. There are about 253 million internet users in North America. (Unfortunately, I could not find any statistics on internet use in New Jersey.)
• 234 million websites as of December 2009; 47 million were added in 2009.
• 90 trillion emails were sent on the internet in 2009; on average, 247 billion email messages were sent each day in 2009.
• 126 million blogs on the internet.
• 27.3 million tweets per day on Twitter as of November 2009.
• 350 million people are on Facebook; 50% of them log in every day.
• 4 billion photos are hosted by Flickr as of October 2009.
• 2.5 billion photos are uploaded each month to Facebook.
• 1 billion videos are served by YouTube each day; 12.2 billion videos are viewed per month.

Also interesting are the differences in adoption of social media by different generations. It comes as no surprise that the younger generations are the most socially active on the internet. A new report shows that 77% of those the report calls “Millennials” (i.e., internet users aged between 14 and 26), and 61% of Generation Xers (those aged 27 – 43) maintain social media profiles. However, even older generations are flocking to the new social media sites. The use of social media, especially Facebook, by Baby Boomers (individuals between 44 and 62) and Seniors (those aged 63 – 75) jumped drastically between 2008 and 2009.

According to the report, from 2007 to 2008 there was barely a measurable change — just 1% — in Baby Boomers’ adoption of social media. But 2009 was the year that social media bloomed for Baby Boomers, with nearly 47% of them (or us, since I’m one of them) actively maintaining a profile on the social web, up 15% from 2008. (I unknowingly participated in the increase in social media usage among Baby Boomers. In 2009, I set up my profile on Facebook, Linked In, Twitter, JDSupra and Rocket Lawyer.)

Similarly, the number of Seniors using social media increased about 4% from 2007 to 2008. But the number of Seniors using social media exploded between 2008 and 2009, increasing about 22%. Now, about 36% of Seniors currently maintain a social networking site profile. Most of those Seniors are on Facebook.

The marketing of legal services has clearly been affected enormously by the growth in the use of the internet and social media. Moreover, it seems likely that the practice of law, and the delivery of legal services, eventually also will be affected by the internet and social media. Our clients and future clients have clearly embraced the new technology. The question, I believe, is not whether the profession will be effected, but how. And, yes, even lawyers in New Jersey will be affected.

Sources: For Statistics – Pingdom – the Internet 2009 In Numbers and Mashable, The Social Media Guide – Baby Boomers and Seniors are flocking to Facebook

On January 31, 2010, the New Jersey Institute for Continuing Legal Education (NJICLE) hosted the annual Family Law Symposium. This year, this “must attend” annual event for New Jersey family law attorneys had the largest audience of any program ever held by NJICLE: 650 family lawyers were in attendance. One program identified the “top 10 family law cases decided in 2009.” I believe that sharing the cases identified at the Symposium would be useful for readers of this blog. To the case list, I added a brief summary of each decision and a link to each case.

Fawzy v. Fawzy, 199 N.J. 456 (2009). The parties to a matrimonial action can agree to submit disputes concerning child custody and parenting time to binding arbitration. The standard of review of a child custody arbitration award is the “avoidance of harm to the child” standard.

Donnelly v. Donnelly, 405 N.J. Super. 117 (App. Div. 2009). The trial court did not abuse its discretion in denying the payor husband’s request for a reduction in alimony and child support without a hearing when the court held a plenary hearing addressing the same issue one year earlier from which the husband did not appeal.

Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, 129 S. Ct. 865 (2009). The U.S. Supreme Court unanimously ruled that a plan administrator properly distributed benefits under an ERISA pension plan to a deceased participant’s ex-spouse, as she was the only designated beneficiary, even though she had waived her interest in plan benefits in a divorce decree. I previously blogged about the Kennedy case here.

Gonzalez-Posse v. Ricciardulli, 410 N.J. Super. 340 (App. Div. 2009). Even though the trial court found that an involuntary and substantial change in circumstances occurred warranting a modification of the husband’s alimony obligation, the trial court erred by restructuring a 5 year limited duration alimony award of $500.00 per week into a 17 year obligation of $100.00 per week.

Kay v. Kay, 405 N.J. Super. 278 (App. Div.), aff’d ____ N.J. ____ (2009). The N.J. Supreme Court held that the estate of a deceased spouse may assert equitable claims of unjust enrichment and constructive trust against the surviving spouse when the deceased spouse was pursuing a claim of diversion of marital assets against the surviving spouse in a divorce litigation pending at the time of the deceased spouse’s death. I previously blogged about the Kay v. Kay case here.

Crespo v. Crespo, 408 N.J. Super. 25 (App. Div.), appeal granted, 200 N.J. 468 (2009). New Jersey’s Prevention of Domestic Violence Act does not violate the U.S. Constitution.

J.S. v. J.F., 410 N.J. Super. 611 (App. Div. 2009). In a case of first impression in New Jersey, the Superior Court of New Jersey, Appellate Division, affirmed a trial court’s ruling, holding that paying for another’s companionship can be a form of “dating” that triggers statutory protections against domestic violence under the Prevention of Domestic Violence Act. I previously blogged about the J.S. case here.

Houseman v. Dare, 405 N.J. Super. 538 (App. Div. 2009). Specific performance is available as a remedy when one party breaches an oral agreement about the possession of a pet.

Martin v. Martin, 410 N.J. Super. 1 (Ch. Div. 2009). Child support order are not subject to a triennial review that governed child support orders prior to September 1, 1998 when R. 5:6B was adopted.

Wunsch-Deffler v. Deffler, 406 N.J. Super. 505 (Ch. Div. 2009). The Court must adjust the child support guidelines when the parenting time is split between the parents equally by disregarding the “Controlled Expenses” section of the child support worksheet.

This recent case involves the intersection of estate law and family law. In Kay v. Kay, 405 N.J. Super 278 (App. Div. 2009), aff’d, ____ N.J. ___ (2010), the New Jersey Supreme Court, in a per curium or unanimous decision by the entire court, affirmed an Appellate Division decision holding that the estate of a deceased spouse may assert equitable claims of unjust enrichment and constructive trust against the surviving spouse when the deceased spouse was pursuing a claim of diversion of marital assets against the surviving spouse in a divorce litigation pending at the time of the deceased spouse’s death.

Hildegard and George Kay were married in 1973. It was a second marriage for both parties. Although no children were born of the marriage, each party had children from the prior marriage. In 2006, when she was 70 years old, Mrs. Kay filed a complaint for divorce. At that time, Mr. Kay was 83 years old.

In 2007, the court entered an order prohibiting the dissipation of marital assets. Thereafter, Mr. Kay claimed that his wife diverted marital assets into her sole name. But before the divorce action and the claims of the diversion of assets could be tried, Mr. Kay died.

Mr. Kay’s will left his estate to family members other than his wife. However, after Mr. Kay died Mrs. Kay dismissed the divorce action and transferred all joint assets she owned with her deceased husband into her sole name. After the transfer, Mr. Kay’s estate did not own sufficient assets to cover his burial expenses and attorney’s fees. As a result, the executor of Mr. Kay’s estate sought to file equitable claims seeking the imposition of a constructive trust to prevent the unjust enrichment that would occur if Mrs. Kay retained marital property belonging to Mr. Kay at the time of his death.

The trial court denied the estate leave to file equitable claims against Mrs. Kay, and dismissed the divorce action. The court held that the estate of a decedent spouse is not entitled to assert equitable claims against the surviving spouse based upon settled law. The estate appealed. The Appellate Division concluded that the trial court should have allowed the estate to assert claims against the surviving spouse and considered whether the equities arising from the facts alleged called for relief in favor of the estate.

The surviving spouse’s petition for certification to the N.J. Supreme Court was granted. The Supreme Court held that a trial court may not refuse to consider equitable claims raised by the estate of a deceased spouse who, during the divorce litigation, was attempting to pursue a claim that the surviving spouse had diverted marital assets. The Court held that, since the deceased spouse himself was, before he died, attempting to pursue claims that marital assets had been wrongfully diverted by the surviving spouse to the detriment of the deceased spouse, the estate’s attempt to continue the claims raised before death should not be extinguished.

The case is annexed here – Hildegard Kay v. George Kay

Here are our top 5 most popular posts in January. The original post date, along with a short summary of the content of each post, are included after each hyperlinked title.

Gift Tax Annual Exclusion Amount Unchanged In 2010 – October 31, 2009. The subject of this post was quite simple: The gift tax annual exclusion amount available to taxpayers in 2010 will remain unchanged at $13,000. Period, the end.

New Statutory Short Form Power Of Attorney And New Major Gifts Rider Form Now Available For New York State – August 21, 2009. This has been one of the most popular posts in the past months. Here, I described the new statutory forms in New York: the new New York Power of Attorney form and the new Major Gifts Rider form.  The statutory Major Gifts Rider form is needed to grant an agent under a power of attorney in New York the authority to make gifts. I also made the new forms available for download in the blog post.

Certain “Blue Water” Navy Vietnam Veterans Now Eligible For Agent Orange Presumptive Service-Connected Compensation Benefits – January 23, 2010. This post describes a recent change in VA policy permitting certain “blue water” navy Vietnam veterans with designated diseases to receive compensation benefits and medical care from the VA without having to prove exposure to Agent Orange during their military service.

VA Compensation Claims and the “Medical Nexus” Requirement – April 23, 2009. This post discussed one of the three criteria that a veteran must meet in order to receive service-connected compensation from the Veterans Administration: proof of “medical nexus”, or medical evidence that the current disability and the in-service disease, injury or event are related.

Medicaid Eligibility Denied Based Upon A Home Transfer To A “Caregiver Child” Who Was Employed Full-Time – December 15, 2009. In this post, I summarized the outcome in the administrative case of A.N. v. Division of Medical Assistance and Health Services and Passaic County Board of Social Services, OAL DKT. NO. HNA 05980-07. Here, I represented the Medicaid applicant, A.N., who transferred his home to his son, T.N., a “caregiver child” under the Medicaid rules. Medicaid eligibility was denied based upon what I consider to be an incorrect ruling that the caregiver child T.N., who was employed, had to provide care on a full-time basis in order to meet the “caregiver child” requirements.

Westfield, New Jersey – The National Academy of Elder Law Attorneys (NAELA) has announced that Donald D. Vanarelli, Esq., a Certified Elder Law Attorney and Accredited Veterans Attorney with offices in Westfield, NJ, has attended the 2010 NAELA UnProgram, an unstructured learning experience that emphasizes peer-to-peer education, held in Dallas, Texas, on January 22-24.

Some of the highlights of the 2010 UnProgram included sessions on:

• The Application of Medicaid Regulations
• Meeting the Requirements for Medicare
• Establishing Special Needs Trusts
• Protecting Elderly Americans From Scams
• Tax Issues Affecting Older Americans
• Estate Planning and Retirement
• Ensuring the Capacity of Caregivers
• Ethics

Mr. Vanarelli attended the program with the goal of building his knowledge in order to continue to provide high-quality service in the growing field of Elder and Special Needs Law and helping to meet the needs of older Americans and people with special needs.

ABOUT NAELA
Established in 1987, the National Academy of Elder Law Attorneys (NAELA) is a non-profit association that assists lawyers, bar organizations and others. Members of NAELA are attorneys who are experienced and trained in working with the legal problems of aging Americans and individuals of all ages with disabilities. The mission of the National Academy of Elder Law Attorneys is to establish NAELA members as the premier providers of legal advocacy, guidance and services to enhance the lives of people with special needs and people as they age. NAELA currently has more than 4,000 members across the United States. For more information, visit www.naela.org.

ABOUT ELDER LAW
Elder law is a specialized area of law that involves representing, counseling and assisting seniors, people with disabilities and their families in connection with a variety of legal issues, with a primary emphasis on promoting the highest quality of life for individuals. Typically, elder law addresses the convergence of legal needs with the social, psychological, medical and financial needs of individuals. The elder law practitioner handles estate planning and counsels clients about planning for incapacity with health care decision making documents. The attorney also assists clients in planning for possible long-term care needs, including at-home care, assisted living or nursing home care. Locating the appropriate type of care, coordinating public and private resources to finance the cost of care, and working to ensure the client’s right to quality care are all part of the elder law practice.

In the recent case of Rossius v. Krasheninnikoff, plaintiff filed a complaint in which she alleged undue influence by the defendant upon the decedent after she discovered that defendant had obtained letters testamentary from the Ocean County Surrogate’s Court by falsely claiming that he was kin to the decedent. After a three day trial, the court found that defendant improperly influenced decedent to make defendant the sole beneficiary named in the decedent’s will. The court determined that defendant had engaged in the tort of undue influence and awarded the entire estate to plaintiff.

Thereafter, defendant’s counsel filed an application for fees relating to his representation of defendant in this case and a variety of other matters.  Plaintiff opposed the application. The Court granted defendant’s application for fees, and an order awarding fees was entered. Plaintiff’s subsequent application for reconsideration was denied.

Plaintiff filed an appeal, contending that the trial court erred in awarding attorneys fees because defendant was found to have exercised undue influence over decedent. The appellate court reversed, holding that, under the facts of the case, it was an abuse of discretion for the trial court to award attorneys fees to defendant:

In a probate action, allowance may be made for legal fees out of decedent’s estate even if probate is refused.  Where probate is granted and there is reasonable cause for contesting the validity of the will, an allowance may be made to both the proponent and the contestant.  But where the wrongful conduct of one party triggers otherwise unnecessary litigation, no allowance of counsel fees will be made to the wrongdoer.  In fact, in some circumstances, counsel fees for the innocent prevailing party may be charged against that individual.  This prevents the wrongdoer, an individual who commits the tort of undue influence, for example, to benefit from his wrongdoing to any extent and protects the estate from being diminished by the litigation engendered by the wrongdoing.  In fact, “undue influence represents such an egregious intentional tort that it establishes a basis for punitive damages in a common law cause of action.”  Thus not only will a wrongdoer be denied payment of his or her legal fees out of a fund in court, he or she may be liable for counsel fees or punitive damages, to the prevailing party.  [citations omitted]

The case is annexed here – Rossius v. Krasheninnikoff

Contrary to the expectations of many practitioners including the writer, Congress did not amend the federal estate tax laws in 2009. As a result, the Economic Growth and Tax Reconciliation Act of 2001 (“EGTRA”), passed by President George W. Bush, controls. EGTRA makes substantial changes to the  federal estate tax laws in 2010 and thereafter. A summary of EGTRA’s effect on federal tax law follows.

Under EGTRA, the federal estate tax, as well as the Generation Skipping Transfer Tax (GST), were repealed on January 1, 2010. As a result, the estates of people who die after December 31, 2009 are not subject to either federal estate tax or the GST. However, under EGTRA the estate tax and GST will be reinstated automatically next year, on January 1, 2011, at the levels of taxation in effect in 2001 ($1 million per person exemption and 55% top rate). In other words, the federal estate tax and GST were repealed under EGTRA, but only for one year, in 2010. After the year 2010 ends, the federal estate tax and GST will be automatically reinstated in 2011 at a much lower individual exemption amount and much higher tax rate than had been in effect since 2001.

Other significant provisions in EGTRA that took effect on January 1, 2010 include changes to the federal gift tax, which remains intact but at a reduced rate of 35% and with a $1 million lifetime exemption. In addition, “carryover basis” rules took effect, which means that property acquired from a decedent through inheritance will retain the decedent’s tax basis in the hands of the beneficiary, with certain exceptions.

The change in the basis rules merit particular attention. For many years prior to January 1, 2010, property inherited from a decedent received a new basis for tax purposes. The fair market value of the property on the date of the decedent’s death became the new basis of the property. This is  commonly referred to as the “stepped-up basis” rule. The stepped-up basis was advantageous to beneficiaries who sold inherited property when the value of the inherited property had increased during the decedent’s ownership of the property. Using the stepped-up basis rule, little, if any, capital gain was realized on a sale of inherited property by the beneficiary. The reason is because capital gain is calculated by subtracting the tax basis from the sales price, and when the tax basis is stepped-up to the fair market value of the property, the difference between the tax basis and the sales price is usually zero. As of January 1, 2010, however, EGTRA changed the basis rules. Beginning this year, property inherited from a decedent retains the tax basis that the property had at the time of the decedent’s death (commonly referred to as the “carryover basis”). Assuming that the inherited property increased in value during the decedent’s ownership of the property, the carryover basis is detrimental to beneficiaries who sell inherited property. There are two exceptions to the carryover basis rule: first, EGTRA allows for an increase of up to $1.3 million in the basis of certain assets owned by the decedent, and, second, an increase of up to an additional $3 million in the basis of property is allowed under the law for property passing to the decedent’s surviving spouse.

The change in the basis rules is expected to adversely affect tens of thousands of estates. It is now important for taxpayers to investigate the decedent’s basis in inherited property. Unless the beneficiaries can provide information about the decedent’s basis in the property, the law presumes that the basis of the inherited property is zero, resulting in substantial capital gains tax liability for beneficiaries who sell the inherited property.

According to the Barna Group, a think-tank in Ventura, California, only 19 % of those Americans who marry in the Northeast get divorced. The divorce rates for Americans who live in the south is 27 %, the same as the divorce rate for those who marry in the Midwest. Americans who live in the West divorce at a slightly lower rate, 26%.

The divorce rate in southern states averages 5.1% per 1,000 people, while the average rate in the northeastern states is 3.5% per 1,000. Nationally the average is 4.1% per 1,000.

The National Center for Health Statistics says that Massachusetts had the lowest divorce rate in the nation. The other states with the lowest divorce rates in the U.S. are Connecticut, New Jersey, Rhode Island, New York and Pennsylvania. The states with the highest divorce rates include Nevada, Arkansas, Oklahoma, Tennessee and Wyoming.

Studies and experts say southern states may have higher divorce rates because:

1. Couples in the South marry younger, and younger couples are more likely to divorce.
2. Fewer Catholics live in the South, and it’s still difficult to divorce and remarry in the Catholic Church
3. Family income in the south is lower than in the Northeast, and couples with a lower income have a higher divorce rate.
4. The level of education is lower in the South than the Northeast, and couples with a lower education level have a higher divorce rate.

“The big factor in divorce is a person’s level of education. The higher the couple’s level of education, the lower the divorce rate. That’s one reason atheists have one of the lowest divorce rates. Atheists tend to be highly educated people. That’s the story in the nut shell,” said Professor David Popenoe, co-director of the National Marriage Project at Rutgers University.

Source: The January 21, 2010 edition of the Raleigh News & Observer newspaper