Q. I am in my late 80’s and am updating my estate plan. I find I have an important decision to make:  in my Power of Attorney (“POA”) and my Trust, if I ever lose mental capacity should I require the opinion of two doctors, or just one, to certify my incapacity before duties transfer to my Agent or Successor Trustee? Requiring two doctors to sign off would seem to give me greater protection against a “wrong call” by only one. What do you think?

A. That is really an excellent question and my compliments for giving it special thought.

A bit of background:  The most common choice in these matters is to require that two (2) physicians must render an opinion on mental incapacity before responsibility shifts to one’s designated successor.  This approach may make sense for younger individuals, who might reasonably believe that requiring two medical opinions will protect against a “wrong call” by a single physician. Hence, the “two doctor” requirement is typically the default approach in most estate plans.

However, for older persons, or those who – in the future – may need care in a facility, this two-doctor requirement could pose a big problem for one’s family, probably at a time of stress, and may actually make managing one’s financial affairs much more difficult.  Here’s why:

When and if incapacity becomes an issue, it is likely that you, the principal, will then be residing in a care facility, such as a nursing home.  In the nursing home and in some other care facilities, typically only one physician covers the entire facility, visits each patient at a prescribed interval, and directs his or her care. In those situations, it is very difficult to arrange for a visit by a second physician, as there is typically no second doctor who also makes those rounds.

Thus, to comply with a “two doctor requirement” in one’s POA or Trust, your family would need to search for a physician outside the facility who makes “house calls” to nursing home patients, and who is willing to assess you for legal capacity and write an opinion letter based upon that assessment.  It would also be an expense that would not likely be covered by private insurance, Medicare or Medi-Cal. This process can be very difficult for one’s family, especially at a time of stress, and can actually impede the prompt and smooth transfer of responsibility for financial affairs to one’s designated successors.

For these reasons, in our practice we consistently recommend that our clients only require the opinion of only one (1) physician to establish their incapacity. By doing so, we believe that we make the process easier down the road for the client’s family, help to smooth transition to his or her designated successors, and thereby help ensure uninterrupted management of our client’s financial affairs.

In this regard, we typically provide in our legal documents that the client’s incapacity, if it ever occurs, is to be “established by the opinion of one (1) physician, licensed in the state in which the principal then resides, who has examined the principal, and who renders an opinion in writing that the principal is incapable managing his or her own financial affairs.”

You may wish to discuss this matter with your family and with your attorney and consider using the “one (1) physician” requirement for the reasons discussed.

Q.  One of my grandchildren has a disability and receives SSI and Medi-Cal. I would like to leave him a bequest from my estate when I pass. But won’t doing so cause him to lose his public benefits?

A.  Not if you plan correctly. As you probably know, your grandson cannot have more than $2,000 in savings or other nonexempt assets and still remain eligible for these benefits. Thus, the receipt of an inheritance would likely put him over that ceiling and terminate his eligibility. However, the law permits you to create a Special Needs Trust (“SNT”) to receive his inheritance without jeopardizing his public benefits.  The law’s purpose is to allow you to set aside “private funds” to supplement his SSI and Medi-Cal, and to thereby enhance his qualify of life in a kind of public—private partnership.

You would create the SNT as part of your own estate plan, and you would designate someone other than your grandson to be the trustee, such as another family member or even the trust department of a bank. So long as properly created and managed, the funds in the SNT would supplement his needs by direct payment to third-party providers of goods and services, while still preserving your grandson’s public benefits.

Currently, a single individual on SSI, living independently, would receive $932 per month in California and $988 if blind (in 2019). Since the SSI program is designed to cover only food and housing expense, it would be best for the SNT to pay for expenses which are not food or housing, e.g.  transportation, cell phone, computer, recreation, etc.  Reason: payments for expenses which are not food or housing result in no reduction in his SSI or Medi-Cal benefits.

However, the SNT could even assist with the cost of food or housing, but in exchange for only a modest reduction in SSI.  Example: if the cost of an apartment for him were $1500 per month, your grandson could pay, say, $200 of the cost out of his SSI, and the SNT could pay the $1,300 balance directly to the lessor.  Your grandson’s SSI would then only be reduced by a modest $277 per month. Not a bad trade-off.  Further, if the SNT had sufficient assets, it could actually pay much more than $1,300 per month to providers of goods and services for his benefit, and here’s the beauty about how this works: no matter how much the SNT pays toward his monthly housing or food expense, the maximum reduction in his monthly SSI benefit, in any single month, would never exceed $277 (in 2019).  Thus, a well endowed SNT could generate a substantial benefit to a person with a disability, with only a modest reduction in his or her SSI and usually none to his or her Medi-Cal eligibility.  The SSI rules which govern here are referred to as the “ISM Rules”, where ISM stands for ‘In Kind Support and Maintenance’.

Caution: the SNT should never distribute money directly to your grandson, as there would then be a dollar for dollar reduction in his SSI. Rather, payments should always be made to third-party providers of goods and services on his behalf.

Readers with a family member receiving public benefits, such as SSI or Medi-Cal, should always consider creating an SNT as part of their estate plan and thereby preserve their loved-one’s continuing access to those benefits while still providing funds for his or her supplemental needs.


NOTE:  The Special Needs Trust is sometimes referred to as a Supplemental Needs Trust.  They are essentially different names for the same kind of trust.

Q.  My wife and I are about to prepare Advance Health Care Directives, with an option to donate our organs. I hear there is a new law that touches on this.  Do you know anything about this?

A.  Yes. The new law is AB 3211, effective January 1, 2019, and designed to make it easier for persons who use the statutory form Advance Heath Care Directive (“Directive”) to donate organs upon death.  If you use the basic statutory form, the law simplifies the check-off-the-box choices, reducing them from six down to only two.  It provides that—unless you opt out of organ donations—the default directive is that you have consented to same.  It also clarifies that your failure to opt for organ donation in the Directive, does not prevent your election to do so on your DMV Driver’s License.

The purpose behind the new law is to increase the number of available organs for life saving transplantation. Reportedly, there are 23,000 Californians awaiting lifesaving organ transplantations.

However, the most significant feature of the new law is to authorize the temporary medical procedures necessary for doctors to evaluate and/or maintain your organs and/or tissues for harvesting and transplantation.  This change was, I believe, designed to address the apparent inconsistency in a Directive, whereby an individual might opt not to prolong life if he/she were comatose, but whereby that same person had opted for organ donation.  Now, without violating your choice not to artificially prolong your life, it can nevertheless be temporarily prolonged just for the limited purpose of evaluating and maintaining your organs for transplantation. To me, this makes good sense and avoids the medical — legal dilemma that the transplant team might otherwise face.

Notwithstanding the new law, you may still opt out of organ donations, and you can also still specify for what purpose your organs may be used, i.e. transplant, therapy, research, or education.

Note: if you do not wish to make organ donations, you must specifically opt out on the form. If you fail to specifically opt out, but do not otherwise indicate that you do not wish organ donations, then an “authorized individual” on your behalf may still opt for organ donation after your passing.  An “authorized individual” would usually include a spouse or a Domestic Partner (as defined in the Family Code). However, apart from the decision to authorize organ donations, even a spouse or Domestic Partner may not be able to consent to the withdrawal of life-sustaining treatment; instead there must be “clear and convincing evidence” of your own wishes, and the decision as to whether that standard has been met would likely be up to a judge in the context of a legal proceeding brought for that purpose.

To be sure, the new law does not require that you use the statutory form. You may still prepare, or ask your attorney to prepare, a customized Directive suitable to your specific wishes.

So, if you and your wife wish to authorize organ donations, and you opt to use the new statutory form, be sure to verify that it complies with the new law, fill it out completely and make your wishes clear on the form.  To those readers who have already prepared Directives, I suggest that you review them to make sure your wishes are clear, and make it a point to discuss them with your designated Health Care Agents.


Assembly Bill 3211, modifying CA Probate Code §4701; CA Probate Code §’s 4716 (Domestic Partner of patient has same status as spouse); CA Family Code § 297 (“Domestic Partner” defined); Probate Code §4643 (“surrogate” defined), and § 4711–4715 (health care surrogates). For more information on Organ Donations, generally, and to sign up to be an Organ Donor on the California Registry, click on this link to “Donate Life California”.

Q. I have three annuities. If my wife or I need to go into a nursing home, do we need to cash them in to be eligible for a Medi-Cal subsidy?

A. Well, like many things in life, it all depends. If your annuities are held inside an IRA owned by you or your wife, and you are both over age 70 ½ and receiving Minimum Required Distributions under IRS rules, then you won’t need to cash them in. Otherwise, you will need to consider the following:

Deferred Annuities:  If the annuity payouts have been deferred (“Deferred Annuities”), then Medi-Cal will count their cash values. The next question is whether their cash values, when combined with your other savings and investments, puts you over the Medi-Cal resource ceilings: $126,420 (married individual); single individual, $2,000 (for 2019). If so, we sometimes refer to this as being “over resourced”. If they do put you over, then you will need to take action. Some possible planning strategies:

(1) Opt to Start Payouts:  If you opt to begin receiving “periodic payments of principal and interest”, in equal monthly payments, and provided that the pay-outs are scheduled to fully exhaust each annuity within the actuarial life expectancy of the owner, then their remaining values won’t count as a Medi-Cal resource.

(2) Cash In & Make Exempt Purchases: You might cash in one or all of the annuities, as necessary, and then use those proceeds to make purchases which Medi-Cal considers exempt, such as:  home maintenance, home improvements, home mortgage pay-down, purchase of cemetery plots, funeral plans, or household furnishings.

(3) Convert Annuities: Convert the annuities with cash value into income-only immediate annuities without cash value (see below).

(4) Cash In & Gift Away: Cash in the annuities which put you over the resource ceiling and then make what I call “strategic gifts” to your children or other trusted family members, but subject to the following CAUTION: if you choose this gifting option, you are very strongly urged to do so only under the strict guidance of an elder law attorney with experience in these matters. Why? Because gifting in this context is very “tricky” and requires careful compliance with the Medi-Cal rules, which are actually designed to discourage gifting.  If you attempt a gifting program on your own, and you do so incorrectly, you may actually end up disqualifying yourselves from a Medi-Cal subsidy.

Immediate Annuities: If your annuities are irrevocable, income-only “immediate annuities” without cash value, and provided that they are designed to pay out to their owner the full value within his/her actuarial life expectancy, then they will not count against the Medi-Cal resource ceilings. However, the income that you thereby receive from them may count toward your monthly “Share of Cost” (co-pay) for nursing care.

On the other hand, if these immediate annuities are not so designed, then the funds used to purchase them may be considered a disqualifying transfer of assets. This is a bit different from being “over-resourced”, but has a similar effect:  If so construed, you may be found ineligible for a Medi-Cal subsidy under the transfer penalty rules, and this ineligibility may extend for a lengthy period of time.

To be sure, the whole subject of annuities in the Medi-Cal context is quite tricky.  Your best bet is to seek guidance from an experienced elder law attorney before you take any action.



Q.  My husband has dementia and I wonder about my ability to refinance or even sell the home, as he cannot sign. The home is held in a Living Trust. Can you advise?

A. The short answer is that, under these circumstances, it may be easier for you to sell the home than it would be to refinance. Here’s why:

Sale of Home: Your Living Trust probably provides that both of you are co-trustees, but that when one of you dies or becomes incapacitated the other becomes the sole trustee with full power to convey trust assets.  So, assuming that you can document your husband’s incapacity as required by the terms of the trust, the trust terms would then typically permit you, as sole Successor Trustee, to convey clear title to the buyers on your signature alone. Then, as Successor Trustee, you would usually then be able to sell your home. In these situations, title companies are usually willing to insure the passage of title to your buyer. In the sale situation, unlike the Refinance situation, you are not the one seeking a loan; instead, it is your buyer who will apply for the loan and who must meet his or her lender’s requirements.

Refinance: However, if your goal were to refinance an existing loan on your home, this could be problematic. In this situation you will need to comply with your lender’s requirements. Many lenders require that the home be removed from trust during the loan escrow and require that all loan documents be signed by both homeowners as individuals, rather than as trustees. Once removed from trust, your authority to sign would no longer be governed by the trust instrument.  Instead, it would be governed by a Durable Power of Attorney (“DPOA”) if one exists.  However, your lender may not accept that DPOA, if, for example, it had been signed long ago, or it does not adequately identify your home, or it does not clearly give you authority to encumber the home to secure the loan.  Also, the lender may require that you obtain physicians’ letters certifying both (a) that your husband had full capacity when the DPOA was originally by him signed years ago, and (b) that he currently is incapacitated.  A letter certifying your husband’s capacity years ago could be a problem if, for example, your husband’s then physician is now unavailable.

Even lenders who do not require that the home be first removed from trust, may still require signatures by both the acting trustees and by both homeowners as individuals.  This appears especially true with regard to Reverse Mortgages. So, again, even in this situation you may need a “friendly” lender and a DPOA that is acceptable to the lender.

Possible Work-a-rounds: Here are my suggestions if you wish to refinance and anticipate that you may encounter lender resistance: (A) shop around: some lenders, such as credit unions, may have more relaxed standards.  For example, some may not require that you remove the home from trust in order to refinance and may accept your signature, alone, on all loan documents as sole successor trustee; and/or (B) consider a Petition to the Superior Court asking the judge to issue an order which substitutes for your husband’s signature. This procedure is available in California under what is called a Petition for Substituted Judgment, so named because it asks the court to substitute its judgment for that of your husband. In most cases, the lender would then accept the resulting court order in lieu of your husband’s signature. For more on Substituted Judgment, click here.

Whether you seek to sell, or refinance, I recommend checking out these issues with one or more title companies and/or lenders early on and before you get too committed to a specific course of action.

Q. My brother created a trust a few years back, naming our sister as one of his beneficiaries and me as the Trustee. He recently died and we now have a problem:  our sister receives public benefits (Medi-Cal and SSI) and the receipt of an inheritance would cause her to lose those benefits.  Is there a way to change the trust to make some other arrangement for her that will allow her the benefit of the bequest, but also permit her to keep her public benefits?

A. Very likely, yes! The goal would be to reform your brother’s trust to direct your sister’s share into a Special Needs Trust (“SNT”). If properly set up and managed, the assets in the SNT would permit her to continue receiving her public benefits, even while the SNT pays for items which are not covered, or not fully covered, by her Medi-Cal and SSI: Examples: automobile, computer, nicer apartment, furniture, and vacations.

But the problem, of course, is that your brother’s trust leaves the bequest to your sister directly, and not into an SNT, and he is no longer alive to change it. While this is indeed a public benefits problem for her, there may now be a remedy!

Decanting Into A New Trust: A brand new California law just became effective this year (2019), called the “Uniform Trust Decanting Act”.  While we normally think of “decanting” as referring to the transfer of wine from one container to another in order to separate it from older sediment and rejuvenate the wine in the newer container, this vintner’s term has a similar meaning in the world of trusts: Decanting a trust allows the trustee to transfer assets from an existing trust with unwanted provisions into a new trust with more favorable provisions.

To use the new Decanting Act you should engage a knowledgeable attorney to create a new trust which contains the desired SNT provisions for your sister’s share.  Your attorney would then give your sister and all other beneficiaries 60 days notice of the proposed change. If there is no objection, then after the 60 day notice period you would adopt the new trust as your brother’s trust, and then move the assets from his old trust into the new one with the SNT provisions. Alternatively, you might just propose an Amendment as to just your sister’s share, leaving all other trust terms the same. This procedure would protect your sister’s share while allowing her to maintain her eligibility for Medi-Cal and SSI. The beauty of decanting is that it can be handled without court involvement and without the corresponding expense and uncertainty of a court proceeding.

Judicial Modification: If any beneficiary objects, then you have the more traditional option of petitioning the superior court for an order reforming the trust to include the necessary SNT provisions. Before January 1 of this year, this was the traditional approach in situations like yours.  Now, with the new Decanting Act, it can be used as a “back up” if any beneficiary objects.


A further note on the new Decanting Act:  using it to create a SNT for a beneficiary receiving public benefits is merely one use. It can also be used to modify other provisions of an older trust: Examples: to update tax provisions, clarify ambiguities, change successor trustees, re-designate the place of trust administration, and — in some cases — to unwind an unnecessary A – B Credit Shelter Trust.

This new procedure should certainly be considered in your situation.

References:   “Uniform Trust Decanting Act”, effective January 1, 2019. Uniform Law, Text and Comments. See page 69 re: Credit Shelter Trust Issue.

Special Comments For Elder Law and Special Needs Attorneys:

1) The “Self-Settled” SNT Issue:  When considering Decanting into a newly created Special Needs Trust, timing is critical if the goal is to achieve the benefit of a SNT while avoiding the requirement of a post-mortem “pay back” to Medi-Cal.  Basically, the decanting in this context should be completed prior to the time that the beneficiary vests as to principal: Decanting prior to vesting would likely permit the creation of the SNT to be characterized as a Third Party SNT (without the need for post-mortem payback provisions), while decanting afterward may require that the SNT be characterized as a First Party SNT (i.e., as a “self-settled SNT”) with the requirement that it contain payback provisions. See, Kroll v New York State Dep’t of Health (App Div 2016) 39 NYS3d 183, aff’d (Oct. 5, 2016) NY Slip Op 06499. Whether this New York case will govern similar proceedings in California, or other states, is presently undetermined.  That said, the careful practitioner desiring to decant to a SNT without needing to include “payback” provisions would be wise to observe its holding, whenever possible, until the law in California on this point is clarified. To be even more cautious, I would recommend that — if time permits — the Decanting be handled pursuant to the Notice provisions of the Act, rather than via the Consent provisions, so as to render it less likely that the creation of the SNT will be considered the volitional act of the target beneficiary and hence a “self-settled” SNT.

2) The Problem for Over-Age 65 Beneficiaries: If the Decanted SNT is later characterized by Medi-Cal or SSI as a “First Party Self-Settled SNT”, that is a big problem for a beneficiary age 65 years or older. Reason: a beneficiary over age 65 cannot self-settle a SNT under any circumstance. See, 42 USC 1396p(d)(4)(A). The only option for this beneficiary is to join and fund a Pooled Special Needs Trust, as authorized by 42 USC 1396p(d)(4) ( C). However, even this option has been clouded by a recent appellate decision out of Iowa, called Cox and Cox vs. Iowa Dept of Human Services, decided November 30, 2018, wherein the funding of a Pooled SNT by a married couple — both of whom were over age 65 — was determined to be a transfer for less than fair market value, resulting in a transfer penalty medicaid disqualification for each spouse. That Iowa decision notwithstanding, the rule in California has long been that a person of any age may join a Pooled SNT without jeopardy to their Medi-Cal eligibility. See, 22 Cal Code Regs §50489.9 ( c). Indeed, the California Dept. Of Health Care Services acknowledges as much on its own website. See Special Needs Trust notice, wherein it recites that a person of “any age” may join a Pooled SNT. See CEB, Special Needs Trusts, Planning, Drafting and Administration, at §12.9.

However, there still remains concern as to SSI eligibility under Federal Social Security Law for the over-age 65 SNT beneficiary where the decanted SNT is deemed a “Self-Settled” First Party SNT. The concern is that SSI (unlike Medi-Cal) may impose a transfer penalty of up to 3 years upon funding a Pooled-SNT by the over-age 65 beneficiary. See CEB, Special Needs Trusts, Planning, Drafting and Administration, at §12.10.

For a more detailed article prepared for California Elder Law and Special Needs attorneys, click on the following article entitled “The New CA Decanting Statute: Some Advisory Cautions”.

Q. My wife and I are considering selling our home and purchasing a replacement home in California to be closer to our children? I hear there may be some way to transfer our very low property tax to our replacement home. Do you know anything about this?

A. Yes. If at least one of you is at least age 55, or disabled, you may be able to transfer your low “base year value” from your current residence to your new residence. But, there are conditions and restrictions, including geographic limitaions, some of which are as follows:

1) The new residence must be located either within the same county as your original home, OR, within one of the following 10 counties which now permit transfers in from other counties:  Alameda,Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne and Ventura. Note: El Dorado County just ended its program, except as to transactions that were in escrow as of November 7, 2018.

2) The replacement residence must be of “equal or lesser value” to your original residence. This is determined by comparing the sale price of your old residence with the purchase price (or the construction cost) of your new residence.  If the replacement home is purchased prior to the sale of your existing home, the purchase price may not exceed 100% of the sale price of your existing home.  But, it can be up to 105% if you purchase your replacement home within the 1st year following sale, and up to 110% if purchased within the 2nd year following sale. Caution: If these equivalency tests are not met, there is no partial benefit. Thus, it is all or nothing regarding the base-year transfer rule, and so you need to be very mindful of the numbers when planning.

3) The replacement home must be purchased or newly constructed within two years either before or after the sale of your original home.

4) You must formally apply for this base-year transfer by submitting the appropriate form to the County Assessor of your new county within three (3) years of the date the replacement dwelling is purchased or newly constructed, although the Assessor can grant relief for late filed claims.

5) You can only use this benefit once, with the following exception: if you have opted for this benefit once based upon age, and you later become “severly and permanently disabled”, you may then use it a second time based upon your disability.

The law regarding base-year transfers has some quirks and you should read up on them as part of your planning.  A good resource is the website of the Alameda County Assessor, which offers information Notices, Questions & Answers, and the relevant Claim Form. The Assessor’s phone number for questions pertaining to Base-Value Transfers is (510) 272-3787. I hope this information helps and extend good wishes on your planned relocation.

References:  Cal. Rev & Tax Code § 69.5;    CAL Constitution Article XIIIA, §2(a) [valuation of real property]; BOE Letter to Assessors 2016/034 (9/15/2016) [List of California counties which have adopted Ordinances permitting transfers in of Base Year Values from other counties]. Alameda County Assessor Information notices:  Notice #1 Re: Base Year Transfers, with Claim Form;  Notice #2 [with Questions & Answers].

Note: Base Year Value transfers are permitted for property substantially damaged or destroyed by a disaster.  CA Rev & Tax Code § 69 and § 69.3.

Q. My wife and I created our estate planning documents about 10 years ago and we really have not even looked at them since. Do you have any thoughts about when we should consider updating them?

A. Yes, I do. I would tie a review and update into a New Year’s Resolution. Many of us resolve to eat healthier and exercise more in the New Year. I would suggest another resolution: persons who have not created an estate plan should resolve to create one; and those who have already created one, such as yourself, should resolve to update them as need and changes in the law may now require.

A very basic estate plan would typically consist of the following legal documents: a “Living Trust”, a backup Will, a Durable Power of Attorney, an Advance Health Care Directive, and a HIPAA Release for each person. These legal documents are designed to be reviewed, modified and updated as circumstances change. Benchmarks for updating them might include: changes in family structure, such as births, deaths, divorces and marriages; changes in your finances or asset ownership; changes in your ability to manage your own affairs and/or the onset of incapacity; the need for long-term care; the disability of a spouse or child; and changes in tax law.

However, as much as we encourage clients to review and update their estate planning documents, too few actually take that advice. In fact, I have seen wills of deceased parents, prepared two or three decades earlier, which still refer to their children as minors, and others that mention only one child when the parents subsequently had more children. Outdated documents can sometimes be more problematic than none at all.

If it has been 10 years or so since you created your documents, you very likely have provisions in them which were designed with old tax law in mind, and which would now might make administration of your estate unduly cumbersome. Example: for married couples, it was common practice years ago, when the estate tax exemption was only $1 million per person or less, of requiring asset splits and sub trust funding at the first spouse’s death in order to minimize the estate tax bite for the survivor’s estate. Now, with the federal estate tax exemption increased to $11.4 Million per person (for persons dying in 2019), and the corresponding option for married couples to double that amount by making a timely election, the need for burdensome sub-trust funding is no longer necessary for most couples. If your 10 year-old plan falls into this category, you may wish to modify it by eliminating this sub-trust requirement and thereby make asset management easier for the survivor.

For those who have not created an estate plan, I would encourage them to do so. Sometimes setting a specific calendar deadline is helpful, such as by setting a goal of creating or updating your plan by March 31 of the New Year.

The New Year is a time for renewal. Let’s add getting your legal affairs in order to your other resolutions. Your elder law or estate planning attorney can assist you in crafting or updating your plan to meet your present circumstances.

Q. I am wondering if I can still get deductions for charitable gifts under the new tax law? Do you have any thoughts on this?

A.  Yes. Under the Tax Cuts and Jobs Act, effective this year, the traditional method of making a gift and itemizing your deductions on your Federal Income Tax Return, as in years past, may not work. This is because of the way the new Standard Deduction works: essentially, your charitable and other qualified itemized deductions would need to exceed the amount of the increased Standard Deduction before you would receive a tax benefit for your charitable gifts. Reason: On your Federal Tax Return, you cannot claim both the Standard Deduction and itemized deductions; you must choose one or the other. Under the new tax law, the Standard Deduction has been almost doubled: it is now $12,000 per year for single individuals and $24,000 per year for a married couple filing jointly.

But, here’s the good news: there are some “workarounds” for those who are charitably minded, but also wish to also receive a tax benefit. Here are three:

1) Bunch Your Deductions and Make Them in Alternate Years.  For example, if you are single and normally make up to $10,000 per year in charitable deductions consider, instead, making $20,000 per year in charitable deductions in alternating years.

2) Consider a Donor Advised Fund (“DAF”) Offered By a Public Charity. Many charities offer DAF’s to their contributors. A DAF allows you to contribute what would normally be several years’ worth of charitable donations into the fund in one year, and receive a charitable deduction immediately. Your contribution would then typically be invested and grow tax-free. Meanwhile, you could make donations to charities from that account as time goes on, whether in the year of gift or in following years. Additional contributions to the DAF in later years would also be tax-deductible. However, you should first check with your financial advisor to choose an appropriate DAF, selecting one with a good management and investment record. Since the advent of the new law, DAF’s have increased in popularity.

3) Consider a Qualified Charitable Donation Through Your IRA. If you are at least 70.5 years of age, and already taking Minimum Required Distributions (“MRD’s”) as required by the IRS, you could arrange to allocate some of your MRD draws directly to a charity of your choice. The contribution would still count toward your required MRD’s, and the distribution will not be included in your gross income, which essentially lowers your overall income tax bill. However, there are special rules. Notably, the contribution must be made directly from the IRA to the charity; it cannot be made to you initially, with you later turning around and sending the funds off to the charity. Check with your IRA custodian to see if it offers this service. I understand that Fidelity, Vanguard, T. Rowe Price, and Charles Schwab offer this option to their customers. Note: the charity must receive the contribution and cash the check before the end of the tax year to make this work.  Although you will then receive a Form 1099-R, it is up to you – not your brokerage company – to properly report the contribution as a nontaxable Qualified Charitable Donation.

Note: On your California Income Tax Return, these deductions will work the same as in prior years.  This means that your deductions may be different for your Federal and State income tax returns.

ReferenceIRS Publication 5307 “Tax Reform Basics for Individuals and Families”.

Q. I hear there is a new scam going around whereby seniors receive phone calls that appear to be from Social Security. Do you know anything about this?

A. Yes. There is a spoofing scam going around the entire country whereby seniors receive calls which appear to be coming from the Social Security Administration, but which in reality are scams. The recipient’s caller ID shows that the call is coming from 1-800-772-1213, which indeed is the phone number for the Social Security Administration, but the call itself is phony. Here is how you can tell:

The caller claims that he or she needs your Social Security number and other personal information in order to process an increase in your Social Security benefits, and may also go so far as to threaten that your benefits will be terminated if you do not provide that information. These are fraudulent calls! If you get one, hang up immediately, and in any event do not give out your Social Security number or other personal information.

The Federal Trade Commission (“FTC”) recently released a consumer advisory about this scam, urging recipients to hang up if they receive one. The FTC advises that the Social Security Administration (“SSA”) will never threaten, will never seek to get personal information over the telephone and will never promise to increase your benefits in exchange for that information. If the caller makes that claim, you can bet it’s a scam call.

If you have any doubt hang up and call SSA directly and inquire. Further, if you get a spoofed call of this nature report it to the SSA’s Office of Inspector General at 1-800-269-0271. Be alert and be safe.

References: FTC advisory issued October 29, 2018.