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Monday, July 11, 2016

How does life insurance fit into my estate plan?

Life insurance can be an integral part of an estate plan. Policies can be set up to be paid directly to the beneficiary, without the need to pass through the estate, and without the need for any taxes to be paid. Having a life insurance policy ensures that some assets will be liquid, so that debts and expenses can be paid quickly and easily without the need to dispose of assets. Beneficiaries can be changed at any time as can the benefit amount. The policy can be used to accumulate savings if the plan is surrendered before death. Life insurance policies, especially those purchased later in life, can pay out significantly more than what was invested into them. There are many benefits to purchasing a life insurance policy as part of an estate plan.

An attorney can set up a life insurance trust to help avoid estate taxes. A life insurance trust must be irrevocable, cannot be managed by the policy holder, and must be in place at least three years before the death of the policy holder. Any money received from the life insurance trust is not a part of the taxable estate. The need for this is rare as the exemption for estate taxes is currently almost five and a half million dollars, but it is a useful tool for some nonetheless.

There is a limit to how much life insurance an individual is permitted to purchase. A person may carry a multiple of his or her gross income which reduces with age. A twenty five year old can buy a policy worth thirty times his or her annual income. A sixty five year old may only purchase ten times his or her annual income worth of life insurance. This is an important factor to consider when deciding whether life insurance should be a part of your estate plan.

Life insurance as a part of estate planning is a complicated issue. It makes sense to consult with an estate attorney and a tax professional before meeting with an insurance broker. Both can help an individual understand the benefits of insurance over other means of transferring assets.


Monday, June 27, 2016

Why Might I be Denied Bankruptcy Protection?

While there are certain debts that cannot be discharged through bankruptcy proceedings, such as college loans or child support payments, for most people bankruptcy is available as a protection from overwhelming debt. Nonetheless, certain circumstances can result in your being denied the entire discharge, leaving you responsible for all outstanding debt. Alarming as this may sound, as long as you have been open and honest with your creditors, you should have nothing to worry about.

Reasons for Denial of Chapter 7 Bankruptcy Discharge

The primary reasons you may be denied Chapter 7 bankruptcy discharge are all based on dishonest and/or illegal behavior. These reasons include:

Attempt to Defraud

If you have transferred, destroyed or concealed property within a year before, or at any time after, filing for bankruptcy, you may be accused of attempt to defraud and lose your right to file for bankruptcy protection.  For this reason, it is extremely important that you be completely honest with your attorney about any transactions involving property that may have occurred, even if such transactions took place without any intent to defraud.

 

Lack of Sufficient Information

Any failure to maintain sufficient records about your finances during the period in question may result in your being accused of destroying, mutilating, or falsifying pertinent data. You have to be able to back up your assertions with proper recorded information.

Lying

The point has already been made that honesty is not only the best, but the only policy that will help you file for bankruptcy. When you file for bankruptcy protection, you take an oath that everything in your statement is true and accurate. You are therefore open to perjury charges if you are not completely honest with your attorney and with the court.

Inexplicable Loss of Assets

You are responsible for your own financial record-keeping and will be held accountable if you cannot explain to the satisfaction of the court where certain assets have gone. 

Refusal to Comply with a Court Order 

If the debtor fails to obey a lawful court order during the proceedings, he or she has forfeited the right to bankruptcy protection.

 Failure to Take an Instructional Course on Debt Management 

Under the bankruptcy code, debtors must take two instructional courses, one in credit counseling before the proceedings can begin, and a second one in financial management that must be completed during the case. The second one must be completed as a prerequisite for getting debt discharged through the bankruptcy proceeding. 

How to Avoid Being Denied Bankruptcy Protection

It is always best to work with a skilled and experienced attorney when you are preparing to file for bankruptcy. Having an attorney who specializes in bankruptcy proceedings is important because such a professional will not only help you to achieve the most effective resolution of your debt problem, but will guide you through the procedure with as little turmoil as possible.  It is crucial that you choose an attorney with whom you have a personal rapport, one you can trust implicitly and with whom you can be completely honest. 


Monday, June 20, 2016

Costs Associated with Dying Without a Will

When someone dies without a will, it is known as dying intestate.  In such cases, state law (of the state in which the person resides) governs how the person's estate is administered. In most states, the individual's assets are split -- with one third of the estate going to the spouse and all surviving children splitting the rest. For people who leave behind large estates, unless they have established trusts or other tax avoidance protections, there may be a tremendous tax liability, including both estate and inheritance tax.

For just about everyone, the cost of having a will prepared by a skilled and knowledgeable attorney is negligible when compared to the cost of dying intestate,  since there are a number of serious consequences involved in dying without a proper will in place.

Legal Consequences

The larger your estate, the more catastrophic the consequences of dying intestate will be. If you die without a will, the freedom to decide how your property will be divided will be taken from you and the state in which you reside will divide your assets.

Not only will you not be able to decide on the distribution of your property, but a stranger will be making personal, familial decisions. This may be divisive among your family members; instead of leaving your loved ones in peace, you may leave them engaged in bitter disputes over a family heirloom or even a simple memento. This can be especially true in situations where there are children from a previous marriage.

Tax Consequences

In addition to the legal and personal problems associated with dying intestate, the tax results can be severe as well. This is particularly true for clients who have not consulted with an estate planning attorney in order to protect themselves through tax avoidance methods. Both the state and federal governments can tax the transfer of property and an inheritance tax may be imposed on the property you have left to your heirs.

The most effective way to avoid all of these negative tax consequences is to create a will with a competent attorney. Your lawyer will help you to choose a proper executor (the person who will administer your estate, distribute your property and pay your debts), and will assist you in finding ways to limit your tax liability. There are several ways your attorney can help you to do this:

  • By gifting some of those you want to inherit before you die
  • By creating one or several trusts
  • By purchasing a life insurance policy
  • By buying investments in your loved one's name

These methods will ensure that your loved ones receive the assets you desire them to have, while simultaneously protecting them from possibly enormous tax burdens after you pass.

For those who have no family, dying without a will can be even more troublesome and costly, since their entire fortunes can be left to the state. If a genealogical search doesn't turn up any blood relatives, all of your assets will be claimed by the government. This means that any individual, group, organization or charity you wished to endow will receive nothing.

It is never easy to think of one's own mortality, but it is even more painful to contemplate leaving a messy, uncomfortable situation behind when you pass. By engaging the services of an excellent estate planning attorney, who will help you fashion a legally binding, precisely designed document,  you can make sure that your loved ones are well taken care of and that your final wishes are respected and implemented.


Monday, June 6, 2016

The Effects of a Contagious Disease on Immigration

Fear of an Ebola outbreak in the United States renewed the debate over how open the country should be to people who are sick. Some people are prevented from immigrating to the United States because they are infected with a contagious disease, but illness is not typically the reason people are denied legal status.

All people who wish to immigrate to the United States (and people currently in the United States who want to adjust their status to permanent resident) must undergo a medical examination by a doctor certified by the U.S. Centers for Disease Control (CDC). Thinking about the medical exam often causes applicants undue stress because very few people are in perfect health. The United States does not, however, turn people away for minor issues such as the common cold.

The CDC is in charge of determining which diseases prevent people from being able to immigrate. Checking their website is the best way to learn which illnesses are currently considered disqualifying.

People who fail the medical exam because they have a disease that is on the CDC’s list are not permanently banned from entering the United States. Some of the diseases on the list can be cured, so reapplication after treatment is possible. Applicants who fail the medical examination can also apply for a waiver.

Waivers are granted on a case by case basis. The CDC reviews the waiver application and the applicant’s medical records, then makes a recommendation to the Department of Homeland Security, which makes the final decision. If the waiver is approved, the person is allowed to come to the United States.

It is important to keep in mind that the medical examination is just one small part of the application process. It is rare for applicants who are otherwise eligible to be denied entry to the country or a chance of status based on illness alone.

An experienced immigration attorney can help an applicant determine if they are likely to have difficulty passing the medical examination and what options are available if the applicant does fail the exam.


Monday, May 30, 2016

What Happens If I Cannot Keep up with My Chapter 13 Repayment Plan?

If a bankruptcy petitioner in Chapter 13 fails to make payments according to the schedule mandated in his or her repayment plan, creditors can ask the court for relief from the automatic stay, allowing them to resume collection activities including foreclosure and repossession actions. If the court has not yet confirmed the bankruptcy repayment plan, it is unlikely to do so if a petitioner is unable to keep up with the plan prior to confirmation. A bankruptcy judge may dismiss a petitioner’s case for failing to comply with the terms of the repayment plan, terminating the case without discharging (forgiving) any debt, frustrating the benefit of filing for bankruptcy relief in the first place.

A petitioner who fails to make Chapter 13 payments usually does so because of a temporary financial emergency. Regardless of whether a lost job or a bout with illness is to blame, a court will allow a petitioner to explain the reason for default and to request time to cure the default. Most courts will offer a petitioner the opportunity to catch up to their payments before dismissing the bankruptcy petition. 

If the reason the original bankruptcy plan was untenable is because the petitioner suffered a permanent change in circumstances, the bankruptcy court may be willing to modify the bankruptcy plan. A petitioner may also request a hardship discharge, which would discharge the unpaid portion of the debt even though the repayment plan has not been completed. A hardship discharge will not affect priority debts, such as child support arrears, that cannot be discharged. Depending on the situation, it may be prudent to ask the court to convert the bankruptcy petition to a Chapter 7. If a court refuses to allow any of these options, and dismisses the bankruptcy petition anyway, a petitioner may refile the claim as a Chapter 13 once his or her financial situation improves. The court may prohibit refiling of a claim for six months, however, if it finds a petitioner has disobeyed court orders, and may limit the automatic stay in the second case to 30 days if filed within a year of the previous petition.


Monday, May 16, 2016

Controlling Estate Planning Through Trusts

How can I control my assets after death?

The practice of estate planning is dedicated to preserving an individual’s control over his or her assets after death. A simple will can control which individuals receive what assets, but a more thorough plan has the potential to do much more. Establishing a trust is the most common method used to exercise this kind of control. 

A trust can issue a bequest restricted by a condition; for example, a trust might be established to pay out $10,000.00 to a specific grandchild only once he or she has reached 18 years of age. Multiple payments can be made to the beneficiaries as long as the trust is funded. The trust can stipulate that the grandchild may have to graduate from college to receive the money, or even that he or she must graduate from a specific school with a minimum grade-point average or membership in a particular fraternity or sorority.

A trust can make the condition of payment as specific or as broad as the creator of the trust wishes. It may, for instance, bequeath benefits to a humanitarian organization on condition that the organization continues to provide food and shelter to the homeless. There is no limit to the number of conditions permissible in a trust document. Even when the conditions go against public policy and general norms and mores established by society, as long as the conditions may be met legally, they will be upheld by the court.

In order to create a trust, there must be a capital investment to fund it and a trustee must be named. The trustee is responsible for protecting the assets of the trust, investing them to the best of his or her ability, managing real estate and other long-term assets, interpreting the trust document, communicating regularly with the beneficiaries of the trust and performing all of these actions with a high level of integrity. Trust assets may be used to pay for expenses of managing the trust as well as to provide a stipend for the trustee if so provided for in the trust document.

If a trust document is not well written, it may be the target of a lawsuit seeking to dissolve the trust and disburse the assets held therein. Even if the trust is defended successfully, the costs of this challenge may deplete its coffers and frustrate the very reason for its creation. In order to avoid these possible pitfalls, it is imperative that a trust document be drafted by an attorney with a high degree of experience in estate planning law.


Monday, May 2, 2016

Is Birth Tourism a Shortcut to Citizenship?

Ever since the post-Civil War adoption of the 14th Amendment to the Constitution, all persons born on American soil have been automatically granted citizenship. This policy was common sense in the era it was adopted, a time when international travel was cumbersome and relatively rare, but today its wisdom is being questioned. Is birthright citizenship being abused by people who want to short-circuit America’s labyrinthine immigration law?

The Citizenship Clause of the 14th Amendment states:

“All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.”

From the moment it was adopted, this clause has motivated foreigners to give birth in America. For many years the number of these birth-tourists were limited by the nature of travel, but in today’s world, where air travel drastically cuts down the time it takes to get from one country to another, the path to citizenship guaranteed by the 14th Amendment is well-trod.

Stories abound of pregnant women visiting the U.S. on tourist visas who stay long enough to have their children, get American birth certificates and passports for them, then go back to their native countries, American tot in tow. The Chinese film industry even made a popular romantic comedy about the practice

Having a child that is an American citizen does not, however, guarantee that the child will grow up in America, or allow the family of the child to stay in this country indefinitely. Unless the parents have legal status in the United States, the entire family must return to their home country. It is not until an American-born baby is 21 that they are able to come to the United States and stay without being in school or having to show that they have a legal guardian here.

Once they reach the age of majority, the birthright citizen can enjoy the full benefits of citizenship, and can even sponsor his or her parents’ applications for citizenship.  It is important to remember that having an American-born child is a way to short-cut the system, but will likely take at least 21 years to capitalize on the investment.. In most cases applying for citizenship through other means will be just as fast.


Monday, April 25, 2016

Can bankruptcy save my home from foreclosure?

Bankruptcy can be a useful tool to protect a secured asset, such as a home, from foreclosure or repossession. First, in the case of a chapter 13 bankruptcy, an automatic stay will go into effect, which requires that debt owners cease all collection activity and puts a hold on any legal proceedings concerning the collection of a debt.  The arrearages on the mortgage, that is any late payments accrued, can be consolidated and included in a repayment plan.  This reduces the amount on the arrearages to a manageable payment, allowing them to be paid off within the time limit set by the bankruptcy court, usually three to five years.  In order for this option to be viable, a petitioner must have enough income to make the existing mortgage payments on a monthly basis.

If a secured asset is underwater, that is, if its value is less than the amount owed, a chapter 13 bankruptcy can strip second and third mortgages of their secured status. That means that, though the debts may not be discharged, they will not be tied to the house, and they become last in line to be repaid. Similarly, if a first mortgage is greater than the value of the home to which it is attached, the amount of the mortgage above the value of the home may be separated from the mortgage, stripped of its secured status, and incorporated into the repayment plan.

In a Chapter 7 bankruptcy, a bankruptcy trustee may order assets liquidated to repay unsecured creditors. This means that, if a home has sufficient equity, the trustee may force the sale of a home in order to create money to pay off debts that would otherwise be discharged. If a homeowner is behind on payments, Chapter 7 does not provide a mechanism to catch up as Chapter 13 does, although it does institute an automatic stay on foreclosure proceedings.

There are other options besides bankruptcy to save your home from foreclosure. Loan modifications are often available to those who qualify under the lender’s criteria. Government programs also exist to assist homeowners. A bankruptcy attorney can help determine the best course of action in each individual situation. 


Monday, April 18, 2016

What Do I Have to Study for My Citizenship Test?

The United States naturalization test, also called a citizenship exam, comes in two parts.  The first part of the test covers an applicant’s knowledge of the United States system of government. During the interview to determine if an applicant is eligible for naturalization, a USCIS officer will select 10 questions from a list of 100 and administer an oral examination to test the applicant’s knowledge of civics. Some examples of questions on the list of 100 include:

  • How many amendments are there to the US constitution? (27)
  • Who makes the federal laws? (Congress)
  • What group of people were taken to America and sold as slaves? (Africans)
  • What is the capital of the United States? (Washington D.C.).

A complete list of the one hundred potential questions is available on the USCIS website.

The second half of the citizenship test examines the applicant’s ability to read, write, speak, and understand the English language. Each applicant must be able to read one out of three sentences correctly, and write one out of three sentences correctly in order to demonstrate the ability to read and write in English. A USCIS officer will determine an applicant’s ability to speak and understand English during the eligibility interview on the Application for Naturalization. The best way to study is to practice speaking, reading, and writing every day. The more a person uses the language, the more comfortable he or she becomes with it. Vocabulary flashcards can be a useful study tool as well.

There are exceptions to the English portion of the exam. Applicants who are over the age of 50 do not have to take the English portion of the exam if they have been in the United States on a green card for more than 20 years. Similarly, applicants over the age of 55 do not have to take the English portion of the exam if they have been in the United States with a green card for more than 15 years. A person who qualifies for these exemptions must still pass the civics section of the citizenship test in his or her native language, and is responsible for bringing an interpreter who is fluent in both English and his or her native tongue.

If a person fails one or both sections of the test, a second interview will be administered to the applicant seeking naturalization. The second interview will be between 60 and 90 days after the initial interview and will only cover the portion of the test that the applicant previously failed.


Monday, April 11, 2016

What Is the Spousal Share of an Estate?

There are many reasons why a person might leave a spouse or another loved one out of his or her will. It is possible that the will in question was executed prior to a marriage and was never properly updated. It may also be the case that the husband and wife, though still technically married, are estranged, and do not contribute to one another’s support. An end of life revelation of a past infidelity may anger a spouse enough to rewrite his or her last will and testament. Individuals may make rash decisions to disinherit spouses based on a single argument or misunderstanding. This can be exacerbated by symptoms of dementia. Regardless of the reason, a person who is not named in his or her spouse’s will may petition the court for the spousal share to receive a portion of the estate.

The spousal share of an estate, also called an elective share, is a holdover from the concept of dower in English common law. Traditionally, dower is a portion of a man’s estate guaranteed to a wife when she is widowed to ensure that she does not fall into poverty after her husband dies. The practice continues today without the same restrictions on gender. Every state in America has a provision in its laws to protect an individual whose spouse dies from being left with nothing. Similar provisions for children also exist in some states. Attempts have been made to introduce legislation to protect unmarried romantic partners the same way as married couples, but these attempts have had little success.

The structure of these protections vary from state to state. The value of the estate for the purposes of establishing the spousal share may include the widow’s assets depending on the jurisdiction. Some states provide a widowed spouse a larger share of the deceased’s estate than others, but almost every state prohibits an individual from disinheriting a spouse entirely. The one state that does not permit an elective share to the spouse in a probate case requires that an estate pay a disinherited spouse financial support for up to one year after the death.


Monday, March 28, 2016

What Rights Do Undocumented Citizens Have in the United States?

The Supreme Court of the United States has repeatedly held that the protections of the US constitution are limited to U.S. citizen, but individuals maintain certain rights regardless of their immigration status. Every person has the right to equal protection under the law and to due process.  This means that a person accused of not maintaining legal status in the United States has the right to defend him or herself against removal from the country. Similarly, where there are criminal allegations against an undocumented immigrant, that person has all the same rights as would an American citizen. This includes the right to confront witnesses in a trial, the right to representation, and the right against unreasonable searches and seizures by the police.

Regardless of immigration status, everyone has a right to free speech, freedom of religion, and freedom to peaceably petition the government. Undocumented children in the United States have a right to free public education. Publicly funded hospitals are required to provide medical care to all patients. They are prohibited from discriminating against a person based on immigration status. Undocumented immigrants are permitted to file lawsuits against other people and the government for claims arising out of negligence, just like any other person in the United States.

It is, however, against federal law to hire someone who is undocumented. It is the responsibility of the employer to ensure that every employee hired is legally permitted to work. Nonetheless, once a person is hired, that individual is entitled to some rights in the workplace. He or she must be paid the minimum wage. It is improper for an employer to prohibit anyone from forming a union. If an undocumented immigrant is injured on the job, he or she is entitled worker’s compensation and disability if it is part of the employer’s normal practice. Undocumented workers are protected from workplace discrimination and sexual harassment by federal law as well.

Many undocumented immigrants are victims of crimes and are afraid to come forward to the police for fear of deportation. This goes against public policy, so in 2000, the federal government created a new visa to allow undocumented immigrants to stay in the country legally for up to four years if that person is the victim of a qualifying crime. This visa is called a U visa and is an important tool to protect undocumented people from crime.


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