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Monday, December 15, 2014

Considering Online Estate Planning? Think Twice

The recent proliferation of online estate planning document services has attracted many do-it-yourselfers who are lured in by what appears to be a low-cost solution. However, this focus on price over value could mean your wishes will not be carried out and, unfortunately, nobody will know there is a problem until it is too late and you are no longer around to clean up the mess.

Probate, trusts and intestate succession (when someone dies without leaving a will) are governed by a network of laws which vary from state to state, as well as federal laws pertaining to inheritance and tax issues. Each jurisdiction has its own requirements, and failure to adhere to all of them could invalidate your estate planning documents. Many online document services offer standardized legal forms for common estate planning tools including wills, trusts or powers of attorney. However, it is impossible to draft a legal document that covers all variations from one state to another, and using a form or procedure not specifically designed to comply with the laws in your jurisdiction could invalidate the entire process.

Another risk involves the process by which the documents you purchased online are executed and witnessed or notarized. These requirements vary, and if your state’s signature and witness requirements are not followed exactly at the time the will or other documents are executed, they could be found to be invalid. Of course, this finding would only be made long after you have passed, so you cannot express your wishes or revise the documents to be in compliance.

Additionally, the online document preparation process affords you absolutely no specific advice about what is best for you and your family. An estate planning attorney can help your heirs avoid probate altogether, maximize tax savings, and arrange for seamless transfer of assets through other means, including titling property in joint tenancy or establishing “pay on death” or “transfer on death” beneficiaries for certain assets, such as bank accounts, retirement accounts or vehicles. In many states, living trusts are the recommended vehicle for transferring assets, allowing the estate to avoid probate. Trusts are also advantageous in that they protect the privacy of you and your family; they are not public records, whereas documents filed with the court in a probate proceeding are publicly viewable. There are other factors to consider, as well, which can only be identified and addressed by an attorney; no online resource can flag all potential concerns and provide you with appropriate recommendations.

By implementing the correct plan now, you will save your loved ones time, frustration and potentially a great deal of money. In most cases, proper estate planning that is tailored to your specific situation can avoid probate altogether, and ensure the transfer of your property happens quickly and with a minimum amount of paperwork. If your estate is large, it may be subject to inheritance tax unless the proper estate planning measures are put in place. A qualified estate planning attorney can provide you with recommendations that will preserve as much of your estate as possible, so it can be distributed to your beneficiaries. And that’s something no website can deliver.


Monday, December 8, 2014

Will Marriage to a U.S. Citizen Make an Undocumented Immigrant Legal?

Under the laws of most states, a United States citizen can marry an undocumented immigrant.  Regardless of whether the marriage is legal, however, the marriage may not confer legality upon the undocumented spouse's immigration status.

Usually, an immigrant who marries a U.S. citizen becomes an "immediate relative" and is eligible to apply to the United States Citizenship and Immigration Service (USCIS) for a green card, i.e. lawful permanent residence.  After the marriage, the U.S. citizen spouse can file Form I-130, Petition for Alien Relative and the immigrant can file Form I-485 seeking Adjustment of Status to permanent resident.

If the spouse is here illegally, however, the couple may encounter some obstacles.  The spouse's illegal presence may mean that using Form I-485 to apply for permanent residence is not an option.  The undocumented spouse must first leave the United States and rely on  processing by a U.S. Department of State Consulate abroad before returning.  Once outside the U.S, however, he or she may be barred from returning to the U.S. for years because of laws designed to punish and deter illegal immigration.

According to Section 212 of the Immigration and Nationality Act, if the spouse was present unlawfully for more than six months but less than a year, he or she would be barred from returning to the U.S. for three years.  If present for more than a year, the spouse would be barred for ten years.

Under a recent change in immigration law, undocumented immigrants can apply for a provisional waiver of the three- or ten-year ban.  If granted, the undocumented spouse would still have to leave the U.S. and apply at a consulate for reentry, but would not barred from returning.

Undocumented spouses must also meet the requirements that any documented spouse would have to meet.  They might have to show that they are not inadmissible for other reasons, such as a criminal past, a dangerous communicable disease, or a need for public assistance.  The marriage to an undocumented immigrant, like a marriage to a legal immigrant, would also have to be genuine and not a ploy to help the immigrant spouse get citizenship.

As the consequences of remaining in the country illegally can be severe, if you or your spouse is undocumented and intends to apply for citizenship based on the marriage, you should contact an immigration attorney as soon as possible.


Monday, November 24, 2014

Deferred Action Extended to Millions

New changes to immigration law will extend protection from deportation to millions of immigrants currently in the Unites States illegally.  A recently announced program will shield immigrants who qualify from the threat of deportation, as well as issue work permits to remain living and working in the US.

 

The new program expands on the Deferred Action for Childhood Arrivals (DACA) program, which began in 2012.  Under DACA, immigrants who were brought to the U.S. illegally as children (before the age of 16) could apply for the program if they met a certain criteria.  Among the requirements to qualify for DACA, the immigrant had to arrive in the U.S. before June 15th 2007, has to have a certain level of education and no criminal record, had to be physically in the US on June 15th, 2012 (when DACA began), and had to be younger than 31 as of June 15th, 2012.  Over one million immigrants in the US qualified for DACA, and by applying for the program could obtain a legal status that protected them from being deported. 

 

Now, under the newly announced changes, that program has been expanded to anyone brought to the US as a child before January 1st, 2010.  Under the new changes, there is no age cap to DACA, so anyone older the 31 as of June 15th, 2012 can now apply.  Also, anyone brought to the US after June 15th, 2007, but before January 1st, 2010 can apply as well.  This opens up the DACA program to hundreds of thousands of immigrants who otherwise didn’t qualify under the original criteria. 

 

Furthermore, this deferred action program also applies to millions more.  If you have been in the US illegally for more than five years, and have a child who is a U.S. citizen or legal permanent resident, you can now apply for a legal status and protection from deportation.  Those who are accepted must first pay a fine and pass a background check, and then will be issued a work permit and could be eligible for a driver’s license.  The program provides a legal status for three years once you are accepted, and can be renewed after the three years are up. 

 

This program does not provide a pathway to citizenship and it is not like having a green card.  Rather, it is deferred action, which means the government acknowledges that you are here illegally, but assures you that you will not be deported, and provides you with a work permit.  And it is not permanent – it only grants legal status for three year periods.  But during those periods, the threat of deportation will be removed, allowing qualifying immigrants to live and work openly in the US.

 

Details and a timetable regarding the application process have yet to be released, but it is expected to be similar to the DACA process.  Immigration processes can be very difficult to navigate without the help of an attorney.  If you are one of the millions of immigrants that could benefit from this new program, contact our office today for a free consultation to determine if this program applies to you.


Tuesday, November 18, 2014

401(k) Loans and Bankruptcy

Consumers considering bankruptcy usually do so only as a last resort. If you are in this situation, you have likely exhausted all other options to keep yourself financially afloat, from selling off possessions to cashing out or borrowing against retirement accounts. If you have borrowed – or are considering borrowing – from your 401(k), 403(b), 457 or other qualified retirement plan, keep in mind that these loan repayments receive very different treatment, depending on whether you are filing for Chapter 7 or Chapter 13 bankruptcy, and can negatively impact your ability to qualify for a Chapter 7 discharge. If bankruptcy may be in your future, you should consult with an attorney before borrowing against any retirement accounts to avoid unintended consequences.

Most who borrow against their 401(k) accounts do so because they need access to immediate cash and intend to repay the loan in the short term in order to preserve the funds for retirement and avoid the income tax ramifications of an early distribution. Unfortunately, bankruptcy trustees don’t see it the same way. In the trustees’ view, allocations for repayment of 401(k) loans result in an unnecessary reduction in disposable income that you would otherwise use to repay your creditors under a Chapter 13 plan.

The primary difference in how these retirement account loans are treated in Chapter 7 versus Chapter 13 bankruptcy is in the “means test.” To qualify for a Chapter 7 bankruptcy, you must meet one of two conditions: 1) your household income is below the average income for your family size in your state; or 2) if your household income is greater than the average, but you pass the means test. In Chapter 7, the means test is used to help the court determine whether the debtor has enough income to fund a repayment plan under Chapter 13, rather than seeking a discharge under Chapter 7.

The means test establishes a budget using “reasonable” figures as determined by the IRS. If your actual expense exceeds the “reasonable” figure, any excess is deemed to be disposable income available to repay unsecured creditors. Unfortunately for 401(k) borrowers, these loan repayments cannot be included in their Chapter 7 means test budget. As a result, under the means test calculation, any amount you are repaying to your 401(k) loan is actually deemed to be “available” to repay creditors under a Chapter 13 repayment plan. The trustees are concerned with making sure your creditors are paid, if at all possible, and are not concerned as to whether your failure to repay your 401(k) loan will cause you to owe income taxes or penalties.

Under a Chapter 13 bankruptcy means test, however, 401(k) loan repayments are included as an allowable expense. The Chapter 13 means test is used to determine how much money should be paid to unsecured creditors as part of your repayment plan. By including the loan repayments as an expense under the Chapter 13 means test, the amount of disposable income leftover to repay your unsecured creditors is reduced.

As you can see, with so many nuances and distinctions between the bankruptcy remedies available, it is vitally important that you share with your attorney all available information about every asset or debt – even when you just owe the money to “yourself”.  


Wednesday, November 5, 2014

Role of the Successor Trustee

When creating a trust, it is common practice that the person doing the estate planning will name themselves as trustee and will appoint a successor trustee to handle matters once they pass on.  If you have been named successor trustee for a person that has died, it is important that you hire a wills, trusts and estates attorney to assist you in carrying out your duties. Although the attorney that originally created the estate plan would most likely be more familiar with the situation, you are not legally required to hire that same attorney. You can hire any attorney that you please in order to determine what your obligations are.

 If the decedent had a will it is common that the successor trustee is also named as the executor.  Although the role of executor is similar to that of trustee, there are technical differences. If there was a will, you should consult with an attorney to determine if a court probate process will be required to administer the estate. If all assets were titled in the trust prior to the person’s death, or passed by beneficiary designation, such as in the case of life insurance and retirement plan assets (such as 401ks, IRAs, etc.), then a court probate may not be needed. However, if there were accounts or real estate in the person’s name alone that were not covered by the trust, a court probate may be necessary.

During the probate process, all of the deceased person’s assets must be collected and accounted for. This includes all bank accounts, stocks, bonds, mutual funds, investment accounts, retirement assets, life insurance, cars, personal belongings and real estate. All of these assets should be valued and listed on one or more inventories. Depending upon the value of the assets, an estate tax return may be needed. You should be aware of any final expenses, the person’s final income tax returns, and any creditors. Although this process is lengthy, once all of the appropriate steps are taken, the assets will be distributed and the estate will come to a close. 

If you have been named a successor trustee, an experienced estate planning attorney can help you through this process and make sure you carry out your legal duties as required.  Contact us for a consultation today.


Thursday, October 30, 2014

When will I receive my inheritance?

If you’ve been named a beneficiary in a loved one’s estate plan, you’ve likely wondered how long it will take to receive your share of the inheritance after his or her passing.  Unfortunately, there’s no hard or and fast rule that allows an estate planning attorney to answer this question. The length of time it takes to distribute assets in an estate can vary widely depending upon the particular situation.

Some of the factors that will be involved in determining how long it takes to fully administer an estate include whether the estate must be probated with the court, whether assets are difficult to value, whether the decedent had an ownership interest in real estate located in a state other than the state they resided in, whether your state has a state estate (or inheritance) tax, whether the estate must file a federal estate tax return, whether there are a number of creditors that must be dealt with, and of course, whether there are any disputes about the will or trust and if there may be disagreements among the beneficiaries about how things are being handled by the executor or trustee.

Before the distribution of assets to beneficiaries, the executor and trustee must also make certain to identify any creditors because they have an obligation to pay any legally enforceable debts of the decedent with those assets. If there must be a court filed probate action there may be certain waiting periods, or creditor periods, prescribed by state law that may delay things as well and which are out of the control of the executor of the estate.

In some cases, the executor or trustee may make a partial distribution to the beneficiaries during the pending administration but still hold back sufficient assets to cover any income or estate taxes and other administrative fees. That way the beneficiaries can get some benefit but the executor is assured there are assets still in his or her control to pay those final taxes and expenses. Then, once those are fully paid, a final distribution can be made. It is not unusual for the entire process to take 9 months to 18 months (sometime more) to fully complete.

If you’ve been named a beneficiary and are dealing with a trustee or executor who is not properly handling the estate and you have yet to receive your inheritance, you should contact a qualified estate planning attorney for knowledgeable legal counsel.


Wednesday, October 15, 2014

What’s really covered on your homeowners insurance policy?

 A solid homeowners insurance policy can provide peace of mind about securing one of your most valuable assets. Unfortunately, many homeowners don’t fully grasp what exactly is covered under that policy, and most importantly, what isn’t.


Homeowners insurance policies generally cover your home itself and other physical structures on the property. Your personal belongings also fall under most policies, along with property damage and bodily injury sustained by you or others on your property. You, your spouse and children, and any guests, tenants, or employees in your home can all be covered under this policy, just be sure to check when you purchase the policy.

Sounds like they’ve got you covered, right? Not so fast; there are a number of possible perils that are often not covered under basic homeowners insurance. Knowing what falls into this category can save you a lot of time and trauma if you ever experience one of these situations in the future.

The two main exceptions are earthquake and flood damage. The impacts of these natural disasters would not be covered by your standard policy. Earthquake insurance and coverage for some types of water damage can often be purchased as an addendum, but flood insurance must be purchased on its own as a separate policy.

Further, standard policies don’t cover damages to your building as a result of your failure to perform regular maintenance on your property. Insect, bird, or rodent damage, rust, mold, and any kind of wear and tear on your property is typically not covered. Neither are hidden defects, mechanical breakdowns, or food spoilage in the event of a power outage. Though there is no current concern for this, damage caused by war or nuclear exposure is also not covered.

Some things have minimal coverage built into your standard policy, for which you can purchase additional coverage as an addendum. Valuable property, including firearms, jewelry, silverware, etc., is usually covered by a standard $1,000. Insurance for replacement value of lost or damaged property is usually determined on an itemized basis that takes depreciation into account. You can expand this coverage by paying to remove depreciation from consideration.  Liability coverage can be increased if desired as well.

These should serve as general guidelines for your homeowners insurance, but be sure to consider the details on your specific policy.  It’s important to consider exactly what you have covered in order to determine what additional types of insurance you may want to purchase.

 


Sunday, October 5, 2014

What Bankruptcy Cannot Do?

Bankruptcy is an avenue to debt relief for many Americans, allowing them to get a fresh start and improve their financial well-being.  Some people are under the impression that bankruptcy is a cure for all of their financial problems.  This is not the case.  There are certain things that filing for bankruptcy cannot do.

Bankruptcy will not rid you of secured creditors unless you pay at least part of what you owe.  A secured creditor is one that has a security interest or a right to property that served as collateral for a debt.  Bankruptcy might allow you to pay a portion of your debt instead of paying it in full and it may enable you to pay them back over time.  But, if the debt is a secured one, the creditor will receive some form of payment.

Co-signors are not protected by bankruptcy.  If someone co-signed on a loan, financing agreement or other debt for you, bankruptcy cannot protect them.  They are not released from liability to pay back the debt because you filed for bankruptcy.  They will most likely still be responsible for payment.

Bankruptcy cannot be used to relieve you from debts incurred after filing for bankruptcy.  If you incur new debts after the date of your filing, you will be fully responsible for them.

Certain types of debts are not covered by bankruptcy.  These are called non-dischargeable debts and include student loans, most tax obligations, domestic support obligations and judgments for personal injury or death due to driving while intoxicated.  Even bankruptcy cannot relieve you of these debts, if you are currently responsible for them.

If you have been considering bankruptcy and believe that it is the answer to all of your financial problems, you should be cautious.  There is no magic cure to all of your financial woes and one will certainly not be found in bankruptcy.  But, if you qualify, bankruptcy can help you get back on your feet and give you some relief from the debts that are making your life miserable.  Successfully filing for bankruptcy requires the advice of an experienced attorney.  Contact a qualified bankruptcy attorney for a consultation today.


Tuesday, September 30, 2014

Protecting the Rights of Parents with Disabilities

The Americans with Disabilities Act (ADA), signed into law in 1990, recognized the civil rights of a large class of citizens with physical and mental disabilities by making it illegal to discriminate against them in employment, transportation or public services and accommodations. Since its enactment, much progress has been made, enabling people with disabilities to obtain an education, pursue a career, live independent lives and fulfill their dreams. 

Despite this progress, people with disabilities who have children are more likely to have their parental rights terminated or lose custody after a divorce. 

Discrimination in the Courts

These discriminatory actions are often justified on the grounds that the courts are protecting the best interests of the child, but there is little research to support the assumption that someone who is disabled is incapable of being a good parent. In fact, according to advocacy groups there are likely more than 4 million parents with physical disabilities currently raising children. 

Most family courts work diligently to provide services and support to ensure that children maintain contact with their parents whenever possible. This is not always the case when disability is involved. There have been cases where disabled parents have not been allowed to bring their newborns home and the state subsequently filed to have their parental rights revoked, even in the absence of evidence of abuse or maltreatment. The presumption is that the disability endangers the welfare of the child. Currently, two thirds of the states have laws permitting the removal of children based on the disabled status of the parent.

Disadvantage in Custody Cases

Parents with disabilities are also at a disadvantage in custody cases, particularly if the ex-spouse does not have a disability. Competent parents with special disabilities require knowledgeable advocates who can demonstrate that they are able to effectively carry out their parenting duties in their own adaptive ways.

Fighting Discriminatory Practices

Advocates for the legal rights of parents with disabilities are waiting for a landmark trial that halts the discrimination suffered by parents with disabilities and protects their rights to have and raise children. While everyone agrees that children should not be exposed to a hazardous environment, decisions to remove children from homes where a parent is deaf or has a low IQ are often made by individuals who fail to grasp the remarkable capabilities of such parents despite their significant handicaps. More education on disability issues is needed at all levels of the child welfare and family court systems. At the same time, parents with disabilities must have better access to fair legal representation and support services. 


Friday, September 5, 2014

A Shared Home but Not a Joint Deed

Many people erroneously assume that when one spouse dies, the other spouse receives all of the remaining assets; this is often not true and frequently results in unintentional disinheritance of the surviving spouse.

In cases where a couple shares a home but only one spouse’s name is on it, the home will not automatically pass to the surviving person, if his or her name is not on the title. Take, for example, a case of a husband and wife where the husband purchased a home prior to his marriage, and consequently only his name is on the title (although both parties resided there, and shared expenses, during the marriage). Should the husband pass away before his wife, the home will not automatically pass to her by “right of survivorship”. Instead, it will become part of his probate estate. This means that there will need to be a court probate case opened and an executor appointed. If the husband had a will, the executor would be the person he nominated in his will who would carry out the testator’s instructions regarding disposition of the assets. If he did not have a will, state statutes, known as intestacy laws, would provide who has priority to inherit the assets.

In our example, if the husband had a will then the house would pass to whomever is to receive his assets pursuant to that will. That may very well be his wife, even if her name is not on the title.

If he dies without a will, state laws will determine who is entitled to the home. Many states have rules that would provide only a portion of the estate to the surviving spouse. If the deceased person has children, even if children of the current marriage, local laws might grant a portion of the estate to those children. If this is a second marriage, children from the prior marriage may be entitled to more of the estate. If this is indeed the case, the surviving spouse may be forced to leave the home, even if she had contributed to home expenses during the course of the marriage.

Laws of inheritance are complex, and without proper planning, surviving loved ones may be subjected to unintended expense, delays and legal hardships. If you share a residence with a significant other or spouse, you should consult with an attorney to determine the best course of action after taking into account your unique personal situation and goals. There may be simple ways to ensure your wishes are carried out and avoid having to probate your partner’s estate at death.


Saturday, August 30, 2014

Do Heirs Have to Pay Off Their Loved One’s Debts?

The recent economic recession, and staggering increases in health care costs have left millions of Americans facing incredible losses and mounting debt in their final years. Are you concerned that, rather than inheriting wealth from your parents, you will instead inherit bills? The good news is, you probably won’t have to pay them.

As you are dealing with the emotional loss, while also wrapping up your loved one’s affairs and closing the estate, the last thing you need to worry about is whether you will be on the hook for the debts your parents leave behind. Generally, heirs are not responsible for their parents’ outstanding bills. Creditors can go after the assets within the estate in an effort to satisfy the debt, but they cannot come after you personally. Nevertheless, assets within the estate may have to be sold to cover the decedent’s debts, or to provide for the living expenses of a surviving spouse or other dependents.

Heirs are not responsible for a decedent’s unsecured debts, such as credit cards, medical bills or personal loans, and many of these go unpaid or are settled for pennies on the dollar. However, there are some circumstances in which you may share liability for an unsecured debt, and therefore are fully responsible for future payments. For example, if you were a co-signer on a loan with the decedent, or if you were a joint account holder, you will bear ultimate financial responsibility for the debt.

Unsecured debts which were solely held by the deceased parent do not require you to reach into your own pocket to satisfy the outstanding obligation. Regardless, many aggressive collection agencies continue to pursue collection even after death, often implying that you are ultimately responsible to repay your loved one’s debts, or that you are morally obligated to do so. Both of these assertions are entirely untrue.

Secured debts, on the other hand, must be repaid or the lender can repossess the underlying asset. Common secured debts include home mortgages and vehicle loans. If your parents had any equity in their house or car, you should consider doing whatever is necessary to keep the payments current, so the equity is preserved until the property can be sold or transferred. But this must be weighed within the context of the overall estate.

Executors and estate administrators have a duty to locate and inventory all of the decedent’s assets and debts, and must notify creditors and financial institutions of the death. Avoid making the mistake of automatically paying off all of your loved one’s bills right away. If you rush to pay off debts, without a clear picture of your parents’ overall financial situation, you run the risk of coming up short on cash, within the estate, to cover higher priority bills, such as medical expenses, funeral costs or legal fees required to settle the estate.


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