Category: Family Law

Divorce Rates and COVID-19

With divorce rates spiking, some couples want to know their options for separating in 2020.

All relationships involve a degree of conflict—and it’s normal to argue more during stressful times. From worrying about your health and the health of your loved ones to facing increased financial uncertainty, all of the classic marital stressors have been amplified by the events of 2020.

For some couples, pandemic friction has involved a few more fights about the laundry or the savings account. For others, lockdown has exposed issues that run deeper and offered ample time for reflection, leaving them to wonder about their options for pursuing separation during the pandemic.

Covid’s Impact on Relationships

Relationship counselors consistently rank financial stress, boredom, disagreements about parenting, and arguing about household chores as the most common sources of relationship trouble.

With many couples stuck in the house, homeschooling children, and facing added financial uncertainty, it should come as no surprise that the coronavirus pandemic is placing additional strain on relationships that were already struggling.

Additionally, support systems have become more difficult to access. Venting to friends over coffee or spending a night out on the town just isn’t an option right now. If you’ve been using these outlets to manage stress—or, perhaps, to avoid dealing with deeper problems—-you may find yourself suddenly in the position of having to confront your difference head on.

It’s no surprise that given this, many marriages have reached their breaking point.

Although the recognition of real, substantive problems in a marriage can be a sobering moment, it is also a necessary and hopeful turning point on the road to a healthy future. One of the pandemic’s brighter spots may be that it may prompt a refocusing on values and on what really matters, clarifying when the healthiest and wisest path forward for two people involves separation.

The Pandemic and Divorce Rates

The evidence that the pandemic might lead to an uptick in divorce rates came early this year.

By April, the interest in divorce had already increased by 34% in the US, with newer couples being the most likely to file for divorce. In fact, a full 20% of couples who had been married for five months or less sought divorce during this time period, compared with only 11% in 2019.

Some predict a continuation of this trend, anticipating that divorce rates will increase between 10% and 25% in the second half of the year.

One way of understanding this timeline is through the collective disaster response curve, a model charting the phases through which a community moves in the wake of trauma. The curve shows increased energy and a sense of community cohesion in the period of time immediately following a disaster —it’s the “We’ll get through this together!” phase of disaster response. After a few weeks, the energy wears off, and disillusionment and depression can set in. During this period, couples may begin to struggle.

Experts also observe that when people are experiencing greater stress from sources external to a relationship, they struggle more to problem-solve within their relationships, and may inadvertently take out this stress on each other.

In the most serious cases, tensions can lead to violence, and 2020 saw a 9% increase in outreach to the National Domestic Violence Hotline compared to the same period last year. If you are experiencing domestic violence, there’s help just a phone call away with the National Domestic Violence Hotline here.

Can I still get divorced during the pandemic?

If you’re wondering whether or not you can still get divorced with everything going on, the answer is yes. Deciding to end a marriage is never easy, and with the pandemic altering the rhythms of life, it may feel particularly daunting. But there are many options to start the divorce process in 2020, and finding which path is best for you and your family is essential.

COPYRIGHT © 2020, STARK & STARK
For more articles on family law, visit the National Law Review Family Law / Divorce / Custody section.

Excessive Spending During Divorce

Once a divorce is looming, some people change their spending habits.  Some start excessive spending expending money on purchases that they never did before, while others start taking trips or signing up for classes. Is any of this spending appropriate during the time you are going through your divorce?

I often run into clients who have been counseled to spend a lot more, apparently to show what that person’s needs are and to validate the request for more money.  I think it is fair to say that this is an emotional time for everyone, and some people are not acting in the right way.  You shouldn’t be spending any differently during a divorce then you would typically  The law in Illinois-domestic relations division, wants everyone to maintain the status quo.  If you always spent $400 a month getting your hair done, then it is not a problem.  But if you never used to go and now you start, the court is going to look at the reasonableness of what the person is doing.

Spending in Ways Not Beneficial to Your Marriage?

If you believe that the excessive spending your spouse is doing is not beneficial to your marriage, you might have a claim for dissipation.  When the court divides the marital property in your divorce case, dissipation is something that is considered by the court.  What exactly is dissipation?

Is it the Dissipation of Marital Assets?

Dissipation is the spending of marital monies for the benefit of one spouse for purposes unrelated to the marriage while the marriage is undergoing an irreconcilable breakdown. The party alleging dissipation must first demonstrate that dissipation has occurred, and once that hurdle is met, the burden shifts to the other party to prove the money was used for a legitimate purpose.

Illinois law requires that you file a document, called a Notice of Intent to Claim Dissipation.  That document must be filed 30 days after discovery closes and no later than 60 days before the trial.  The notice has to tell the court when the breakdown in your marriage occurred.  This is an important element that many people overlook.  People are allowed to spend money however they like, and just because you did not like it that your spouse spent $45,000 on a race car, does not necessarily mean it is dissipation.

Is the Marriage Irretrievably Broken?

The first question you need to ask is whether your marriage has irretrievably broken down. Although you might not have been happy with the expenditure for the car, were you still a couple?  Were you still going out with friends or going out to dinner together?  I have had a couple of divorce trials that had to examine the sexual nature of the relationship.  Are you still engaging in marital relations?  Share the same bedroom?  These all need to be examined if your spouse indicates that you were still a couple and there was not a breakdown.  Without a break down in the marriage, an irretrievable breakdown, you cannot allege dissipation.

But let us say you can prove that your marriage underwent an irretrievable breakdown.  You can prove that your spouse has been living in the basement for a year, you never go out together, you take separate vacations and you have different friends.  Then you have made it through the first hurdle and an examination of the spouse’s expenses needs to be looked at.

One thing the court always asks is “how long has this been going on?”  I once had a case in trial where the wife claimed that the husband’s weekly bowling was dissipation.  My client testified that he had been bowling weekly for over ten years.  The continuation of his bowling habit continued while they were married and after they separated.  The judge did not find dissipation.

Spouse Commits a Criminal Act?

What about when a person has a spouse who commits a criminal act?  The spouse is arrested and spends money on a lawyer?  Loses his job?  The money the spouse spent on a lawyer could be considered dissipation.

Is There an Extramarital Affiar?

What about a claim for dissipation filed by the wife when she found out her husband had had an affair and was paying child support to the other woman?  Or if the wife found out that her husband had been cheating on her for the past 5 years?  If the family continued to go on vacation and act like a couple, and their marriage had not broken down, then no dissipation.

I remember when golf pro Tiger Woods was going through a divorce and his wife found out about his extramarital affairs and the money spent on them.  There could not be a claim for dissipation because her marriage had not broken down, but you have to wonder if it would have broken down a lot earlier if she knew.  We can speculate as to the answer and it seems unfair that if your spouse hides something from you, that it cannot be dissipation.  If you had known, you would likely have broken up.  But that is not the way our law works — you have to be irretrievably broken in order to claim dissipation.

I have had trials where the parties had been separated for 20 years, but neither had gotten around to filing for divorce. Each side made claims of dissipation going back 10 years or more.  These types of cases resulted in a change to our statute and now you have a time limit on the claim for dissipation.  No dissipation shall be deemed to have occurred prior to 3 years after the party claiming dissipation knew or should have known of the dissipation, but in no event prior to 5 years before the filing of the petition for dissolution of marriage.

Watch Your Marital Finances for Excessive Spending

Marriages require some trust between the two, so it is hard when your spouse ruins the trust you placed in them.  But if you do not pay attention to your finances, or what is on the credit card statements, you could be in a position where dissipation cannot be claimed by you for the excessive spending in the event of a divorce.

If you decide to go to trial on the issue, then you will need to establish which expenditures are dissipation.  Is paying the mortgage from the spouse’s retirement account dissipation?  Typically, you would not think so. But each case is fact-specific.

 

 

Anderson & Boback Copyright © 2020 All rights reserved.
This posting is for educational purposes only to give you general information and a general understanding of the law, not to provide specific legal advice. By using this website you understand that there is no attorney-client relationship between you and the National Law Review and/or the author, and the opinions stated herein are the sole opinions of the author and do not reflect the views or opinions of the National Law Review or any of its affiliates.

Could the COVID-19 Pandemic Impact Child Custody and Relocation?

As a result of the COVID-19 pandemic, many face uncertainty about their jobs and careers. The last week of March saw 6.6 million Americans applying for unemployment benefits, and many more experienced reduction in their compensation. The uncertainty could lead to more people choosing to relocate closer to family or take jobs that may require them to relocate for different economic opportunities. If you share physical custody of your children with their parent, what should you consider before making the decision to relocate?

Under Michigan law, a parent is prohibited from relocating a child, whose custody is governed by a court order, more than 100 miles from the child’s legal residence at the time of the original court order. As a result, parents who share custody of their child and want to relocate will need court permission. MCL 722.31. The court analyzes a parent’s request to move with a child in four steps. The first is to determine whether the relocating parent can support the move of the child by analyzing the following factors:

  1. Whether the legal residence change has the capacity to improve the quality of life for both the child and the relocating parent.
  2. The degree to which each parent has complied with and utilized his or her time under a court order governing parenting time with the child and whether the parent’s plan to change the child’s legal residence is inspired by that parent’s desire to defeat or frustrate the parenting time schedule.
  3. The degree to which the court is satisfied that, if the court permits the legal residence change, it is possible to order a modification of the parenting time schedule and other arrangements governing the child’s schedule in a manner that can provide an adequate basis for preserving and fostering the parental relationship between the child and each parent, as well as whether each parent is likely to comply with the modification.
  4. The extent to which the parent opposing the legal residence change is motivated by a desire to secure a financial advantage with respect to a support obligation.
  5. Domestic violence, regardless of whether the violence was directed against or witnessed by the child.

MCL 722.31

What impact, if any, does the COVID-19 pandemic have on a court’s analysis of the above factors? First of all, as far as the COVID-19 pandemic relates to the potential quality of life of a particular geographic region, as more and more data becomes available regarding the outbreak, certain regions of the country that found themselves more susceptible to COVID-19 may be less likely to increase the quality of life for a parent and child. Certain geographic areas may pose more of a health risk to families until the development of a vaccine. Second, many parents, although acting reasonably and in the best interests of their child, have informally agreed to modify their parenting time due to Gov. Whitmer’s Stay Home, Stay Safe order. Although it is difficult to imagine a court would criticize a parent for putting a child’s health first, lapses in parenting time and parental absence can dramatically impact a child’s relationship with a parent, which a court may be hard pressed to ignore, despite good intentions. At the end of the day, a parent’s desire to provide more stable financial and family support during this uncertain time may not necessarily result in a court approving the move.

© 2020 Varnum LLP

For more on family & other laws affected by COVID19, see the Coronavirus News section of the National Law Review.

Family Law and COVID-19: Alimony and Child Support

What do you do if the novel coronavirus has shut down your employer, caused a furlough or your termination, or has otherwise suddenly left you without income to pay child support and/or alimony? What do you do if you are the recipient of alimony or child support and now have to figure out how to pay bills and make ends meet without support from your child’s parent or ex-spouse?

A pandemic like this has far reaching economic consequences in these family law issues and can significantly strain both the payor and the payee.

In general, New Jersey law states that a temporary change in economic circumstances does not qualify for a change in the alimony or child support obligation of the payor, even temporarily.

However, given the worldwide attention and knowledge as to the widespread and unprecedented economic effect this pandemic has already shown, and the sudden closing of many offices and businesses through the state, a court of equity, such as the Family Court, may very well provide relief to the payor.

This is particularly likely if both the payor and the recipient of support are equally struggling. A look at the totality of each parties’ financial circumstances would be required.

Compromise may be appropriate, though you must take care to properly articulate the entire agreement to avoid interpretation or enforcement issues later, and legal counsel is strongly advised.

However, in cases where parents cannot reconcile their differences and find compromise, those parents may need to seek court intervention or some form of virtual alternate dispute resolution, and should also seek legal counsel immediately.

COPYRIGHT © 2020, STARK & STARK

For more on COVID-19 effects on Family Law & other sectors, see the dedicated National Law Review Coronavirus News section.

End of the Year Bonuses – Do They Have to Be Shared with My Ex?

The end of the year is coming, and for many employees that means end of the year bonuses will be included in their paychecks this month. Many question whether their bonus should be included as “income” for the purpose of support obligations, as well as equitable distribution in the context of a divorce.

A baseball manager from Arizona, Anthony DeFrancesco, recently faced issues surrounding his year-end bonus and how it related to his support obligations. Mr. DeFrancesco, the manager of the Houston Astros AAA minor league team, was given a $28,000 bonus in 2017 when the Astros won the World Series. The Arizona Appeals Court recently found that the bonus was considered a gift, as opposed to earnings, and he did not have to provide a portion of the bonus to his now ex-wife.

This result is not typically what happens in New Jersey when courts consider whether bonuses are a part of income. In the vast majority of cases, bonuses are awarded to employees for their exemplary work during the preceding year, often resulting from meeting specific targets, going above and beyond the work of a typical employee, and sharing in the success of the company without which the company would have not have otherwise reached. While employees are not legally entitled to bonuses in most cases, bonuses are most often the result of the employee’s hard work. Thus, in the eyes of most courts, the bonus was earned. Any earned income is considered by courts when setting support obligations.

In connection with equitable distribution, money that is earned during the marriage is considered an asset of the marital estate. Therefore, even if the complaint for divorce has already been filed, an end-of-year bonus may be considered a part of the marital estate. For example, if a complaint for divorce is filed on July 1, and an employee receives a bonus of $50,000 at the end of the year for work performed during the previous calendar year, half of that bonus would be attributable to time spent during the marriage.

New Jersey is a court of equity. Arguments can be made that bonuses, or portions of bonuses, should or should not be considered for support and equitable distribution purposes.

Several years ago there was a case in New Jersey in which a private company had been working for many years to go public. One of the company officers had been a long-time employee and, in fact, his dedication to the company to the exclusion of all else contributed to the failure of his marriage. Two years after the divorce complaint was filed, the company went public. The SEC filings noted that the employee received a bonus in excess of $1 million for his dedication to the company and work over the last five years. His wife was successful in her application to reopen the divorce and obtain a portion of that payout due to the evidence that it was for work conducted during the course of their marriage. While this case may be unique, it speaks to why each case has to be evaluated on its own merits, and why each case may have a different result.

COPYRIGHT © 2019, STARK & STARK

For more on spousal support obligations, see the National Law Review Family Law, Divorce and Custody law page.

What is a Holographic Will?

When a loved one passes, questions may arise as to who possesses the Decedent’s Last Will and Testament. If a formal document exists that was validly executed and was drafted by an attorney, chances are that the document is a valid Last Will and Testament unless a challenge is levied against it. What may become problematic is when a handwritten document in the testator’s own handwriting is discovered. The question then becomes if this handwritten document is a valid Last Will and Testament of the Decedent. In general, a handwritten instrument of this nature is called a Holographic Will, and may be enforceable provided certain requirements are met.

Typically, Courts often do the best they can to accept as a Last Will and Testament a writing by the Decedent where it is clear that the Decedent intended the instrument to be their Last Will and Testament. That is because the Courts would rather enforce the wishes of the Decedent than to allow the document to be invalidated based upon a mere formality. Perhaps the least formal of all Last Wills and Testaments which may be admitted to Probate is a document called a Holographic Will. These documents are relatively simple and are akin to something that a Decedent wrote on a piece of notebook paper and signed. The requirements of a Holographic Will are set forth below.

In general, pursuant to New Jersey S.A, 3B:3-2B, a Will can be considered a Holographic Will and admitted to Probate if the signature and the material portions of the document are in the Decedent’s handwriting. The Holographic Will must have all material testamentary provisions in the handwriting of the testator and also must be signed by the testator. What this means is that the provisions in the Will which dispose of the Decedent’s property must be in their own handwriting and not the handwriting of another. Further, the Will must be signed by the Decedent and not another party. As noted, this is a very simple instrument and is akin to a piece of notebook paper upon which a Decedent described how to transfer his/her property.

Provided the Will meets the requirements of a Holographic Will, it may be admitted to Probate and the Decedent’s Estate may be distributed in this regard. Different things could occur if not all the Decedent’s property is disposed of pursuant to a Holographic Will, however, that is best left for another blog. The purpose of this blog is to merely highlight one potentially type of valid Last Will and Testament which is informal in nature.

COPYRIGHT © 2019, STARK & STARK

Article by Paul W. Norris of Stark & Stark.
For more on wills & testaments, see the National Law Review Estates & Trusts law page.

Employers Beware: SC Abolishes Common-Law Marriage

On July 24, 2019, South Carolina joined the ranks of Alabama, Pennsylvania, and others in abolishing future recognition of common law marriages in the state.  The state will continue to recognize all common law marriages in effect before this date, but they will be subject to a higher standard of proof.  On and after July 25, 2019, all South Carolina marriages will require the issuance of a marriage license.

This ruling from the South Carolina Supreme Court came after many legislative attempts at abolishing common law marriage failed.  The court determined the paternalistic reasons behind the original recognition of a common law marriage, e.g., the stigma of unwed mothers, children out of wedlock, and the logistics of the “circuit minister” or other official required to cover a large territory, no longer apply.  With the elimination of future common law marriage recognition, the court also handed down a new standard of proof parties must meet to continue to be considered married under common law.  Probate cases in South Carolina use the “clear and convincing evidence” standard to prove marriage, and now this standard applies to the living too.

Our workforce is transient.  Employees residing in South Carolina often move across state lines for work and personal reasons.  And many companies with principal offices outside South Carolina choose to open locations in South Carolina.  For that reason, this ruling reaches beyond state lines, and it is important for all employers to understand its implications upon benefit plans and leaves of absence.

After July 24, 2019, it no longer is enough for employees claiming an employee is a “spouse” for employee benefit plan purposes simply to establish they were married under the common law of South Carolina.  Now, the critical factor is the date as of which that marriage was established.  The documents submitted to prove the marriage (e.g., tax returns, documents filed under penalty of perjury, introductions in public, contracts, and checking accounts) must also reflect this timing.

This Court decision will also have implications for employees in South Carolina seeking to take a leave of absence under the Family and Medical Leave Act to care for a spouse with a serious health condition.  Before July 25, 2019, eligible employees could take a leave of absence under the FMLA to care for a common law spouse with a serious health condition.  Yet after this Court ruling, employees can only take FMLA leave to care for a common law spouse if that common law marriage was established on or before July 24, 2019.  Employers should remember that under the Department of Labor’s FMLA Regulations, employees can be required to provide reasonable documentation evidencing the existence of a valid marriage.

Jackson Lewis P.C. © 2019

Mental Illness in Family Law & Divorce

According to the National Institute of Mental Health,

Not surprisingly, mental health issues come up in the context of a divorce in a variety of ways. They arise when mental health issues contribute to the breakdown of the marriage or relationship. For instance, a partner may suffer from a condition which causes him or her to behave in ways that are detrimental to the relationship. This can manifest itself in aggression, narcissism, and self-centered behavior to the detriment of the other partner or children, excessive spending impacting family finances, to engaging in dangerous behavior with a partner, and/or their children.

What happens when someone believes that their partner’s actions are caused by a mental illness? After a complaint for divorce has been filed, or other court process started, attention needs to be focused to the behavior, and steps should be taken to:

  1. Ensure that children are safe;
  2. Assets of the marriage are protected; and
  3. A plan is created to provide treatment options if children are involved.

If a spouse or partner is suffering from mental illness to the extent that he or she cannot make rational decisions, the court has a variety of options to protect that person, both personally and his or her property. The court can appoint a guardian for the person, particularly if the illness is so extreme as to cause a person to be incompetent.

If the litigant is ill, but not to the point of incompetency, the court can appoint a Guardian Ad Litem.

If a partner or spouse’s illness is creating a risk of assets being dissipated, a court can freeze accounts, and limit access to funds. A court may allow a third party to make payments on behalf of a litigant such as rent, etc.

There is little question that difficult issues arise when a parent suffers from mental illness. The courts, acting in the best interests of children, must make sure the child is safe, while at the same time safeguarding a parent’s rights to have a relationship with a child. When custody is an issue and one parent is alleging that the other suffers from a mental illness, the court will typically order an evaluation by a licensed mental health provider with experience in custody cases. The court may enter an order limiting, or prohibiting contact with the children pending the outcome of the evaluation. Then, depending on the outcome of the evaluation, the court may order therapy, medication, or other recommended treatment as a condition to parenting time. While the parent is undergoing treatment, the court can order supervised parenting time to make sure the children see the parent, but also making sure they are safe.

If substance abuse is part of the illness, there are options to make sure a child is not with a parent who is intoxicated. In addition to random drug testing, which the court can order as a condition of parenting time, there are devices, similar to mini breathalyzers to detect alcohol and certain other substances. These can be carried on someone’s person, in a pocket or purse, and they will be sent a random text instructing them to blow into it. A report will then be sent to the custodial parent, who can take steps to protect the children.

Sometimes, a child will suffer from a mental illness and the parents may differ as to the existence of the illness or for its treatment. This often results in a health care provider refusing to treat in the absence of agreement. In that case, either parent can petition the court for assistance, and an order allowing treatment.

COPYRIGHT © 2019, STARK & STARK.

This post was written by Jennifer Weisberg Millner of Stark & Stark

Read more about Divorce & Family Law on the National Law Review’s Family Law, Estate Planning and Personal Injury Legal News page

Three Critical Legal Documents Every Parent Should Get in Place Now to Safeguard Their Adult Children

As a parent, you might not fully appreciate that when your child turns 18 years of age, at least in the eyes of the law, you no longer have certain inherent rights related to medical and financial details about your adult child. For this reason, you’re strongly advised to get three simple legal documents in place to ensure you’re able to intervene on behalf of your adult child in the event your child is injured, becomes ill or is otherwise incapacitated.

These situations aren’t easy to think about, but imagine the following scenarios:

  • Your 19-year-old son, while away at college, is involved in a severe car accident and is rushed to the hospital unconscious.

  • Your unmarried 25-year-old daughter, while vacationing with friends in Hawaii, is unconscious in the hospital following a jet-skiing accident.

  • Your newly divorced 30-year-old son is hospitalized after suffering a brain hemorrhage and is put into a medically induced coma.

In each scenario, when you find out that your adult child is in the hospital, you immediately call for details about your child’s condition. You are horrified when the nurse says, “I’m sorry, but I am not authorized to provide you with any information or allow you to make any decisions.”

Here are insights about the three legal documents that would be prudent to have in place on behalf of your adult child before another day goes by.

1. HIPAA Authorization Form (for Authority to Speak with Healthcare Providers)

HIPAA, or the Health Insurance Portability and Accountability Act of 1996, exists for good reason; it is a federal law that safeguards who can access an adult’s private health data. If you call or visit the hospital to inquire about your adult child, as in the above scenarios, healthcare providers are prohibited by law from revealing health information to you – or anybody else – about your child; healthcare practitioners could face severe penalties if they violate HIPAA laws.

This illustrates why a HIPAA authorization, signed by your adult child and naming you as an authorized recipient, is so critical. It gives you the ability to ask for and receive information from healthcare providers about your child’s health status, progress, and treatment. This is particularly important in the event your adult child is unconscious or incapacitated for a period of time. Without a HIPAA authorization in place, the only other way to obtain information regarding your child’s health would be to go to court.

2. Healthcare Power of Attorney (for Medical Decisions)

If your adult child signs a Healthcare Power of Attorney naming you his/her “medical agent,” you will have the ability to view your child’s medical records and make informed medical decisions on his/her behalf. Without this document or a court-appointed guardianship, healthcare decisions concerning your child’s diagnosis and treatment will be solely in the hands of healthcare providers. While this is not always a bad thing, a physician’s primary duty is to keep the patient alive. So, a healthcare provider might not pursue a risky or experimental course of treatment at the risk of exposure to liability.

Keep in mind that doctors prefer to see one medical agent named rather than multiple medical agents. The concern is that multiple medical agents may not agree on the medical course of action to take on behalf of the incapacitated adult. As a best practice, it’s prudent to name multiple agents in priority order with single authority; for example, the adult child’s mother might be listed first as the medical agent; if the mother is unable or unwilling to serve in that capacity, the second person listed—say the child’s father—would be empowered to step in.

3. General Durable Power of Attorney (for Financial Decisions)

If your adult child were ever incapacitated, you would also benefit greatly from having a General Durable Power of Attorney in place, where you were named as the “agent” authorized to make financial decisions on his/her behalf. This would allow you as the named agent to manage bank accounts, pay bills, sign tax returns, apply for government benefits, break or apply for a lease, and conduct similar activities relating to your child’s financial and legal affairs. Otherwise, you will not be able to assist your child in managing his or her financial affairs without a court-appointed conservatorship.

Important Considerations

There are some important considerations to keep in mind regarding these documents:

  • Update these forms yearly. Be prepared to have your adult child re-sign and re-execute these documents every couple of years. This is especially critical for Powers of Attorney. The institutions where you would be most likely to use these documents – such as hospitals and banks – might refuse to honor them if they perceive them to be outdated.

  • These documents are only as good as the institutions that will accept them. Making sure these documents are properly executed is half the battle; whether they will be accepted by the involved institutions is the other half of the battle—one you don’t have complete control over.

  • These documents can be revoked at any time by your adult child either orally or in writing. Your adult child retains control of the ongoing validity of these documents; therefore, your best bet is to maintain a trusting relationship with your child so he/she sees the benefit of giving you the access and control these documents afford.

  • For adult children attending college at an out-of-state university, parents will want to execute separate documents in both the student’s home state and college state. If your daughter is from Denver but is attending college in Los Angeles, you’ll want one set of documents prepared under and governed by Colorado law and a second set of documents prepared under and governed by California law.

Copyright © 2019 Ryley Carlock & Applewhite. A Professional Association. All Rights Reserved.

A Year-End Estate and Financial Planning Checklist: Make Your List and Check it Twice

During the holidays, it can be hard to find the time (or desire) to review your finances and estate plan. To help with that effort, here is a short list of things that you can easily accomplish before the ball drops on New Years’ Eve.

1. Review required minimum distributions (“RMDs”). If you’re 70½ or older, you must take RMDs from certain retirement accounts by December 31 or face a penalty equal to 50% of the sum you failed to withdraw. If you turned 70½ this year, you have until April 1, 2019, to take your first RMD without penalty. (However, note that deferring your first RMD to 2019 will mean taking two RMDs in the same tax year, which could bump you into a higher income tax bracket). These rules also apply in the case of an inherited or “stretch” IRA. Generally, you must begin taking RMDs for inherited IRA assets by December 31 of the year after the year of the original owner’s death, but certain exceptions may apply. The IRS provides some helpful worksheets here.

2. Reduce taxable income and rebalance investments. Work with your financial advisors to sell losing positions in taxable investment accounts as necessary to offset gains. Then review your asset allocation and, if necessary, rebalance your investment portfolio.

3. Max out company retirement plan contributions. In 2018, you can contribute up to $18,500 in your employer-sponsored retirement plan (i.e., 401(k), 403(b), most 457 plans, and the Federal government’s Thrift Savings Plan). Employees aged 50 or older who participate in such plans can contribute an additional $6,000 in “catch-up” contributions. If you are not able to contribute the maximum, try to contribute enough to qualify for any matching contributions by your employer.

4. Review insurance coverage. Make sure you have adequate policies in place insuring your life, health, disability, business, and assets (home and auto), which can help protect you and your family from unforeseen liabilities and expenses.

5. Review estate plans and beneficiary designations. Estate planning should be reviewed holistically and periodically to be sure that the plan you have in place accomplishes your goals. See “So You Think You’re Done With Your Estate Plan” for a more in-depth discussion.

6. Make gifts. The 2018 annual gift tax exclusion is $15,000. This exclusion is the amount of money you can give away per person per year, tax-free. In addition, married couples can elect to “split gifts”. By utilizing this strategy, married taxpayers can gift up to $30,000 to an individual in 2018 before a gift tax return is required. On top of annual exclusion gifts, an unlimited gift tax exclusion is available for amounts paid on behalf of a person directly to an educational organization, but only for amounts constituting tuition payments. Amounts paid to health care providers for medical services on behalf of a person also qualify for an unlimited gift tax exclusion. Annual gifting is an excellent way to reduce the value of your gross estate over time, thereby lowering the amount subject to estate tax upon your date of death. Charitable and philanthropic gifts (whether outright, in trust, or through a donor advised fund or similar vehicle) should also be considered.

7. Fund your Health Savings Account (“HSA”). In 2018, those in high-deductible health-insurance plans can save as much as $3,450 in pre-tax dollars in a health savings account. For families, the figure is $6,900, and those aged 55 and older can contribute an additional $1,000. Unlike a Flexible Spending Account, your HSA balance rolls over from year to year, so you never have to worry about losing your savings. If you are over age 65 and enrolled in Medicare, you can no longer contribute to an HSA, but you can still use the money for eligible out-of-pocket medical expenses.

8. Use your flexible spending dollars. Unused funds in a Flexible Spending Account (“FSA”) are typically forfeited at year’s end, so make sure to spend them for eligible health and medical expenses by December 31. Some plans offer a “grace period” of up to 2 ½ months to use FSA money. Other plans may allow you to carry over up to $500 per year to use in the following year. Bottom line, check with your employer to confirm your plan’s deadlines.

9. Check your credit and identity. Under the Fair Credit Reporting Act, each of the national credit-reporting agencies is required to provide you with a completely free copy of your credit report, upon request, once every 12 months. Get yours at www.annualcreditreport.com.

10. Organize your records for 2019. Now is the time to gather and organize the documents and 2018 records that will be needed to prepare your tax returns in 2019. As part of that process, shred documents that no longer need to be retained.

© Copyright 2018 Murtha Cullina

ARTICLE BY

Lisa P. Staron
Murtha Cullina