Equitable Distribution and Worker’s Compensation

One asset in equitable distribution or support that parties should consider when getting divorced is worker’s compensation awards. Depending on what state the worker lives, there may be a component not only for lost wages but also an award comparable to a personal injury award. In these instances, the lost wages should be calculated into any support award and the again, you will need to decide whether you want to lump sum the award portion as either income for purposes of support or as an asset for purposes of equitable distribution. In the event that it is considered as income, you cannot double dip and claim it as an asset. If, however, the award is for an injury that occurred outside of the marital period, either before or after separation, you will need to include it as income as you cannot include it as an asset. Your support order should be very detailed and specific and identify exactly what portion of any worker’s compensation is included in the calculation of the income. Whether to have the worker’s comp treated as an asset or income really depends on how the court will treat the asset. In some instances, the court may award the majority of that asset to the injured party and it may be better to then include it income if you are also eligible to receive support. Speaking with your attorney about the expected amounts would be wise to do before you make that decision so that you can decide whether it is better as support or as an asset.

For more information see:/Family-Law-Divorce/Division-of-Marital-Property/

 

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Pennsylvania Inheritance Tax

Pennsylvania is one of a handful of states that requires a tax paid on inheritances. There is also a federal estate tax, but your estate is exempt as long as your estate is valued at less than $5,430,000. Pennsylvania, on the other hand, has no minimum threshold.

The inheritance tax in Pennsylvania only covers tangible property (i.e. furniture, clothes, collectibles, vehicles) and real estate located in the Commonwealth. Furthermore, there are several exemptions: spouses, parents inheriting from a child who passed away before reaching the age of 21 years, charities, and the government.

The tax rates are as follows:

Spouses: 0%

Children: 4.5%

Parents: 4.5%

Siblings: 12%

Other beneficiaries: 15%

The inheritance tax is due within 9 months from the date of death. However, there is a 5% discount if the tax is paid within 3 months.

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Warranty of Habitability

There is an implied Warranty of Habitability when you rent a premises in Pennsylvania. In other words, the rental unit must be habitable: i.e. there must be water and heat, and the property must be safe and sanitary.

If a problem develops after you move in, contact the landlord immediately. While I recommend calling the landlord, send a follow-up confirmation letter/email. Make sure that all communication is documented. Also, keep a copy of any written correspondence for your records. (Do not record phone conversations).

If the issue is not resolved within a reasonable time-frame, then let the landlord know that you are placing the rent into an escrow account until such time as the problem is resolved. You may also let the landlord know that you will be fixing the problem yourself with the costs deducted from the following rent payment.

If the landlord disagrees and you find yourself in court, bring pictures and copies of your correspondence, as well as proof that the rent is in an escrow account. When you see the judge, you may receive an abatement of rent for the time that the premises was not habitable.

TransUnion article: What does the Implied Warranty of Habitability Mean?

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Advertising the estate

In Pennsylvania, executors have a duty to pay all debts prior to distributing assets to the beneficiaries. Normally, creditors may file a lawsuit against a party prior to the expiration of the statute of limitations, which runs for several years (for example, a breach of contract claim has a 4-year statute of limitations). As executors usually wish to finalize the estate and beneficiaries seek their inheritances well in advance, Pennsylvania has provisions to shorten the statute of limitation period for estates.

Once an estate is opened, an executor may advertise the estate in two periodicals. One must be in the legal newspaper in the county where the decedent resided. For example, you must advertise in the Bucks County Law Reporter or Philadelphia Legal Intelligence. Additionally, the other needs to be in a newspaper of general circulation. These advertisements must be published once per week for three weeks. Once this is done, the statute of limitations is shortened to one-year from the last date of advertising.

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Income or Asset? Avoid the Double Dip

Oftentimes when getting divorced, an asset the generates income can either be considered in equitable distribution or in support. For example, if you receive stock options as part of your employment, they are considered an asset for purposes of divorce. If you cash them in during the divorce, it will either be considered an asset for income, but not both. If you have a pension that accumulated during the marriage and it goes into pay status during the divorce, or if it is already in pay status at the time of the divorce, it may be considered an asset or income but not both. You need to be careful that if you have a support order that the income from that pension or the stock option is not considered into the incomes if you want to have that asset considered an asset for equitable distribution. You need to be very careful that any support order entered specifically states whether any of the income was included, and if so, how much.

Sometimes, an asset may be a hybrid of a marital asset and non-marital asset. For example, a pension may include a portion of non-marital years and a portion that is marital. In that instance, you need to weigh whether it is better to include the entire pension income, or whether you want to include the non-marital portion income and include the marital portion as an asset for equitable distribution. Since you often receive more in equitable distribution than you do in support, oftentimes, the person who is entitled to a share of the pension or a share of the stock option will want to consider it in equitable distribution instead of support. Either way, be very clear in any agreements or order, which is so that there is no double dip if you are paying and that there is no argument it was already included if it was not considered.

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Stepparents and Custodial Rights

Under the custody laws, when parents split up, both parents often will go to court or come to an agreement on a custody schedule. What happens, when a parent and a non-biological parent separate? Oftentimes, the non-biological parent may have been very involved in the child or children’s lives. If that non-biological parent did not adopt the child, they can still sue for visitation and/or custody of the child or children under in loco parentis. This means that they have the right to go to court to seek scheduled time with the children, be that primary custody, partial custody or visitation even though they are not the biological parent and even if both biological parents have their own custody schedule.

In some instances, one or both of the biological parents may object and say that they did not act in loco parentis and therefore they cannot bring a case. This, however, is often, if not always overcome in a stepparent relationship. To establish in loco parentis, the stepparent has to show that they discharged parental duties with the permission of a parent. Given that in a household both the parent and stepparent usually handle matters together such as paying the bills, driving children around for activities, going to school functions, helping with homework, it is not difficult to see why it would be difficult to say a stepparent did nothing for the child or children.

The standard that the court uses to determine the custodial schedule for a stepparent is no different than the standard used to determine custody for the child generally and that is the best interest of the child. There are instances where a stepparent ends up with primary custody if the circumstances warrant it. Generally, however, a stepparent, should anticipate that the court will give more preference to the biological parents as primary or joint custodians with the stepparent getting some time carved in there if it is in the child or children’s best interest.

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When and where to file for Child Support in Pennsylvania

Child support is a remedy afforded to the parent who has the majority of time with the children or who has equal time but makes less money. Child support may be filed either in the county where the child lives, the defendant lives or the defendant works. In Pennsylvania, child support is based on guidelines so no matter what county in Pennsylvania you choose to file, the amount should be the same and the money is all funneled through the PACSES which is located in Harrisburg. The difference may be procedure, time and how many steps it takes you to see the Judge. For example, in Bucks County, PA, you will attend a lower level conference and if not resolved it will be scheduled for a Judge within a few weeks. In Philadelphia and Montgomery Counties, however, you will first go to a conference, then to a Master’s Hearing and then to a Judge.

You should file for support as soon as you know that you will not be living with the other parent and about six weeks prior to the date you will separate. There are no filing fees for support in any of the counties and it is one of the few times you will not have to pay a filing fee. Most counties have pre-printed forms that you can fill out to file on your own or you can hire an attorney to file it for you. Domestic Relations is the office that handles support matters and you will want to contact that office to find out the hours and location to file in your county.

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