The issue of how personal perks are being paid often arises when dealing with a self-employed party. Examples of personal perks provided at the expense of the company may include cell phone payments, car payments or repairs, entertainment, meal expenses, travel expenses, country club dues, and other comparable expenses that primarily benefit the individual. These expenses may be still be permissible deductions for tax purposes but the court should consider the amount and nature of these expenses in a support case.

Personal perks are also relevant in the context of a business valuation for divorce. An income based approach is most popular for small businesses. This method of valuation focuses on the cash flow of the business. The reasonable compensation of the party owner should be deducted from the cash flow of the business in doing a valuation. Again, the personal perks paid by the business on the owners behalf would need to be accounted for and subsequently, necessary adjustments would need to be made.

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Child support in Pennsylvania is based on statewide guidelines established by the Pennsylvania Supreme Court. The guidelines are intended to ensure that similarly situated parties are treated similarly. Accordingly, all parties making $3000 per month with 3 kids would pay the same amount of support based on the guideline amounts. The guidelines are based on an “Income Shares Model.” Accordingly, the guideline amount will be based on the combined net monthly income of both parties. However, there are circumstances which warrant a deviation from the guideline amount such as having a special needs child.

There are often additional financial, education, and medical costs associated with raising a special needs child. The child may be involved in counseling and/or specialized education. There may be frequent medical attention required. Sometimes, special supplies are needed to encourage good behavior and/or supplement their educational program. The Rules of Civil Procedure governing support matters do allow for deviations from the guideline amount. Rule 1910.16-5 lists the factors to be considered in deciding whether a deviation is appropriate. Reasons for any deviation must be clearly articulated. Rule 1910.16-6 discusses allocation for additional expenses independent of the basic support award. Additional expenses can be added in such as health insurance costs, child care costs, summer camp, private school tuition, unreimbursed medical expenses, and other needs. You can create a support order which would dictate these expenses be split between the parties in proportion to their income. Parties can agree to pay the provider directly for their share or for one party to pay the full sum and then seek reimbursement from the other party. It is always a good idea to keep detailed records of expenses for the children and provide proof of the costs.

Click here to read more about child support.

Bucks County has a “Wills for Heroes” event this upcoming Saturday, May 14, 2016. This is a program in conjunction with the Pennsylvania Bar Association that provides free wills, living wills, and powers of attorney to first responders and their spouses/significant others. Proof of military or public service affiliation is required. Appointments are required and can be made on the Pennsylvania Bar Association website. Each appointment is for one hour. At the conclusion of the appointment, each participant will have their final, notarized documents to take home with them. If a spouse or significant other is also participating, their appointment will be immediately following that of the first responder. The program is made possible through the time of volunteers including attorneys, reviewers and witnesses.

This week’s “Wills for Heroes” event is being held at Bucks County Community College, Lower Bucks Campus, 1304 Veterans Highway, Bristol, PA 19007. The event starts at 11 a.m. For more information, you can visit Our firm is also able to assist with estate planning documents at a reasonable cost including wills, living wills and powers of attorney. Please contact our office if you would like additional information or to set up an appointment.

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One of the most important duties of the executor or administrator is keeping an accurate accounting of the estate assets. Prior to distribution, an executor should prepare an accounting of all of the assets and liabilities of the estate, including all sources of assets (i.e. bank accounts, refunds, sale of real estate) and all liabilities paid and still outstanding (i.e. funeral costs, unpaid credit cards, medical bills).

The accounting must accurately show what went into the estate, what went out, and what is left to be distributed amongst the heirs.

An account is necessary whenever there are multiple beneficiaries receiving a percentage of the residuary estate, or when the executor goes to court to file for an insolvent estate, or when there is a dispute amongst heirs. Without it, the court and/or beneficiaries have no way of determining whether the executor did something inappropriate.

Do you need a will? Most people don’t think so, or don’t get around to it. While an estate can proceed without a will, i.e. by intestacy, a will can resolve many problems.

For example, if you have minor children, a will can designate guardians in case both parents pass away. Likewise, you may appoint a trustee to handle money and gifts that are to be left to children who aren’t yet responsible. You can also put money into trust for children who are adults but not fully responsible. You don’t want an 18-year-old to spend their entire inheritance on an expensive car or a trip to Europe when he or she can use the funds to help offset college expenses or for a down-payment on a house.

Another reason to have a will is when you wish to appoint an individual to be the executor – the person in charge of carrying out your wishes and moving the estate through probate. Without a will, your children or spouses who don’t get along may all wish to become executor or administrator. This can cause many problems and may require court action – something a will can avoid.

You may also give designate certain personal items or money to go to friends or family who otherwise wouldn’t inherit.

For these reasons, it is advisable for everyone to get a will, even if you don’t think you have anything to leave behind.

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 $5,450,000 for 2016. 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 Pennsylvania.

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%

You must file the inheritance tax within 9 months from the date of death, or else there may be penalties and interest. However, you get a 5% discount when the tax is paid within 3 months of passing.

In order to open an estate, you must go to the courthouse located in the county where the decedent was residing when he or she passed away.

The executor must bring the original will, signed and witnessed by the decedent. The executor(s) named in the will must be present. If the executor does not wish to handle the estate, then they will need to sign a renunciation which will be presented to the Register of Wills. In this case, the alternate executor can proceed. The court also requires the executor to bring photo identification (i.e. drivers’ license).

Finally, you will need to pay the filing fees, which are based on the size of the estate, plus costs for each short certificate.

In a support matter, the incomes of the parties will be used to calculate an appropriate award based on the support guidelines applicable throughout the Commonwealth. At the initial appearance for a support matter, both parties are asked to bring in proof of their income in the form of W-2s, tax returns, pay stubs, or other documentation of income received. If a party is unemployed or underemployed, the courts may consider their earning capacity. Pennsylvania Rule of Civil Procedure 1910.16-2(d)(4) discusses earning capacity. First, the rule indicates there should be a determination that a party willfully failed to obtain or maintain appropriate employment. Involuntary reductions income (e.g. lay-offs or unemployment due to illness or disability) generally do not trigger an earning capacity analysis.

If the reduction income is seen as voluntary (e.g. willingly took a lower paying job or cut hours) then the court may impute an income consistent with that party’s earning capacity. A number of factors should be considered when trying to identify an appropriate earning capacity. For example, age, education, training, skill set, work experience and prior earnings history are relevant to consider. A Judge must explain the rationale behind any earning capacity that is assessed against a party. The earning capacity provision exists so that parties who have a support obligation can’t escape their obligation by leaving their jobs or otherwise lowering their income. Under- or un-employed parties seeking to avoid imputation of an earning capacity should be prepared to show they have taken good faith efforts to secure comparable employment and that any reduction income was for a valid purpose, not to lower or avoid a support obligation.

Click here to read more about calculating support.

When you divorce with children, you are going to have to transition them between two homes. For a minor child of any age, this can be not only traumatic when it starts but also feel like a constant state of flux. It is critical that you children know they are loved by both parents, have space in your home, and are made to feel comfortable. How can you make this as easy as possible for them? Make sure you have duplicate supplies, take some responsibility, and be reasonable when they forget important items from one home.

Have duplicate supplies
Cosmetics for teenage girls, graphing calculators, clothing, or soccer balls – making sure each house has favorite and necessary items can be important. While this may seem redundant, having certain items in each home will ease the burden of packing on the child and anxiety that they might forget something important. While this can cost you a few extra dollars the comfort it provides to your child can be invaluable. If your child wears a uniform to school, make sure you each a set at your home including any shoes. You may even want to ask if you can get two uniforms if your child is in sports.

Put the burden on the parents
While living in two homes is common these days, it is not your child’s fault they have to move back and forth so make sure that you do the heavy lifting for them. Help them pack, maybe develop a list for them to use, and offer to pack the car with them. If they are switching homes after school coordinate with the other parent to ensure you can drop-off or pick-up their belongings.

Be reasonable when they forget necessary items.
When your child leaves a textbook or snow boots at the other parent’s house remain calm. While children of divorced parents tend to be more organized due to the moving around they are still young and will forget every once in awhile. They also need to feel that you will help them have the items that they need for their day. If you have a problem with textbooks contact the teachers – they are usually happy to provide extra copies.

Having to move belongings on a regular basis can be troublesome for some kids. While you and your ex may both provide loving environments, remember it is not your child’s fault they have to travel between two homes. Going out of your way to make them feel comfortable and helping also negotiate packing will help. Children crave a stable environment and parents should do what they can to provide that for them.

During your divorce every nook and cranny of your financial picture will be evaluated. Together we will take a look at the finances you brought into your marriage and then what you and your spouse accumulated together. It is very important that you have a full understanding of your financial picture and copies of all financial documents.

What did you bring into the marriage?

Before you got married you may have had assets including investments, property and savings account. If you kept them solely in your name and they did not increase due to the influence of your spouse, they are yours to keep. If you commingled these assets with your spouse, meaning you added his/her name as an owner, then they are considered a contribution to the marriage and the court will determine how to allocate them. Some counties will apply their own methodology for determining what portion you will get credit back for this contribution based on the date it was contributed and time that has passed. The increase in value of a separate asset is always marital. Usually we look at each asset on a case by case basis. It is important that you provide your attorney with the details of any contributions you made either from before the marriage or through an inheritance and it is also important to have a paper trail of these transactions.

What assets did you build together?

The assets of a marriage are simple to state but can be difficult to calculate. For instance, if you had a 401k before your marriage but continued to then add to it during your marriage, your spouse is entitled to share in the accumulation since the date of your wedding. If you and your spouse purchased a home together the current equity is up for consideration.

Make copies of your statements

A very important part of your financial situation is knowing your current financial situation. When you decide to divorce (or find out you are getting divorced) start to immediately make copies of financial statements. Do not let your spouse try to hide money or claim

Just as every couple is different so is every divorce. You have the ability to negotiate each part of your divorce to ensure you are getting your share of the assets. Additionally, based on other factors such as income and potential income we can always negotiate in other ways as well – trade-offs are common. An experienced divorce attorney will be able to explain your options and negotiate creative solutions for you.