Gifts of Assets

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Each individual is permitted to gift $15,000 in assets each year without tax implication. $15,000 is the annual cap for federal gift tax purposes. There is not a gift tax in Pennsylvania. Even individuals who gift above this yearly threshold, may not need to pay taxes. Amounts in excess of the yearly limit can be assessed against that individual’s lifetime gift tax exclusion. Presently, the lifetime gift tax exclusion is 11.18 million. Most individuals will not exceed that sum over the course of their lifetimes.

You should be aware that gifts made within a year of death may be subject to Pennsylvania inheritance tax depending on the amount and nature of the gift. There are some gifts that are non-taxable and do not count against your annual exclusion or lifetime exemption. Gifts between spouses can be unlimited. Payments for tuition or medical expenses paid directly to respective institution or facility on someone’s behalf are not taxable. Gifts to political organizations and charities are also under the umbrella of non-taxable gifts. Any individual making a taxable gift above the annual exclusion must complete Form 709, the Gift Tax Return. Filing of the return does not mean any taxes are due however if still within your lifetime exemption. Consult with an experienced estate planning attorney to make further understand your options in making gifts as part of your estate plan.  By April M. Townsend

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Foreign Adoption Decree

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A foreign adoption decree is a decree issued from another country regarding adoption that took place abroad. If you have adopted a child from abroad, you can take steps to register that foreign adoption here in the United States. Pennsylvania discusses the applicable steps in 23 Pa. C.S. Section 2908. The adoptive parents can file a properly authenticated copy of the foreign adoption decree along with copy of child’s via and birth certificate in the county where the adoptive parents reside. The adoption decree should be translated into English where applicable. If there is no birth certificate or other birth record for the adoptee, the parents may submit an affidavit instead.

The court is to supply a foreign adoption registration form for adoptive parents to use. The form should include information on how to obtain an adoption decree from the Commonwealth. Where the court is satisfied that a full and final foreign adoption was completed, they would enter the decree on the docket and issue a certificate of adoption to the parents. If the court is not satisfied that a full and final adoption took place, instructions regarding re-adoption are to be provided to the parents. All records submitted to the court to register a foreign adoption are maintained by the court and sealed. Filing fees may be assessed by the county for this procedure.  By April M. Townsend

 

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Foreign Adoption

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If you have adopted a child from abroad, there are several steps to take to finalize the adoption domestically. A re-adoption being filed in the United States can serve a few purposes. It can allow for an adoption decree that is in English. It can be required for immigration purposes. It may also be helpful for effectuating a name change of the child if not already completed.

The procedure for re-adoption in Bucks County is similar to domestic adoptions. It begins by filing a Report of Intent to Adopt. There is only one post-placement visit required that is usually completed by the agency the parties worked with for the foreign adoption. Once report is completed, petition for adoption can be filed. Copies of all the foreign documents (ex. Birth certificate, decree of guardianship, adoption decree) shall be translated if necessary, certified, and presented to the court for adoption hearing.

An alternative to refiling for adoption is to have a foreign decree of adoption registered with a local court. For this option the parents would file a certified copy of the foreign adoption decree with the court. It should be noted that no English language adoption decree will be issued, and the other issues addressed above will not be automatically resolved. A Pennsylvania birth certificate can be acquired through registration of a foreign adoption if at least one of the parents signs a statement regarding their US citizenship and PA residency. This allows the local court to register the foreign adoption with the Division of Vital Records as well.  By April M. Townsend

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Father’s Consent to Adoption

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Pursuant to 23 Pa. C.S. Section 2711(a), a consent must be signed by the following individuals where applicable: (1) the child(ren) being adopted if over 12 years of age; (2) the spouse of the adopting parent if that spouse is not also a petitioner; (3) the natural parent(s) of any minor child(ren) being adopted; (4) the guardian of an incapacitated child up for adoption; and (5) the guardian of a minor child or persons having custody when the adoptee has no parent whose consent is required. Subsection (c) discusses specific time limitations as to when a consent can be signed however these time limitations are directed towards the natural mothers. A consent cannot be executed by a birth mother within seventy-two (72) hours of the birth.

A putative father can consent at any time after receiving notice of expected or actual birth of the child. A putative father is one whose legal relationship with the child has not been established but suspects he is the father born to a woman that he is not married to at the time of the child’s birth. A putative father is distinguishable from a birth father whose legal relationship with the child is established due to marriage to birth mother. A birth father would also need to wait a minimum of seventy-two (72) hours before executing a consent for it to be valid. Consent may be executed outside of Pennsylvania and still recognized here if executed in accordance with the law in the location where it was signed. The consent is irrevocable thirty (30) days after signature absent proof of fraud or duress.

 

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Family Settlement Agreement

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The family settlement agreement is a document that can be filed at the conclusion of administration of an estate wherein the beneficiaries accept their distributions and release the executor or administrator from any liability for their handling of the estate. Often, an informal accounting will accompany the settlement agreement so all interested parties can review the administration of the estate. The document would also clearly state the distributions of the net assets of the estate. With respect to cash assets, this may be accomplished by specific dollar amount or by percentage.

One of the benefits of finalizing estate administration by agreement is fewer filing fees and legal fees since less paperwork is filed with the court and a court hearing is not required. Executors or administrators should still publish notice of the estate for any potential creditors and wait one (1) year before distribution. It is possible to allow distributions prior to the one year mark from notice of the estate. In that scenario, it is important to include language that beneficiaries will return funds as needed if a valid creditor is subsequently identified and makes a timely claim against the estate.

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What Happens to the Family Pet?

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Many people consider their pets as members of the family and accordingly, when the family breaks up, custody of the pets can become an issue. While pets may be considered members of the family from the perspective of the owners, the courts in Pennsylvania deal with pets the same way as they deal with other inanimate personal property in the event of a divorce.

Parties can elect to enter an agreement on who will get the family pet or if there is a schedule to share the pet. This written agreement should be submitted to the court so that in the event either party does not comply, the disgruntled party can file for contempt and the court can assist in enforcing the agreement. The other option is to seek court intervention. This would require raising a count for Equitable Distribution in the Divorce Complaint. If you must go this route, understand the court will give the pet to one spouse or the other just as it would any other personal property such as furniture or TVs. Increase your likelihood of retaining your pet by showing you were the party that purchased the pet and/or you were the party that primarily cared for the pet in terms of vet appointments, grooming, etc.

 

 

 

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Equitable Distribution of Marital Property

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Once you have identified your marital property, the next step is reaching an equitable distribution. Equitable distribution in Pennsylvania is not an automatic 50/50 split. Instead, there are thirteen (13) factors to be considered by the court in determining the appropriate division of a marital property. A few of the factors include the length of the marriage, sources of income and needs of each of the parties, value of property set apart to each party, standard of living established during the marriage, economic circumstances of each party as time division of property is to become effective, and whether either party will be serving as custodian for dependent minor children.

In a divorce involving equitable distribution, the parties are tasked with identifying all the property to be considered. Each party is to file an inventory of assets. The Inventory should list all marital assets and debts at issue, its value or balance, anything that has been transferred, and anything a party asserts is non-marital in nature. An Inventory must be filed prior to requesting a hearing on equitable distribution. You can supplement the list of marital property if you do not have knowledge of all the assets and debts at the outset. A pre-hearing statement must also be filed if a party is seeking a hearing to address equitable distribution. Similar to the Inventory, you will list all marital assets and debts. You will include as exhibits the statements or documents for each item confirming their value or balance. It is important to work with an experienced family law attorney when dealing with equitable distribution matters to ensure all marital property is identified, valued and submitted to the court in a timely fashion.  By April M. Townsend

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Divorce Costs

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There are a number of costs involved in a divorce action. The total amount of expenses will vary depending on the nature of the divorce. For example, a simple divorce with no assets or children will have different costs than a case where there are minor children and assets to divide. With children, custody and child support may need to be addressed as well. When there are assets, equitable distribution should be raised. Other filings that may be necessary depending on your circumstances can include a request for special relief in terms of asking the court to take immediate action on an emergent situation or intervene on an interim basis. Each county will determine which pleadings require a filing fee as well as the amount. On average, it can be several hundred dollars just in filing fees.

In addition to filing fees, you should work with an experienced family law attorney to ensure your divorce and related issues are handled properly. Most attorneys will charge by the hour for the time they spend working on your case. To that end, this expense can also fluctuate quite a bit depending on the nature of your case and whether everything goes smoothly and all parties cooperate versus if it is particularly contentious and additional litigation is required. A retainer is the initial deposit you pay to your attorney to get started. Your attorney will then subtract their hourly charges from the retainer as the case moves forward. You can help manage the costs by being organized and providing requested information to your attorney in a timely manner.  By April M. Townsend

 

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Dividing Investment Accounts

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Investment accounts that are opened or funded during the marriage will be considered marital property and up for division in the context of a divorce. Investment accounts present an additional consideration when it comes to division due to fluctuating value based on the market. The balance in these accounts is subject to various gains and losses on a daily basis. It will be important to establish a clear date and time for valuation purposes. With other assets, the cut-off date for valuation is usually the date of separation. With investment accounts however, you must also account for gains and losses from date of separation through the date of distribution as they are also considered marital. This can result in a significant sum for an account with a large balance or if there is a lengthy period of time between separation and distribution. Failure to address the market experience can result in an unfair distribution.

It is good practice to work with an experienced family law attorney who is familiar with division of investment accounts to ensure you are getting an equitable distribution of these types of assets. It may be appropriate to divide the accounts based on shares instead of value. To the extent the account holds retirement assets, you will also need to be clear on any withdrawal penalties in addition to tax consequences. To the extent a Qualified Domestic Relations Order (QDRO) is necessary, your attorney can draft/review an Order with the appropriate language to effectuate the desired distribution. A QDRO is a document that identifies the plan to be divided and gives specific details as to how that division will take place and what rights the party receiving the funds, referred to as the alternate payee, will have going forward.

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Debts of Estate

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Prior to any distributions of the assets of an estate, the debts of the estate should be reviewed. Section 3392 if Title 20 discusses the priority for payment of the debts of an estate. First, the costs of administration should be covered. These costs can include filing fees for the probate process, attorney fees, advertisement costs and compensation for the executor or administrator. Next, the family exemption of $3,500, applicable in the case of a surviving spouse or children living with decedent at the time of death, is paid. Next, the costs for the decedent’s funeral and burial are to be paid. This can include costs incurred through the funeral parlor, the cemetery, flowers for immediate family and funeral luncheon.

Next in the line of debts to be paid would be medical costs for the decedent for the last six (6) months followed by cost of grave marker and then any rent owed on decedent’s property in the last six (6) months. The final category is any debt owed to the Commonwealth. Other debts in the decedent’s individual name, such as credit cards, are at the bottom of the list. There may also be instructions to pay inheritance taxes from the residue of the estate prior to distribution. It is important to pay these debts in order of priority in any case but particularly where there may not be enough assets in the estate to pay all the debts.

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