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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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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Child Support 101

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The amount of child support to be awarded in a case is based on statewide guidelines established by the state’s Supreme Court. The starting point for applying the guidelines is to identify the monthly income of the parents as well as the number of children in need of support. The guidelines are intended to ensure that similarly situated parties are treated similarly. Once the amount of support per the guidelines is identified, the amount is allocated between the parties based on their respective income as well as the custody schedule. The amount of support reflected in the guidelines is based on the average expenditures of children for food, housing, transportation and other necessary miscellaneous items.

Additional expenses for the children can be addressed as part of a child support award, such as cost of health insurance, daycare, private school tuition or camp. The amount of support dictated by the guidelines is presumed to be correct. There is not much room for argument as far as what amount of support is appropriate. The guidelines make financial support of children a top priority and the expectation is that other expenses will be adjusted to ensure the child support obligation can be met. Either party can initiate a complaint for child support to get a court order on the amount owed. Wage garnishment is the preferred method of collection for child support and the court will seek to have any support due taken directly from the pay check of the party paying support. Set up a consult with one of our experienced attorneys to better understand your obligations in child support.

 

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Real Estate Ownership

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A deed is the document that reflects ownership in real property. A deed should be recorded with the appropriate county office that maintains records for all real property. You may need to change your deed for a variety of reasons. Any changes to a deed require that a new deed is created and recorded to replace the prior deed.  If a home was purchased prior to marriage in only one name, you may want to add your spouse’s name to the deed. If property was owned jointly during the marriage and only one party is retaining the property in a divorce, you will need a new deed recorded. Please note a deed is separate from a mortgage and additional steps may be needed to address financial liability for a property pursuant to a mortgage.

You may consider adding a child to your deed as part of your estate plan. You may also find yourself in a position where a new deed is needed during the probate of an estate to pass the property from the decedent to designated heir. Each county assesses a fee for recording a new deed. There may also be a realty transfer tax depending on the relationship between the grantor(s) and grantee(s) and the circumstances warranting the transfer. Transfers between spouses are exempt as are transfers to children. Transfers pursuant to a will are also exempt from a realty transfer tax however are subject to inheritance tax depending on the relationship of the decedent to the beneficiary or heir.

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Will My Divorce Affect My Green Card Status or Citizenship Opportunity?

Whether or not your divorce will affect your immigration status depends on the stage of the process you’re in. U.S. Citizen and Immigration Services (USCIS) vigilantly watches for possible fraudulent marriages, entered into solely to evade U.S. immigration laws. There are ways to demonstrate your marriage was entered into in good faith, but their effectiveness depends on your stage in the process.

Application for a visa or green card

If your application for a green card has not yet been reviewed or approved and you are applying on the basis of your marriage to an american citizen or permanent resident, your divorce or annulment will end the immigration process. No evidence of marriage in good faith will help at this early stage.

Conditional resident with 2-year green card

If you’ve been approved for a green card but you had not already been married for at least two years, you will receive a 2-year conditional residence. In two years you will be expected to submit Form I-751, asking USCIS to approve your permanent residence. This form is intended to be signed jointly by both spouses, but if you’ve gotten divorced or annulled, you’ll need to file a waiver of the joint filing process.

This, of course, will raise flags, and USCIS will scrutinize your case for evidence of a fraudulent marriage. You will need to provide ample and convincing evidence that you entered into marriage in good faith. It is still possible to get approved for permanent status at this point, but you may want to hire a lawyer expert in immigration and marriage law to help you present the best case.

Permanent resident status applying for citizenship

The N-400 Form is the application for naturalization. Normally a permanent resident must wait five years before applying for citizenship. A person with a green card who has been married to a U.S. citizen for at least three years can apply in three years, as long as the person remains married up to the time of naturalization. If the marriage ends before naturalization, the process stops, but the permanent resident is still able to apply within the five-year period.

Keep in mind that whenever anyone submits the N-400 Form, USCIS will scrutinize the person’s file. If you’ve gotten divorced in that time, fresh evidence should be submitted demonstrating that you married in good faith.

Evidence for marriage in good faith

It’s important to know what USCIS flags as signs of a fraudulent marriage in order to know what kinds of evidence will show yours was a true marriage.

Warning signs to USCIS of a fraudulent marriage include: wide disparity of age; individuals not cohabitating; marriage upon warning of removal; friend of the family; american spouse previously helping people apply for residence; major differences in ethnic or cultural backgrounds; inconsistent answers in separate interviews.

Knowing what USCIS looks for, you can show that you and your spouse engaged in the kinds of behaviors that spouses normally engage in: documents with both names on them (mortgage or rent, joint bank accounts); pictures from your wedding, family get-togethers, parties, and vacations; cards or letters from friends or family addressed to both of you; documents or bills in your name showing your address matching your spouse’s address; birth certificates for your joint children; affidavits from reliable people in support of your marriage. In this case, a statement from a marriage counselor indicating you tried to work out your problems is particularly strong.

If you’ve been divorced and you’re still working toward american citizenship, contact an attorney knowledgeable in immigration and marriage law to help you present the best case to keep your process moving forward.

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Can My Former Lawyer Represent My Spouse in Our Divorce?

While it is common and even preferable for a divorcing couple to utilize the same attorney in mediation, there are clear guidelines that generally prevent one spouse from hiring the other spouse’s former attorney in a trial divorce case.

The american Bar Association (ABA) Rules of Professional Conduct (RPC) rule 1.7 states: 

(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:

(1) the representation of one client will be directly adverse to another client; or

(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer. (RPC rule 1.7: Conflict of Interest: Current Clients) 

Rule 1.9 of the same code states the following:

(a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.

(b) A lawyer shall not knowingly represent a person in the same or a substantially related matter in which a firm with which the lawyer formerly was associated had previously represented a client

(1) whose interests are materially adverse to that person; and

(2) about whom the lawyer had acquired information protected by Rules 1.6 and 1.9(c) that is material to the matter; unless the former client gives informed consent, confirmed in writing.

(c) A lawyer who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter:

(1) use information relating to the representation to the disadvantage of the former client except as these Rules would permit or require with respect to a client, or when the information has become generally known; or

(2) reveal information relating to the representation except as these Rules would permit or require with respect to a client. (RPC rule 1.9: Duties to Former Clients)

Therefore, the RPC code of the ABA clearly lays out that a lawyer cannot represent your spouse in your divorce case, not only if he or she has represented you, but also if the lawyer’s current or previous firm has represented you in this case.

Further, a lawyer who has represented you or whose firm has represented you in the past in any way cannot represent your spouse in other matters, without your written consent, and may not use any information collected during your representation to your detriment.

Changing divorce lawyers is not uncommon. Often, in a time of great stress, a person chooses a divorce lawyer hastily or at the recommendation of another person without doing thorough review. Sometimes it’s just a matter of personalities not clicking. Whatever your reason for changing your lawyer, be sure to retain a new lawyer first, so that you are not without representation for a moment. Once you’ve signed the agreement with your new lawyer, inform the other in writing and request your file be sent to the new attorney by a given date.

If you have any questions, contact us here at Ulmer Legal and Mediation Services to see how we can help you.

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Dividing the Family Cars in a Divorce

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When couples begin the divorce process, all assets and liabilities need to be listed and valued in order to determine division between the spouses. Negotiation often involves one spouse being given certain assets in exchange for other assets of the same value – and greater need or emotional attachment are values along with cost that can be weighed in the negotiation process.

If a couple can settle out of court with the help of qualified divorce lawyers to ensure a fair and satisfying distribution between both parties, the couple maintains control over their own assets and their own preferences. However, if they cannot come to an agreement, the divorce must go to court and the division of assets is put into the hands of a judge.

Pennsylvania is an Equitable Distribution state, which means the judge does not necessarily divide property 50/50 but rather in a manner that seems fair. Therefore, when determining who gets what, including the vehicles, the judge will consider many factors.

Was the car owned and paid for completely before marriage by one spouse? It is almost assured that the owner will be awarded the car. Was the car purchased after marriage, but it’s in one spouse’s name and that spouse’s money was used to pay for the car or the loans? Chances are very likely that this spouse will receive the car, although other factors could come into play.

Who has greater need for the car? If there is only one car, who needs it to commute to work because there are no public transportation options available? If there are multiple cars, who needs the van to take the kids to school, or who needs the newer car for a long and difficult commute? All these individual factors weigh into the judge’s decision.

The car’s value is also taken into consideration. If the family has two vehicles and one is worth significantly more than the other, the judge will likely award the cars based on need, circumstances, and payment history, but may also award additional compensation to the spouse receiving the car with less value in order to balance the asset division.

If a car is awarded to you in a divorce settlement, be sure to change the title and owner immediately to yourself. If a balance is owed on a loan, the loan should be restructured or refinanced to have only your name on it.

Your divorce attorney will walk you through the many intricacies and details involved in the divorce process and starting over. Reach out to us here at Ulmer Law to see how we can help you.

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