What to do if loved one dies without a will?

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If a loved one has passed away without a will, the laws of intestacy will govern how their estate is handled. The closest kin can apply to the Register of Wills to be designated as the administrator of the estate. Other kin of the same degree may need to renounce their right to serve. The administrator will be granted a certificate of letters of administration as proof of their authority to handle the estate. The administrator then has the responsibility for identifying all the assets and debts as well as beneficiaries and their contact information and maintaining the estate until final distribution. There are certain forms to be filed with the court as well as tax returns and advertisement of the estate.

With respect to final distribution, if the decedent was married and does not have any children or surviving parents, the entire estate goes to their surviving spouse. If there were parents, the first $30,000 goes to the surviving spouse as well as half of the remainder of the estate. If there are children of the marriage, the first $30,000 goes to the surviving spouse as well as half of the remainder of the estate also. If there are children of the decedent only, the surviving spouse gets half of the estate. The remaining half of the estate, or in the event the decedent is not married, the entire estate, shall pass in the following order: (1) to the decedent’s children; (2) to the decedent’s parents; (3) to the decedent’s siblings or their children; (4) to the decedent’s grandparents; (5) to the decedent’s aunts and uncles and their children and grandchildren. If there are multiple persons in a category, they will each receive equal shares such that a decedent with three children would have the estate separated into thirds.

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Medicaid Planning

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Medicaid is a need-based health care program that many older adults end up utilizing in the event of long-term care due to the expenses involved. Since Medicaid is need-based, there are limits on the amount of income and assets a party can have. An individual should plan ahead to make sure any countable assets and income are structured so as not to affect any future applications for Medicaid.  Additionally, individuals may want to shield assets such that Medicaid cannot assert a claim against their estate after their death for their subsidized medical expenses. Appropriate estate planning can assist in this regard.  Medicaid can look back five years from the date of an application so it is important to do any relevant estate planning well in advance.

Certain assets are not countable in terms of eligibility for Medicaid. One of the big exemptions is your home. Current federal law allows one residence to be exempt with a cap of $560,000 for the total equity of the home. Even if the home is above that amount of equity, it may still be exempt if a spouse, child under 18 or permanently disabled child is still residing in the home. In terms of income, a party seeking Medicaid cannot have more than $2,000 per month income. There are additional rules as far as assets your spouse can keep under the anti-impoverishment provision. It is important to look at your estate plan well before the need for any long term care arises to protect your assets and estate while maintaining the ability to use Medicaid to assist with medical costs.  By April M. Townsend

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How do you divide retirement assets in divorce?

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Pensions, as well as other retirement plans, are often one of the assets up for division in a divorce. The court will equitably divide the marital portion of a pension plan after considering all the relevant factors in equitable distribution. The marital portion of a plan would be the portion that accrued from the date of marriage through the date of separation. In some cases, the entire pension will be marital depending on the timing of the marriage alongside the start date of the pension plan. A qualified domestic relations order, or QDRO for short, is a document used to effectuate division of certain retirement benefits.

A QDRO can facilitate a tax-free transfer of retirement benefits from one party to their new or soon-to-be ex-spouse. The receiving spouse would then be taxed as they withdraw the money as the tax laws provide. The exact nuances of how the plan/benefit is split and what options are available will vary based on the type of plan. It is always advisable to review the procedures for the specific plan you may need distributed to understand what their rules and policies are when it comes to splitting a participant’s benefits via QDRO in the context of a divorce. You will also benefit from having an experienced family law attorney review the terms of the QDRO before you sign off on it and submit it to the Plan Administrator for implementation. Finally, most plans have very specific requirements as far as how the language of the QDRO is to be worded in order for it to be accepted and processed. At a minimum, a QDRO should identify the parties, the plan at issue, and the amount going to the receiving party either as a lump sum or a percentage of the total benefit. It is wise to enlist the services of an expert that routinely drafts QDROs to ensure the language is correct and all requirements are met.   By April M. Townsend

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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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Railroad Pensions

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Retirement benefits are one of the assets that may be up for division in a divorce action. If you or your spouse was a railroad employee, there are a few things to keep in mind with respect to equitable distribution of a railroad retirement benefit. First, railroad retirement is comprised of two components: Tier I and Tier II. Tier I s comparable to a social security benefit. This benefit is not divisible as part of a divorce. Tier II is more akin to a traditional pension. The Tier II portion of the benefit is subject to division with proper court order.  Some companies may also offer supplemental pension benefits. All non-Tier I benefits can be divided in a divorce.

As indicated above, to divide non-Tier I benefits, an appropriate court order is required. The order needs to be specific about the request for division of benefits under the Railroad Retirement Act and include a fixed dollar amount or percentage as to the amount to be paid directly to the former spouse. It is important to work with an expert to ensure the court order concerning division of the retirement benefits meets all requirements established by the Railroad Retirement Board. In addition to division of non-Tier I benefits, former spouses might also be eligible for a separate annuity from the Railroad Retirement Board. Receipt of this separate annuity does not impact the amount of any annuity due to the employee. There are a list of requirements that must be met in order to qualify for the separate former spouse annuity.

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