Medicaid Planning

Medicaid is a need-based health care program. It is a federal program that is administered on a state level. Elderly persons needing long-term care often try to utilize Medicaid to assist with the expenses. Appropriate estate planning can assist in this regard. Since Medicaid is for low-income individuals, 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. 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. 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 plan for the potential of long term care well before the need for it arises to protect your assets.

Click here to read more about estate planning.

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Protection from Sexual Violence and/or Intimidation

Pennsylvania’s Protection from Sexual Violence and/or Intimidation Act (PSVI) became effective July 2015. The Act allows victims to obtain a civil no-contact order for up to three (3) years. Adults and minors can petition for an Order on the basis of sexual violence. Only minors may obtain an Order on the basis of intimidation provided the offender is over 18 years old. There is no filing fee to file. A temporary Order can be granted following an ex parte hearing. A final hearing must be held within ten (10) days of when the Petition is filed. The victim must establish sexual violence and/or intimidation by a preponderance of the evidence.

The Protection from Abuse (PFA) Act also provides a civil remedy in the form of a stay away order however the PFA Act can only be utilized if there is a certain relationship between the victim and the offender. The PSVI Act does not restrict protection based on relationship of the parties involved. Sexual violence for purposes of the PSVI Act includes but is not limited to rape, involuntary deviate sexual intercourse, sexual assault, indecent exposure, and unlawful dissemination of an intimate image. Violation of a PSVI Order can carry criminal consequences. Pennsylvania is the 34th state to pass such an Act to provide some protection for victims of sexual assault since many cases do not make it into the criminal justice system.

Click here to read more about domestic violence.

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Additions to Support Award

Pennsylvania utilizes support guidelines to determine the appropriate amount of basic support in each case. The Rules of Civil Procedure also contemplate other expenses that can be added to a support calculation. Child care expenses as needed to allow for employment can be added to the support award. The total amount of child care expenses should be adjusted to reflect the federal child care tax credit if applicable. Health insurance premiums that provide coverage for children and/or the other party can be allocated between the parties’ in proportion to their income. This is only applicable where a party is paying a portion of the premium as opposed to a scenario where the employer covers the full cost or a third party is providing the coverage.

Private school tuition can be added to a support order. Generally, parties should agree on private school costs prior to seeking to have them included in their support order. If a child always attended private school prior to parties separating, they will likely be permitted to continue in private school. If a child has not previously attended private school, whether or not they should now be permitted to is more of a legal custody question that should be dealt with in custody court prior to any inclusion in a support order. Summer camp pay also be added to the support award. These additional expenses are allocated between the parties in proportion to their income. Parties with comparable incomes would each pay roughly 50% of these added costs. Alternatively, in a scenario where there is a significant disparity income, the party earning more will pay a greater share of these added costs.

Click here to read more about calculating child support.

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Changes to Income

Once a support order is established each party is under a continuing obligation to notify the court of any changes income, employer or employment status. Changes income may impact the support order under the guidelines as the amount of support varies based on the income bracket the parties fall into. A reduction income does not necessarily mean the support order will change. The court can consider the reason behind the reduction income. A voluntary reduction income should have no effect on the support order. Voluntary reductions income are defined as a party taking a lower paying job, quitting or leaving a job, changing occupations or returning to school or being fired for cause. The purpose behind this provision is to make sure parties cannot benefit from attempts to escape or lower their support obligation.

A non-voluntary reduction in support may result in a change to the support award. Non-voluntary reduction income may result from a lay-off, illness, termination or job elimination. These are circumstances which the party has no control over. Even a party who faces a non-voluntary reduction income should take steps to resume employment as soon as possible. Prolonged failure to obtain employment can result in an earning capacity being imputed. Earning capacity is determined based on a party’s age, education, training, and prior work experience and earnings. For a party with limited or no prior work experience, an appropriate earning capacity may be minimum wage full time. For parties who have the skill set and education for a certain type of career, example nurse or IT specialist, the average income of someone in that career in the same geographic region as reflected by the Bureau of Labor Statistics can be useful in determining an appropriate earning capacity.

Click here to read more about support.

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Income for Support

Each party’s monthly income is evaluated for the purposes of determining an appropriate support order. Pennsylvania Rules of Civil Procedure dictate that each party’s monthly gross income based on at least a six-month window should be ascertained first. For purposes of support gross income includes all wages or salary, bonuses, commissions, business income, rental property income, pension or retirement payments, royalties and dividends, and income from an estate or trust, social security disability and retirement benefits, disability benefits, workers’ compensation, unemployment compensation and alimony. It also includes any other entitlement to money or lump sum awards such as lottery winnings, tax refunds, insurance compensation, settlements, awards or verdicts.

For income that is not received on a regular basis, it may be appropriate to average out the income over the course of a year. This may be applicable in the context of a bonus or other one time payment. Each party has an obligation to report any changes income after the establishment of a support order. Failure to timely report changes income can result in any subsequent modification of the support award being retroactive to the time of the failure to disclose. After identifying the gross income of the parties, the Rules then allow the following deductions to arrive at net income: federal, state, and local taxes, unemployment compensation taxes and local services taxes, FICA payments, non-voluntary retirement contributions, mandatory union dues and alimony paid to the other party.

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Support Guidelines

Pennsylvania utilizes support guidelines to determine the appropriate amount of support in each case. The initial step is to determine the net monthly income of the parties and who will be receiving the support. There is a rebuttable presumption that the amount of support as dictated by the guidelines is correct. In order to overcome this presumption a fact finder must make a determination that application of the guidelines would be unjust or inappropriate. The guidelines are reviewed every couple of years to make sure they are still appropriate given current costs of raising children and the poverty level. The goal of using support guidelines is to ensure that similarly situated parties are treated similarly.

Pennsylvania uses an “Income Shares” approach which presumes that children of separated parents should receive the same amount of support as a child in an intact family. There are a number of studies that demonstrate what an intact family spends on their children in proportion to their income and the guidelines reflect the average expenditures for children on a monthly basis. The primary focus is on the income of the parties however expenses may be considered and deviation from the guidelines may be appropriate where there are unusual or extraordinary expenses. A support award may be adjusted if the party owing support is already at poverty level and barely able to sustain their own basic needs. The 2016 federal poverty level for one person is income of only $990 per month. Outside of falling below the poverty level, it is unlikely a deviation from the guidelines would be warranted due to expenses.

Click here to read more about the support guidelines.

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Dealing with Emotions of Your Divorce

When you move through your divorce you may feel as if your entire life is being turned upside down.  This upheaval can lead to emotional fallout that appears overwhelming to handle.  If you do not want to get divorced this can be even harder to comprehend and start to manage.  When we work with clients, we help them move through the process and build a stronger life for themselves so they can easily walk into their post divorce life.   Putting the right supports in place for yourself will greatly help you manage all of the pieces and stress.


Get honest with yourself about what is happening.  Many individuals, even those who actually want their divorce, have problems accepting the reality of what is going on with their lives.  Usually this happens when one partner moves out, the kids start visiting their new homes, or a joint account is closed. It is very important that, at each and every step, you keep moving forward.  

 

Getting organized will help you feel as if you are in control of the process.  There is a lot of information to organize as you move through your final judgement for divorce and into your post-divorce life.  Clients who are organized have the best chance of staying ahead of the stress. Files or a binder can help as you start to collect documentation related to financials, housing, and even a list of important phone numbers to remember.

 

Putting a support system in place is an important next step.  When we partner with you and help you get divorced, we take care of each legal issue for you.  When you have experienced representation your stress level will be lower and feelings of being overwhelmed will lessen.  However, you will still need help sorting out and managing the myriad of emotions you may feel.  Explore the idea of seeing a counselor and also find a few close confidants – ideally those who have gone through a divorce, to help you when you need support.

 

Trust the process:  So many people start the divorce process scared they are going to wind up broke at the end of the process and with significantly less time seeing their children.  

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After Your Divorce, Make These Changes Immediately

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The process of getting divorced can be hard to move through.  When you are finally divorced you will probably want a break from making decisions and taking care of legal matters.  However, it is crucial to immediately update a few important areas of your life including your will, life insurance beneficiaries, and other estate planning documents.  

Your divorce agreement may include some estate planning language as it pertains to your children, including how life insurance beneficiaries must be maintained.  It is critical to not only follow these agreements, but to ensure that the other pieces of your estate are changed so your ex-spouse is removed and can no longer control your life or handle any of your affairs should something happen to you.  

Your Will

If your last will includes your former spouse, then you will need to update that information so your final arrangements, distribution of personal items, and your financial matters are handled according to your wishes.  Remove your former spouse as your executor and ensure that they are no longer the recipient of any of your personal property.  Additionally, should anything happen to you or your ex-spouse, you should name a guardian for your children.  

Beneficiaries on Financial Accounts


Beneficiaries on your life insurance policies as well as investment and bank accounts need to be changed according to the policies and procedures established by each institution.  Clearly stating your wishes in your will that you want your children to inherit your money is not enough.  Each company is going to have a different form that needs to be correctly filled out to properly change your beneficiaries.  If it is not done correctly the previous beneficiary stands, and your ex-spouse may wind up with a significant amount of money.  Click here to read more about changing your life insurance policies.

Other Estate Planning Docs

 

Power of Attorney documents should be updated.  In the event that you are rendered incapacitated, you want a trusted relative or friend to have the authority to make decisions for you.  This includes matters related to your health as well as your financial matters.  

When we work with clients we always work through these issues to ensure that your best interests are protected through your divorce and into your new adult life.  Taking the time to ensure your will is properly updated after your divorce will give you peace of mind as you will know your final wishes are clearly stated.  

Additional Resources: https://www.reviews.com/life-insurance/

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Inventory of Probate Assets

An inventory must be filed with the court in administering an estate. The inventory should identify all probate assets of the decedent at the time of death. This may require some investigation by the executor. A good starting point is to monitor the decedent’s mail for evidence of statements for accounts. In an increasingly electronic society, however, access to digital accounts may be more productive as more and more parties elect for email correspondence over hard copies in the mail.

The inventory should include the value of the assets listed as of the decedent’s death. The inventory is to be filed with the court within nine (9) months from the date of death unless an extension is granted.

If additional assets are discovered after filing the initial inventory a supplemental inventory should be filed with the court. The amount of tax due depends on the value of the estate. Accordingly, the inventory and inheritance tax return are usually filed together. There is a form available for use in Pennsylvania on the Unified Judicial System website. Alternatively, items on Schedule A – E of the inheritance tax return can serve as the list of assets for the inventory.

Click here to read more about the probate process.

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Probate Assets

Not every asset owned by a party at the time of death will be subject to the probate process or pass under the direction of the will. Probate assets are those for which there is no pre-existing designation as to who should get the asset. Examples of typical assets that will be subject to probate include individually owned bank accounts, cars, personal property, business interest, real property held as tenants in common, cash, and life insurance with no beneficiary. These types of assets should be distinguished from any account with a beneficiary designation as those accounts will pass to the beneficiary. Also, joint accounts will usually go to the other party whose name is on the account.

Assets that are put into joint names within a year of date of death can still be subject to inheritance tax on the full amount of the account though ultimately a non-probate asset. If assets have been put into joint names over a year from date of death then only 50% of the account would be taxed. Ideally, you should plan for how those taxes will be apportioned. Business interests may also end up being non-probate if there is a partnership agreement spelling out what happens in the event of death. If there is a buy-out of the decedent’s interest, that is taxable and should be listed on the inheritance tax return. Where the decedent’s interest is just assumed by the remaining partners in the business then there is no tax and no need to do probate.

Click here to read more about estates.

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