Equitable Distribution and Worker’s Compensation

One asset in equitable distribution or support that parties should consider when getting divorced is worker’s compensation awards. Depending on what state the worker lives, there may be a component not only for lost wages but also an award comparable to a personal injury award. In these instances, the lost wages should be calculated into any support award and the again, you will need to decide whether you want to lump sum the award portion as either income for purposes of support or as an asset for purposes of equitable distribution. In the event that it is considered as income, you cannot double dip and claim it as an asset. If, however, the award is for an injury that occurred outside of the marital period, either before or after separation, you will need to include it as income as you cannot include it as an asset. Your support order should be very detailed and specific and identify exactly what portion of any worker’s compensation is included in the calculation of the income. Whether to have the worker’s comp treated as an asset or income really depends on how the court will treat the asset. In some instances, the court may award the majority of that asset to the injured party and it may be better to then include it income if you are also eligible to receive support. Speaking with your attorney about the expected amounts would be wise to do before you make that decision so that you can decide whether it is better as support or as an asset.

For more information see:/Family-Law-Divorce/Division-of-Marital-Property/

 

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Pennsylvania Inheritance Tax

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 $5,430,000. 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 the Commonwealth. 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%

The inheritance tax is due within 9 months from the date of death. However, there is a 5% discount if the tax is paid within 3 months.

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Warranty of Habitability

There is an implied Warranty of Habitability when you rent a premises in Pennsylvania. In other words, the rental unit must be habitable: i.e. there must be water and heat, and the property must be safe and sanitary.

If a problem develops after you move in, contact the landlord immediately. While I recommend calling the landlord, send a follow-up confirmation letter/email. Make sure that all communication is documented. Also, keep a copy of any written correspondence for your records. (Do not record phone conversations).

If the issue is not resolved within a reasonable time-frame, then let the landlord know that you are placing the rent into an escrow account until such time as the problem is resolved. You may also let the landlord know that you will be fixing the problem yourself with the costs deducted from the following rent payment.

If the landlord disagrees and you find yourself in court, bring pictures and copies of your correspondence, as well as proof that the rent is in an escrow account. When you see the judge, you may receive an abatement of rent for the time that the premises was not habitable.

TransUnion article: What does the Implied Warranty of Habitability Mean?

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Advertising the estate

In Pennsylvania, executors have a duty to pay all debts prior to distributing assets to the beneficiaries. Normally, creditors may file a lawsuit against a party prior to the expiration of the statute of limitations, which runs for several years (for example, a breach of contract claim has a 4-year statute of limitations). As executors usually wish to finalize the estate and beneficiaries seek their inheritances well in advance, Pennsylvania has provisions to shorten the statute of limitation period for estates.

Once an estate is opened, an executor may advertise the estate in two periodicals. One must be in the legal newspaper in the county where the decedent resided. For example, you must advertise in the Bucks County Law Reporter or Philadelphia Legal Intelligence. Additionally, the other needs to be in a newspaper of general circulation. These advertisements must be published once per week for three weeks. Once this is done, the statute of limitations is shortened to one-year from the last date of advertising.

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Income or Asset? Avoid the Double Dip

Oftentimes when getting divorced, an asset the generates income can either be considered in equitable distribution or in support. For example, if you receive stock options as part of your employment, they are considered an asset for purposes of divorce. If you cash them in during the divorce, it will either be considered an asset for income, but not both. If you have a pension that accumulated during the marriage and it goes into pay status during the divorce, or if it is already in pay status at the time of the divorce, it may be considered an asset or income but not both. You need to be careful that if you have a support order that the income from that pension or the stock option is not considered into the incomes if you want to have that asset considered an asset for equitable distribution. You need to be very careful that any support order entered specifically states whether any of the income was included, and if so, how much.

Sometimes, an asset may be a hybrid of a marital asset and non-marital asset. For example, a pension may include a portion of non-marital years and a portion that is marital. In that instance, you need to weigh whether it is better to include the entire pension income, or whether you want to include the non-marital portion income and include the marital portion as an asset for equitable distribution. Since you often receive more in equitable distribution than you do in support, oftentimes, the person who is entitled to a share of the pension or a share of the stock option will want to consider it in equitable distribution instead of support. Either way, be very clear in any agreements or order, which is so that there is no double dip if you are paying and that there is no argument it was already included if it was not considered.

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Stepparents and Custodial Rights

Under the custody laws, when parents split up, both parents often will go to court or come to an agreement on a custody schedule. What happens, when a parent and a non-biological parent separate? Oftentimes, the non-biological parent may have been very involved in the child or children’s lives. If that non-biological parent did not adopt the child, they can still sue for visitation and/or custody of the child or children under in loco parentis. This means that they have the right to go to court to seek scheduled time with the children, be that primary custody, partial custody or visitation even though they are not the biological parent and even if both biological parents have their own custody schedule.

In some instances, one or both of the biological parents may object and say that they did not act in loco parentis and therefore they cannot bring a case. This, however, is often, if not always overcome in a stepparent relationship. To establish in loco parentis, the stepparent has to show that they discharged parental duties with the permission of a parent. Given that in a household both the parent and stepparent usually handle matters together such as paying the bills, driving children around for activities, going to school functions, helping with homework, it is not difficult to see why it would be difficult to say a stepparent did nothing for the child or children.

The standard that the court uses to determine the custodial schedule for a stepparent is no different than the standard used to determine custody for the child generally and that is the best interest of the child. There are instances where a stepparent ends up with primary custody if the circumstances warrant it. Generally, however, a stepparent, should anticipate that the court will give more preference to the biological parents as primary or joint custodians with the stepparent getting some time carved in there if it is in the child or children’s best interest.

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When and where to file for Child Support in Pennsylvania

Child support is a remedy afforded to the parent who has the majority of time with the children or who has equal time but makes less money. Child support may be filed either in the county where the child lives, the defendant lives or the defendant works. In Pennsylvania, child support is based on guidelines so no matter what county in Pennsylvania you choose to file, the amount should be the same and the money is all funneled through the PACSES which is located in Harrisburg. The difference may be procedure, time and how many steps it takes you to see the Judge. For example, in Bucks County, PA, you will attend a lower level conference and if not resolved it will be scheduled for a Judge within a few weeks. In Philadelphia and Montgomery Counties, however, you will first go to a conference, then to a Master’s Hearing and then to a Judge.

You should file for support as soon as you know that you will not be living with the other parent and about six weeks prior to the date you will separate. There are no filing fees for support in any of the counties and it is one of the few times you will not have to pay a filing fee. Most counties have pre-printed forms that you can fill out to file on your own or you can hire an attorney to file it for you. Domestic Relations is the office that handles support matters and you will want to contact that office to find out the hours and location to file in your county.

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Testimony of the Child in Child Custody

Sometimes when you are going through a custody battle your children may have to testify. Oftentimes, depending on their age, it will be done in chambers with the Judge and attorneys present but not the parents. There is always the possibility, however, it may be done in open court which is much more intimidating for the child. Usually, it is the very last testimony in a case as throughout the trial, the attorneys and the Judge may still be trying to settle the case. No judge wants to have to make a child testify but if one of the parents wants the child to testify, the judge has no choice. Rather than have your child miss an entire day of school or sit at the courthouse all day, you may want to see if you can have the child can be brought to court by a third party if needed.

One of the factors in a custody case in Pennsylvania is “the well-reasoned preference of the child, based on the child’s maturity and judgement.” This certainly does not mean that just because your child testifies that they would rather live in your home the majority of the time that you will automatically get custody. There are numerous other factors in custody that the Court also must weigh. In addition, the judge is looking for motives as to why the child says that if it even comes out as all.

Parental alienation is real and turning a child away from the other parent or unduly influencing the child is something that will play against a parent in a custody case. If your child does not testify, there are other ways that the judge may be able to determine the well-reasoned preference of the child. Most cases prior to trial will have a custody evaluation done either through the court depending on the county or through a private evaluation. This process will involve interviews with the child and this information will be conveyed in the report. When you have a court date and your child may be faced with having to testify, it may be best to not mention it to the child. Oftentimes, it ends up not be necessary and there is no reason to worry the child and when it does happen it is better to explain it shortly beforehand at the courthouse then to appear as if you may have influenced the testimony. Also, after they testify it is a good idea not to punish your child or interrogate your child as to what was asked and what was said. The more you focus on, the more traumatic you will make it for your child.

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Tips when first separating from your spouse

If you are separating from your spouse, there are various things that you should do or not do during this time:

1. You should freeze any joint credit card debts so that your spouse does not continue to increase debt in your name.

2. You should freeze joint bank accounts if you are not going to be living together. If you need some of the funds to live, it is a good idea not to take more than half and to leave half for your spouse to prevent litigation. Your spouse can and sometimes will wipe out the entire account forcing you into litigation.

3. You should figure out a budget for yourself best on how much you earn and how much you will expect to receive or pay in support so you can figure out how much you can afford when looking for a place to live. An attorney can help you figure out this amount.

4. You should collect your statements from all your accounts both debt and assets so you can establish what the values were at separation.

5. You should not drop your spouse or children from health insurance as you may be required to continue coverage during the divorce.

6. You should not change the beneficiaries on any insurance policies until after your divorce and only if there is no court order to maintain coverage.

7. You should pull your credit report so you do not have any surprises on what may or may not exist during the divorce.

8. You should gather other important documents, including your marriage certificate, your deed, car titles.

9. If you are struggling emotionally with the separation/divorce, you should engage a good therapist to help you through the process.

10. If you are expecting to receive support you should file once you know you are going to move.

11. If you expect to have custody, make sure you move locally or first obtain permission from the Court.

12. Take the personal property items that are most important to you as oftentimes it is very difficult or cost prohibitive to fight over personal property later.

13. If possible, talk to your spouse and try to come to terms on things as much as possible and consider mediation or collaborative law as an option.

14. Hire an attorney who specializes in divorce if you decide that you need legal assistance to help you with custody or support or if you decide that divorce is your next step.  You should not have expectations based on what happened with a friend or relative’s similar situation.

15. Remember to be civil with your spouse. It will be easier and less expensive if you can handle matters with a respectful and practical approach.

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Who Pays What During a Divorce

Child Support: The party who does not have the majority of time pays child support or if the parties have equal custody time usually based on overnights, the party who earns more pays child support.

Spousal Support/Alimony: Paid by the party who earns more income

Mortgage/household bills: Paid by the party who remains in the home

Car Payment: Paid by the party who uses the car

Car Insurance: Paid by the party who uses the car

Medical Insurance: Paid by the party who carries the insurance and allocated during child support and spousal support in proportion to incomes

Home Equity Loan: Depends on what the loan was used for. May require a special relief action.

Credit Card Bills: Responsibility of both parties for what accumulated during the marriage. Typically paid by party whose name it in to protect credit but any payments made after separation should be document for shared reimbursement.

Repairs to House: Routine repairs are paid by party using home. Repairs that increase value f home benefit both parties and any payments made post separation should be documented to seek a credit.

Taxes: Parties may choose to file jointly or separately. If file jointly, usually a joint expense.

College Tuition: Neither parent is responsible for college tuition for children and any payments are voluntary and not reimburseable.

Legal Fees: Each party is responsible to pay their own legal fees

Filing Fees: The party who files

Expert Witness Fees: The party who retains the expert

Business Valuation Costs: The party who seeks the valuation

Appraisal: The party who obtains the appraisal

Pension Valuation: The party who obtains the valuation 

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