#TuesdayTips: Charitable Remainder Trusts

It’s that time of year again… the hustle and bustle of the holidays are upon us!  If you are like me, you may still be searching for that perfect gift for everyone on your list.  Perhaps this year, as you make your list and check it twice, you may want to consider a charitable remainder trust.

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It’s that time of year again… the hustle and bustle of the holidays are upon us!  If you are like me, you may still be searching for that perfect gift for everyone on your list.  Perhaps this year, as you make your list and check it twice, you may want to consider a charitable remainder trust.

A charitable remainder trust is an irrevocable trust that allows the donor, or anyone else you name, to receive each year either a fixed dollar amount from the trust or a percentage (at least 5%) of the value of the trust.  The right to receive this distribution is either for the individual’s lifetime or for a period of years not to exceed 20 years.  At the end of the term, the amount remaining in the trust is distributed to a qualified charity.  Generally, a qualified charity is one that has been deemed tax-exempt by the Internal Revenue Service.

Moreover, the charity will serve as trustee of the trust and will be responsible for investing and managing the asset(s) to produce income for you.  Because the charity is also the remainder beneficiary, it has an incentive to increase the value of the trust, which in turn, benefits not only the charity, but you as the income beneficiary of the trust.

In addition to the income benefit, there are three primary tax benefits.  First, after you have transferred the asset(s) to the trust, you may take an income tax deduction, spread over five years.  You are not, however, allowed to deduct dollar for dollar the amount that you gave.  Rather, you are only allowed to deduct the amount of the “gift,” which is the amount donated less the amount of income you are expected to receive.  Second, whatever the charity receives at the end of the trust term, is not subject to estate tax.  Similarly, the donation will not be subject to gift tax based on the amount the “gift,” unless the income beneficiary of the trust is someone other than the donor or their spouse, in which case, there may be a gift tax imposed on the amount of income that is paid to the income beneficiary.  Lastly, because the charity is tax-exempt, there is no capital gains tax on the sale of the asset(s) in the trust.  So, you can turn non-income-producing property that has increased significantly in value from the time at which you acquired it, into cash without having to pay capital gains tax on the profit.  This enables you to invest the full proceeds of the sale into an income-producing asset.

Further, you can elect to have either fixed annuity payments or a percentage of the current value of the trust.  If you choose the fixed annuity, you will receive a fixed dollar amount each year.  This is beneficial if the trust has a lower than expected income return because you will still receive your fixed payment.  Sounds great, but be careful.  The higher your annuity is, the lower your income tax deduction.  Also, if the trust does not generate enough income to cover your annuity payment, then the trust’s principal will be used.  The more principal that is used, the less likely it is that the charity would receive anything at the end of the trust term and consequently, the less likely it is that the charity would accept your donation in the first place.

Conversely, if you elect a percentage of the value of the trust, your payments will reflect any gains or losses in value of the investments each year.  And, it is important to note, that once a decision is made, you cannot change it later.  If you are considering a charitable remainder trust, call ERA Law Group, LLC at (410) 919-1790 before making a final decision.  Happy gift giving!

#FamilyFriday – What is Discovery?

Discovery is a process used to provide each party an opportunity to obtain evidence related to the opposing party’s case.

Discovery is a process used to provide each party an opportunity to obtain evidence related to the opposing party’s case.  In this week’s #FamilyFriday article, the attorneys of ERA Law Group, LLC want to describe the process, its purpose, and what you should expect.

Discovery usually takes place shortly after the Plaintiff files their complaint.  Maryland Rules allow for different forms of discovery.  The two most common forms of discovery are Requests for Answers to Interrogatories and Requests for Production of Documents.

A Request for Answers to Interrogatories is a series of questions that one party serves on another party to be answered.  Maryland Rule allows for a maximum of 30 questions to be served.  There are standard questions involving your income, assets, personal information, etc. and then there are custom questions that will specifically relate to the issue at hand.  For example, in a custody dispute there may be a specific question about why one parent refused visitation on certain dates.

A Request for Production of Documents is a series of requests for specific documents that one party serves on another party.  In responding to the request you simply state whether you have the document or will produce the document.  In accordance with those responses, you then provide the documents.  There is no limit to how many document requests you may ask.  Many of these requests are also standard and ask for documents such as your bank statements, communications between the parties, etc.  You may also ask for specific questions.  For example, if you’ve learned your spouse was cheating on you with another person, you may ask for copies of all communications with that specific person.

Each party has a right to object to any interrogatory or document request, however, there must be a basis for the objection and that reason must be stated.  For example, in any case involving children, a parties income is going to be relevant and necessary for the purpose of establishing child support.  If in this example you ask for paystubs and the other party objects, you will need to take the necessary steps to compel that party to provide their paystub.  Generally this first involves a letter demanding the production then a Motion to Compel if the production does not occur.

We often hear clients complain and say that discovery is a “waste of time” or that “s/he already knows this information” or “why do I have to answer this?”  The response to all of this information is simple; discovery is important.  Discovery allows your attorney to see what sort of items the other party is focusing on and perhaps get a glimpse into their strategy.  Interrogatories are also signed under oath and provide an opportunity to get a sworn statement of sorts from the opposing party.  Additionally, once everything is on the table it sometimes becomes easier to have a more honest settlement discussion.

If you have been served with discovery, don’t wait.  The rules only allow for 30 days to respond.  Instead, call the attorneys at ERA Law Group, LLC at (410) 919-1790 and ask how we can help you!

#FamilyFriday – Filing Exceptions

What happens if you disagree with the Court’s order for Pendente Lite relief?  What if the Court denies any Pendente Lite relief?

As previously discussed in an earlier #FamilyFriday article, the Court, upon request, will schedule a Pendente Lite (PL) hearing while the parties wait for their final hearing.  What happens if you disagree with the Court’s order for Pendente Lite relief?  What if the Court denies any Pendente Lite relief?  On this week’s #FamilyFriday article, the attorneys of ERA Law Group, LLC discuss the process for filing Exceptions.

As a reminder, Pendente Lite is a Latin term that translates to “awaiting/pending the litigation.”  Maryland Courts use a Pendente Lite hearing as an opportunity to create a temporary order related to child support, custody, visitation, spousal support, and/or use and possession of the marital home while the parties await the final hearing on the merits.  If you don’t have an arrangement, aren’t seeing your child, aren’t receiving child support, etc., you will want to be sure a Pendente Lite hearing is scheduled as soon as possible.

In most counties this hearing takes place before a Magistrate.  A Magistrate takes the place of a Judge but don’t issue Orders.  They issue Proposed Orders.  At the PL hearing, the Magistrate will hear the case presented by both parties as to why there should or should not be temporary relief and, if so, how much is fair and reasonable.  The Magistrate then states their finding and submits a Proposed Order.  After 10 days, the Proposed Order is sent to a Circuit Court Judge for a signature effectively making the Proposed Order an Order.

Why the 10 days?  At the conclusion of the PL hearing, both parties have 10 days to file “Exceptions.”  Exceptions are written reason(s) why the Magistrate’s Proposed Order should not be signed by the Judge.  For example, perhaps the Magistrate decided to award more child support than the paying party believes is fair.  The paying party would have 10 days to file Exceptions detailing why the Magistrate’s ruling should not be adopted by the Judge.

The Exceptions process is very similar to an appeal and should not be taken lightly.  There are many requirements involving the timing of the filing, the contents of the Exceptions, the timing for requesting a Transcript, the hearing, etc.  By failing to file timely exceptions or abiding by the statute, you could lose your ability to challenge the Proposed Order.

If you disagree with the Proposed Order for Temporary Relief, call ERA Law Group, LLC ASAP at (410) 919-1790 and ask how we can help you get the relief you need!

#FamilyFriday – Split Households & the Holiday Season

It’s difficult for families to decide how to split holidays when they separate.  Neither parent or family want to experience their holidays without their children.  So, what do you do? 

It’s difficult for families to decide how to split holidays when they separate.  Neither parent or family want to experience their holidays without their children.  So, what do you do?  What are your options?  On this week’s #FamilyFriday article, the attorneys of ERA Law Group, LLC discuss various options for developing a fair and reasonable access schedule.

First, as previously discussed in a #FamilyFriday article, Parenting Plans are a great tool to discuss and resolve these issues before the stress and onset of the holiday season.  As a reminder, Parenting Plans encourage parents to focus on the needs of their children, how best to co-parent, and how to anticipate and/or address the various changes in their lives at the time of its creation and in the future.  Attorneys and mediators can help you create a Parenting Plan that best suits your family dynamic and situation.  For example, perhaps both parents are adamant about wanting to spend Christmas with their children.  The fact of the matter is that the children can only wake up once on Christmas morning and how to decide who will experience that can raise a lot of emotion.  One way to resolve this is to alternate years so that one parent has the full Christmas holiday on even years and the other during odd years.  Another way to resolve this is one parent has the children Christmas Eve through Christmas morning and the other has the children from mid-Christmas morning for the remainder of the day.  These types of arrangements are best to be discussed outside of the courtroom as they can involve a lot of detail and negotiating.

Second, talk with the other parent and see if maybe certain holidays are more important to them than they are you.  Creating a schedule or agreement that allows for each parent to have or enjoy the days that are important to them in exchange for those that are important to you can settle future disputes.  For example, perhaps it’s your family tradition to go “big” for Thanksgiving but less so for Christmas.  Maybe you can agree that you’ll have the children for Thanksgiving and the other parent on Christmas.

Third, though uncommon, if you and the other parent are able to co-parent and share some or all holidays that could resolve any disagreement about who should have the children and when.  This can be difficult depending on the relationship between you and the other parent.

Fourth, alternating holidays so that, for example, the parent who does not have the children on Thanksgiving will have them for Christmas or the parent who does not have the children Memorial Day Weekend will have them Labor Day Weekend.

Regardless of the arrangement, always place agreements in writing.  This allows both parents to be held accountable for upholding the arrangement and preventing an issue in the future.  Try and deal with these potential and likely issues before they become bigger issues.

If you need assistance or would like to explore Mediation or Parenting Plans, contact ERA Law Group, LLC attorney Valerie E. Anias, Esq. at (410) 919-1790 and ask about the FREE 30 MINUTE CONSULTATION.

#FamilyFriday – Custody Rights Without a Court Order: Common Misconceptions

What many people don’t know is that in the absence of a court order both parents have an equal right to legal custody and physical custody of their minor child. 

By: Valerie E. Anias, Esq.

You and the other parent have a child together.  You separate or break up but never file any court action.  What are your rights? What about the other parent?  What many people don’t know is that in the absence of a court order both parents have an equal right to legal custody and physical custody of their minor child.  On this week’s #FamilyFriday article the attorneys of ERA Law Group, LLC want to help clear up some common misconceptions.

MISCONCEPTION #1:  The children always stay with mom.  While this is the most common situation and arrangement, this is certainly not the “only” arrangement.  Fathers have a 100% equal right to be the primary custodial parent just like mothers.

MISCONCEPTION #2:  Fathers have less rights.  Not true.  Fathers and mothers have equal rights with regard to their children.  Both relationships are important.

MISCONCEPTION #3:  We share expenses.  I don’t have to pay child support.  Just because you and the other parent can amicably split the child’s daycare costs, for example, does not negate the award of child support.  You and the other parent may have an agreement that works but if that agreement doesn’t work and if a parent decided to file an action for child support it is likely that child support would be ordered.

MISCONCEPTION #4:  Visitation means “every other weekend.”  Not necessarily.  Especially so if you don’t have school aged children.  More often we are seeing alternative schedules providing both parents with nearly equal time.  Living separate does not necessarily mean you spend less or more time with your child than the other parent.

MISCONCEPTION #5:  We get along great!  We don’t need a written agreement or Court Order.  Perhaps you and the other parent do work well together.  But what happens if that stops?  The purpose of a Court Order or an agreement, is to settle disputes that have occurred and to prevent future disputes from arising.  You and the other parent may get along now but what if there’s a dispute later about where to send the child to school?  How to pay for extracurriculars?  How to have an access schedule when one parent lives 50 miles away?  Having a written agreement or Court Order can prevent some of these issues from ruining the amicable arrangement you have now.

Call ERA Law Group, LLC attorney Valerie Anias, Esq. at (410) 919-1790 and ask about our fixed fee Separation Agreements, Parenting Plans, and FREE 30 MINUTE CONSULTATION!

#FamilyFriday: Help, I’ve Been Served!

Most people are not surprised when they are served with divorce papers.  But what do you do when you are served?

By: Valerie E. Anias, Esq.

Most people are not surprised when they are served with divorce papers.  But what do you do when you are served?  What if your spouse has an attorney and you don’t?  What if you don’t want the divorce?  What if you don’t agree with the reasons your spouse has listed for the divorce?  On this week’s #FamilyFriday article, the attorneys of ERA Law Group, LLC want to help you know what to do next!

Many people feel that being the Plaintiff or Defendant matters.  Truth is, it doesn’t.  There are benefits to both.  Just because your spouse served you with divorce papers does not mean that they may not be at fault for the divorce or that they’re automatically in a superior position.  All this means is that they will be presenting their case first.  And, don’t worry.  You’ll present your case next!

What have you been served with?  You will have a summons.  That is the paper that orders the Plaintiff to serve you.  You will also have a copy of the pleading filed.  That is the Complaint for divorce and their request for relief.  This may include child support, custody, alimony, division of marital property, etc.  You will also receive a copy of their Domestic Case Information Report which is simply a cover letter identifying the parties and type of action.

Now what?  After you have been served you will have 30 days (or 60 days if you’re out of state) to file an answer.  This is important because if you fail to file an answer the Plaintiff can file a Motion for Default.  If the Motion is granted and you are found in Default, the Court may award all of the relief directly to the Plaintiff without giving you an opportunity to present your case.  Don’t let this happen.  You should always respond to Court documents!

You can also file a Counter-Complaint.  Perhaps the Plaintiff’s complaint fails to state that they had been cheating on you, for example.  You may want to file a Counter-Complaint alleging adultery, for example.  A procedural benefit of filing a Counter-Complaint is that if the Plaintiff decides they no longer want to pursue the case but you still do, your Counter-Complaint will keep the case moving forward.

Once the Complaint has been served and you’ve filed your answer, the Court will schedule a hearing to get the status of the case and schedule the important dates for the rest of the case.

If you’ve been served, call ERA Law Group, LLC attorney Valerie E. Anias, Esq. at (410) 919-1790 and ask about our FREE 30 MINUTE CONSULTATION!

#TuesdayTips: Medicaid… Trick, or Treat?

Medicaid* can be a scary topic.  Not only are there are a lot of myths about Medicaid, but if you are considering applying for it, a crisis has occurred.  Add to your emotional distress Medicaid’s requirement that you provide five years’ worth of bank statements, tax returns, and proof of expenditures, and likely, you are pulling your hair out.  Do not despair! 

By: Jessica L. Estes, Esq.

Medicaid* can be a scary topic.  Not only are there are a lot of myths about Medicaid, but if you are considering applying for it, a crisis has occurred.  Add to your emotional distress Medicaid’s requirement that you provide five years’ worth of bank statements, tax returns, and proof of expenditures, and likely, you are pulling your hair out.  Do not despair!

Myth #1:  Medicaid will take my house.  FALSE!  Medicaid will not take your house.  If you are married, have a disabled child, or own the home jointly with another, the house will not count as an asset.  Further, if you are married, Medicaid will require you to transfer ownership of the house to your spouse to preserve it for him/her.  Similarly, if you have a disabled child, Medicaid will allow you to transfer, without penalty, the home to a trust for their benefit.  In both cases, the home will be out of your name and protected for your spouse or disabled child, so when you pass away, Medicaid will not have a right to recover against it.

If you are single and own a home, Medicaid will not count it as an asset if you intend to return home.  The intent to return home is a subjective one, meaning, that regardless of whether you realistically can or do return home, it is your own intent that is determinative.  Although Medicaid may lien the property, if you return home prior to your death, that lien will extinguish.  And, even though Medicaid will have a claim against your estate after you pass, it will only be valid if Medicaid files their claim within specified time limits, which it often misses.

Myth #2:  If you transfer assets, you must wait 60 months to qualify.  FALSE!  If you transfer assets for less than their fair market value (i.e. you give them away), then Medicaid will impose a penalty.  The penalty is not a monetary penalty, but rather, a period during which Medicaid will not pay benefits on your behalf.  Contrary to popular opinion, Medicaid does not require the person who received the gift to give it back.

Moreover, the penalty is calculated based on the total value of all “gifts” made during the five-year period immediately preceding the application date.  So, if you gave away $86,840 during the five-year look-back period, then that would result in a 10-month penalty.  Certainly, you would not wait 60 months to apply when you could start receiving benefits in 11 months.

Myth #3:  You must give your assets away to protect them.  FALSE!  If you give your assets away, you lose control of them.  Once you give them away, they are no longer yours and will be subject to the creditors, predators, and lawsuits of the people to whom you gave your stuff.  And, if that person files bankruptcy, gets divorced, or dies, there go your assets and not to the people who you wanted them to go.  Instead, there are ways to protect your assets and still retain control so if you need to access them, or when you die, you decide how and to whom they are distributed.

Call ERA Law Group, LLC today at (410) 919-1790 to make an appointment with Jessica L. Estes, Esq.!

*This article refers only to Long-Term Care Medicaid when one is in a nursing home.