#FamilyFriday – Mediating Family Disputes

Sometimes costly litigation can be avoided with mediation.  Especially in family law related matters, mediation could be key to ensure that the issues involving your family are decided by your family. 

Sometimes costly litigation can be avoided with mediation.  Especially in family law related matters, mediation could be key to ensure that the issues involving your family are decided by your family.  On this week’s #FamilyFriday article, ERA Law Group, LLC wants to explain the pros and cons of mediation.

Mediation is a process of resolving disputes outside of the Courtroom.  A third-party neutral, often a lawyer or retired judge, will attempt to facilitate fruitful conversations between the parties to find common ground, highlight that ground, and hopefully create an environment which will lend itself to a settlement.  An important factor of mediation is that it is not the mediator’s job to create the settlement.  Whether a settlement occurs is always left to the parties.  The mediator is there to facilitate the conversations so that the parties can discuss their positions, opinions, wants, etc. in the best manner possible.

In cases involving family matters such as divorce, child custody, child support, and/or marital property settlement, having a third-party neutral is imperative.  When feelings are at an all-time high, it is difficult to set aside those feelings.  Mediation can offer the environment necessary to have those feelings heard while simultaneously engaging in a meaningful conversation about the issues at hand.  In situations where there is abuse or an uncooperative party, mediation may not be the best method.

To help identify whether mediation is the right process for you, below is a list of its pros and cons:

PROS

  • Save money and avoid costly litigation.
  • The parties decide what is best for them and their family rather than a Judge not familiar with the family or dynamic.
  • The parties have an opportunity to use their voice in ways that a courtroom would not permit.
  • The parties control and orchestrate the settlement, not their attorneys or a judge.
  • Parties may settle more issues that may not be appropriate for a courtroom.
  • Perhaps a total settlement isn’t possible but could limit the issues for court.

CONS

  • History of fear or abuse would render mediation impossible and, if forced, only perpetuate those fears and the abuse.
  • In highly contentious relationships, some parties may only “listen” if a Judge is issuing an Order.
  • There’s a sense of finality in a courtroom that may not be present in mediation.
  • If one party is not willing to engage in any conversation it may be impossible to have a meaningful mediation.
  • One party may not make a good faith effort to disclose vital information.

If you are looking to hire a third-party neutral to mediate disputes in your family or want to know if mediation is right for you, call the attorneys at ERA Law Group, LLC today at (410) 919-1790!

#TuesdayTips: 529 Plans as Part of Your Overall Estate Plan

It’s that time of year again when the kids head out to the bus stop in the morning to start a new year of learning, eager for what lies ahead. These children aspire to do great things, but with the rising costs of undergraduate education, families need to start saving earlier and the sooner the better. A 529 plan may be the answer.

It’s that time of year again when the kids head out to the bus stop in the morning to start a new year of learning, eager for what lies ahead.  These children aspire to do great things, but with the rising costs of undergraduate education, families need to start saving earlier and the sooner the better.  A 529 plan may be the answer and could benefit your estate plan as well.

A 529 plan is a tax-advantaged savings plan operated by a state or qualified educational institution that is designed to make it easier to save for college.  There are two basic types of plans: prepaid tuition plans and college savings plans.

Prepaid plans let you lock in future tuition costs at today’s prices; whereas, college savings plans are designed to increase over time to cover tuition costs at the time the beneficiary begins college.  Generally, the prepaid plans guarantee a minimum rate of return, but you will be limited to that rate.  Conversely, the college savings plans generally do not have a guaranteed minimum rate of return so you will receive whatever return the stock market generates.  Based on recent trends, this could be significant.

The main advantage of a 529 plan is that the earnings generally are not subject to federal or state income tax provided the funds are used for the qualified education expenses (i.e. tuition, fees, books, room and board) of the designated beneficiary.  Although contributions to a 529 plan are not deductible on your federal return, some states, including Maryland, will allow you to deduct a portion of your contribution on your state return.  In Maryland, you can deduct up to $2,500 each year per beneficiary with the ability to deduct excess contributions in the subsequent 10 years.  This benefit is available only to those contributors who are the actual account holders and Maryland taxpayers.

Also, for federal gift tax purposes, any contribution to a 529 plan generally is considered a completed gift so it will reduce the value of your estate and will not be subject to estate tax when you die.  However, there are contribution limits and if your yearly contribution exceeds $14,000 (in 2017) to any beneficiary, then you may have to file a gift tax return.  But, you will not owe any gift taxes until you have given away more than $5.49 million (in 2017).

Another benefit to the 529 plan is its flexibility.  Generally, the beneficiary may use the funds at any participating school even if they are a part-time student.  Also, if a designated beneficiary does not use the funds in the account, you have the option to change the beneficiary designation, or roll it over tax-free to another plan.

The biggest disadvantage is that if the funds are not used for qualified education expenses then the earnings are subject to federal and possibly state income tax.  Additionally, a 10 percent federal penalty will be imposed on the withdrawal.  Further, for Medicaid purposes, a 529 plan likely is a countable asset that must be spent-down before you will be eligible for benefits and could have other negative consequences.

Call ERA Law Group, LLC today at (410) 919-1790 and ask how we can help you save for your children’s future!

#FamilyFriday – Adultery

Statistics range from 25% to 75% where at least one partner has admitted to committing adultery at some point during their marriage.  Perhaps this makes sense given the 40% to 50% divorce rate in America.

On this week’s #FamilyFriday article, the attorneys at ERA Law Group, LLC want to talk to you about adultery.  Not surprisingly, it is difficult to obtain the rate of adultery in marriages today.  Statistics range from 25% to 75% where at least one partner has admitted to committing adultery at some point during their marriage.  Perhaps this makes sense given the 40% to 50% divorce rate in America.

As discussed in previous blog posts, there are many ways to obtain a divorce.  If there are children and/or unresolved property issues, you must wait at least twelve months to receive your Judgment of Absolute Divorce.  There are a few exceptions to this general rule.  One of these exceptions is if a spouse has committed adultery.  Adultery is defined as sexual intercourse between a married person and another person that is not their spouse.  Maryland Courts have indicated that any sexual activity can be adulterous even if it does not include intercourse.  This takes into consideration same-sex couples and others who may be engaging in nefarious and inappropriate conduct but stopping at intercourse.

Proving adultery can be problematic.  Sometimes spouses suspect that their partner has been unfaithful but can’t prove it.  In these circumstances, it may be difficult to obtain your divorce within twelve months.  When you do have proof whether it be text messages, catching your spouse, receiving contact from the “other” person, etc., that can be your way to divorce within a year.  In some instances, the adulterous spouse even admits to the adultery.

In the case when adultery is proven or the alleged unfaithful spouse’s actions are highly suspected of adultery, the Court may take this into consideration when making a marital award.  Perhaps they’ll find that the unfaithful spouse deserves less of a marital share than what the Court would have otherwise awarded the spouse.  Perhaps the Court may order the unfaithful spouse pay more alimony or rehabilitative alimony considering their actions.

If you know or believe your spouse has cheated on you, call the attorneys at ERA Law Group, LLC today at (410) 919-1790.  We are here to advocate for you!

#TuesdayTips – Speeding Tickets

At some point or another everyone has likely went over the speed limit.  What happens when you do and you’ve been caught?  What happens if you don’t think you were going as fast as what the officer told you?

At some point or another everyone has likely went over the speed limit.  What happens when you do and you’ve been caught?  What happens if you don’t think you were going as fast as what the officer told you?  This week’s #TuesdayTips article is about speeding tickets.

Depending on your clocked speed and the speed limit will result in various penalties.  The faster you go the greater the fine and number of points that will be charged to your license.  When you are caught speeding you will receive a ticket.  Your ticket will give you three options: (1) plead guilty and pay the fine, (2) plead not guilty and request a trial, or (3) guilty with explanation or request a waiver hearing.  The first plea is self-explanatory.  If you select the first option you will have the points added to your license and have to pay the fine.  If you choose the second or third option, you will have to appear in Court.

By pleading not guilty you are asserting that you did not speed or question the accuracy of the clocked speed.  The Court will summon you and the ticketing officer to appear in Court.  After you plead not guilty, the Court will move on with a trial where you will need to assert defenses and question the officer.  For example, you may want to question (a) when and if the radar gun was calibrated, (b) the weather conditions, (c) the traffic conditions, and/or (d) whether the officer’s vehicle was moving when you were clocked.  If the officer can’t answer these questions, give his notes, etc. you may very well win your case.  Or the Court may dismiss your case all together if the officer fails to appear.

By pleading guilty with explanation or requesting a waiver hearing, you are admitting you were speeding but have an explanation justifying your speed.  For example, you were in the middle of a medical emergency.  The Court will summon your appearance but the officer will not need to appear.  In these situations, Judges may take into consideration the reason you were speeding and find that it was justified or perhaps lessen the penalty given your justification.

If you have a poor driving record, a commercial license, a provisional license, etc. you may be inclined to fight the ticket to avoid losing a job, losing your license, seeing a spike in your insurance payments, or many other possible consequences.

If any of these reasons or potential consequences resonate with you, call the attorneys at ERA Law Group, LLC at (410) 919-1790 and ask about our fixed fee services!

#FamilyFriday – Military Retirement Pay, Disability Benefits, and Divorce.

Due to a recent Supreme Court decision, a former spouse may now lose a significant amount of their ex-spouse’s military retirement pay despite what was awarded to them in their Judgment of Absolute Divorce.  

On this week’s #FamilyFriday article, the attorney’s at ERA Law Group, LLC are discussing the recent change in how Court’s treat a service member’s waiver of retirement pay for disability benefits and the effects it may have on the former spouse.  A service member’s retirement pay is considered marital property.  Depending on the length of the marriage and the Court’s Order, a percentage of the marital portion of the retirement pay is reserved for the former spouse upon the service member’s retirement.  Due to a recent Supreme Court decision, a former spouse may now lose a significant amount of their ex-spouse’s military retirement pay despite what was awarded to them in their Judgment of Absolute Divorce.

In Maryland, upon entering a Judgment of Absolute Divorce, couples negotiate what, if any, percentage of the service member’s retirement pay will be awarded to the former spouse. If a service member applies for and receives disability benefits, the Department of Veterans’ Affairs (DVA) automatically reduces the member’s retirement pension on a dollar-for-dollar basis.  This automatic waiver prevents members from double dipping and receiving both retirement pay and disability benefits.  In practice, in exchange for the disability benefits, a member’s retirement pay is decreased which also results in a decrease for the former spouse.  Put simply, the former spouse will receive a smaller piece of the pie than what was originally contemplated.

Until recently, Maryland and many other states, treated the award of the service member’s retirement pay as a contractual arrangement.  This permitted the former spouse to retain their agreed upon portion of the service member’s retirement pay if and when a service member obtained disability benefits or increased benefits after the divorce which resulted in a waiver of their retirement pay.  The Court interpreted the waiver as a dilution of the former spouse’s share.  Finding this arrangement unfair, Maryland Courts continued to enforce the award in the Judgment of Absolute Divorce.  In other words, the service member was still required to pay the difference.

A recent Supreme Court decision, Howell v. Howell, has changed the way Maryland and other states have treated such circumstances.  Now – regardless of what the award was – a former spouse is only entitled to receive a portion of the retirement pay even if that retirement pay is now significantly smaller.  The Supreme Court suggested that state courts consider the unreliability of the former spouse’s portion of retirement pay when making a marital award and, if applicable, compensate the spouse elsewhere.  For example, perhaps this would increase alimony or a lump sum award.

If you are a military spouse, call the attorneys at ERA Law Group, LLC today at (410) 919-1790 to ensure your rights and benefits are protected!

Federal Special Needs Trusts: An Overview

You might be wondering: what is a special needs trust (SNT)? A SNT is a specific kind of trust that can receive and hold property and/or money for an individual with special needs and it will not impact that individual’s right to receive those government benefits he or she had been previously receiving.

One common scenario routinely encountered when planning a client’s estate is figuring out a way to allow a child with special needs to receive an inheritance from a parent (or other loved one) without it adversely impacting that child’s Social Security or Medicaid benefits.  As estate planners, we often resort to using special needs trusts (also commonly known as supplemental needs trust) in the parents’ estate plans.

You might be wondering: what is a special needs trust (SNT)?   A SNT is a specific kind of trust that can receive and hold property and/or money for an individual with special needs and it will not impact that individual’s right to receive those government benefits he or she had been previously receiving.

There are two main categories of federally recognized SNT’s—d(4)(A) and d(4)(C).   These are known as Medicaid pay-back trusts.  The most commonly used federal SNT is the d4A trust, being named after its location in the United State’s Code 1396p(d)(4)(A).  This trust uses the disabled person’s money to fund the trust, and the disabled person is named as the beneficiary of that trust.  Often times, a parent, guardian or attorney is named as the Trustee to oversee and manage the Trust as there are very strict guidelines related to disbursements from the trust.  When the trust beneficiary dies, any money remaining in the Trust must be used to pay back the State of Maryland (or other state) for any amounts it paid out in Medicaid benefits for the beneficiary.

The other common federal SNT is a d(4)(C).  This type of SNT is called a “pooled special needs trust” meaning the assets of the individual are pooled together with the assets of others for investment and management purposes and managed by a non-profit entity.  Don’t worry though, the assets of the individual are kept separate and accounted for until the beneficiary dies at which point the assets pay back the state Medicaid agency.  Any left-over funds are retained by the asset pool.

If you are concerned about special needs planning, the attorneys at the ERA Law Group, LLC are here to help!