#FamilyFriday – Parenting Plans

You’ve heard it, we’ve written about it, and everyone knows it – divorce can get ugly and children are often the first to suffer.  Parenting Plans encourage parents to focus on the needs of their children.

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On this week’s #FamilyFriday article the attorneys at ERA Law Group, LLC want to discuss the importance of Parenting Plans.  You’ve heard it, we’ve written about it, and everyone knows it – divorce can get ugly and children are often the first to suffer.  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.

Frequently parties obtain their divorce, receive their Judgment of Absolute Divorce, and some form of an access schedule, holiday schedule, and child support.  What happens when this changes?  What about claiming the children on your taxes?  What about switching schools?  Sports?  Doctors?  The Judgment of Absolute Divorce is frequently silent on many of these issues which results in continuous litigation.  A well-drafted Parenting Plan can resolve many, if not all, of these issues.  More importantly, it allows parents to come together as parents – not as spouses.  They may no longer be spouses but they will always be parents.

Attorneys and mediators can help you and your family create a Parenting Plan that best suits your family dynamic and situation.  Additionally, attorneys and mediators often know what questions to ask, problems to prepare for, things to consider that many parents in the moment don’t think about.  Most importantly, settling the disputes between the spouses when it comes to them as parents also make the divorce process less painful for children.  Their parents may not be married but their family will have consistency and a plan in place.

Call the attorneys at ERA Law Group, LLC today at (410) 919-1790 and ask about our mediation and parenting plan services!

#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!

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!

#TuesdayTips – Domestic Violence: Protective Order or Peace Order?

Unfortunately, it is likely that you or someone you know has been a victim of abuse which may or should have resulted in a Protective Order or Peace Order.   On this week’s #TuesdayTips article the attorneys at ERA Law Group, LLC want to explain the difference between Protective Orders and Peace Orders in order to help victims best protect themselves as quickly as possible.

Unfortunately, it is likely that you or someone you know has been a victim of abuse which may or should have resulted in a Protective Order or Peace Order.   On this week’s #TuesdayTips article the attorneys at ERA Law Group, LLC want to explain the difference between Protective Orders and Peace Orders in order to help victims best protect themselves as quickly as possible.

A Protective Order is ordered by a judge and instructs the abuser to stop committing a specific act or set of acts against others.  To be eligible for a protective order you must have fall within one of the following relationship categories: (a) current or former spouse, (b) residing together in an intimate relationship for at least 90 days within the year of filing, (c) related by blood, marriage or adoption, (d) have a parent-child or stepparent-stepchild relationship and resided together for at least 90 days within the year of filing, (e) have a caretaker-vulnerable adult relationship, (f) be parents of a child together, and/or (g) have had a sexual relationship within a year of filing.

Unlike a Protective Order, a Peace Order is a form of protection for anyone who is experiencing some sort of problem with an individual such as a neighbor, stranger, etc.  When filing a Peace Order the relationship between the parties is not a factor.

What a Judge can and cannot order also varies based on the type of Order requested.  In both cases, a Judge can order the abuser to stop abusing you and to stay away.  In the case of a Peace Order, a Judge can also order counseling, mediation, and for the abuser to pay the court costs and filing fees.  Because a Protective Order involves more intimate relationships, a Judge can also impose more restrictions and make additional awards.  For example, a Protective Order can award temporary custody or visitation, emergency family maintenance (or, financial support) to be paid by the abuser, award possession of any pet, award use and possession of a jointly titled car, etc.  It can also order the abuser to stay out of the marital home, stay away from your child’s school, and to stay away from and not contact family members.

We’re here to help.  If you or someone you know is suffering from abuse and needs help, contact ERA Law Group, LLC today at (410) 919-1790.

#FamilyFriday – How is Child Support Calculated?

Frequently parents are confused by the child support calculation when considering their other bills and obligations.  What many don’t realize is that in nearly all scenarios the amount of child support ordered is determined by a calculator and factors such as “I have student loans” or “I have rent to pay” don’t necessarily matter.

On this week’s #FamilyFriday article, the attorneys’ at ERA Law Group, LLC want to explain exactly how child support is calculated.  Frequently parents are confused by the child support calculation when considering their other bills and obligations.  What many don’t realize is that in nearly all scenarios the amount of child support ordered is determined by a calculator and factors such as “I have student loans” or “I have rent to pay” don’t necessarily matter.

Maryland uses a Child Support Guideline formula to calculate child support.  Both parents are required to complete a Financial Statement which outlines the various components of that formula.  First, the parents identify their actual monthly income.  This would include salary, Social Security benefits, alimony, etc.  Second, the parents then identify earlier child support or alimony obligations – per Court Order – which will reduce their actual monthly income.  This is called their adjusted monthly income.  Third, if there are any work related child care expenses, health insurance expenses, or extraordinary medical expenses such as braces, those will also be identified by both parents.

Once both parties’ have identified the above, the formula then predicts what percentage of the parents combined income would have been attributed to the child(ren) had they continued living together.  This number is then used to determine the “basic child support obligation.”  The additional factors such as work-related child care and health insurance are incorporated to determine the “total child support obligation” that the non-custodial parent would be responsible for paying to the custodial parent.  Some exceptions exist, such as, if a parent receives Social Security Income, food stamps, or transitional services which would not be considered actual monthly income.

If you or a loved one need help obtaining child support for your children, call ERA Law Group today at (410) 919-1790 or visit our website at www.eralawgroup.com!