#TuesdayTips: DIY Estate Documents Gone Wrong

Estate planning can be a very complicated area of the law.  Before going online to print off your documents, ask yourself, if I needed open heart surgery, would I go to WebMD to get the “how-to” instructions?  Not likely, so why go online to get the how-to instructions to complete your own estate documents? 

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Did you create your own documents?

Why pay a lawyer when I can get my estate documents online for free (or at least at a lesser cost than a lawyer)?  Every estate planning attorney has fielded that question at some point or another.  My response is usually: “I love online documents…because it usually means I’ll have more work that makes more money in the future.”  After I say that, I typically get a grin across the client’s face and then they ask “why”?

Using online documents to accomplish your estate planning goals is not generally a good idea and in many cases can lead to severe consequences.  Have you ever heard the saying, “you get what you pay for”?  When you get your documents online, you don’t have the opportunity to talk to an attorney, to ask questions about your specific situation unique to only you or your family, and your documents will not be tailored to your specific circumstances.

Prior to your documents being drafted, you meet with an attorney to discuss your estate planning goals and objectives at the consultation.  My estate planning consultations usually last at least an hour if not an hour and a half.  During the consultation, we review your health status, family status and financial status all before we even mention the words “will” or “power of attorney” or “trust.”  You also have the opportunity to ask questions and receive specific answers related to your situation.  When you get your documents online, they are almost  never tailored to your specific situation.

What happens if you are a blended family?  I can almost guarantee you that the basic online Will does not address how to provide for your spouse and your biological children if you were to die first.  Many estate litigation cases arise from blended family situations where the surviving step parent does a new will after the spouse dies cutting out the spouse’s biological children from any inheritance.

What about your million-dollar IRA?  Who does that go to?  Many clients think the Will directs who gets that money.  WRONG!!  If you have beneficiaries on that IRA, then the beneficiaries listed on the IRA account receive the money and the beneficiaries named in the Will get none of it!  So many people believe the Will controls everything, and unfortunately, if you get your documents online, you will not be educated on what happens to each asset that comprises your estate.

What if you own property in multiple states?  Chances are you were not advised by the online website that you will have to likely do probate in each state you own property.  To avoid this common situation, often times estate planning attorneys will employ trusts so that ownership of those properties are consolidated into the Trust.  That way, upon the death of the owner, the Trustee can sell the properties and does not have to go through the probate/ancillary probate process in each state the Decedent owned property.

Estate planning can be a very complicated area of the law.  Before going online to print off your documents, ask yourself, if I needed open heart surgery, would I go to WebMD to get the “how-to” instructions?  Not likely, so why go online to get the how-to instructions to complete your own estate documents?  Instead, call ERA Law Group, LLC at (410) 919-1790 today!

#TuesdayTips: Financial Powers of Attorney – To Be or Not to Be?

The purpose of most powers of attorney is to authorize your named agent to act on your behalf when you are incompetent or unable to make decisions yourself.  So, if your plan is to wait until you need the power of attorney before talking to your named agent, likely, it is too late.   

That is a valid question.  One that is not pondered enough and often results in a family member being thrown into a position of great responsibility without any direction or idea how they are to act or what they are to do.  In fact, most people sign power of attorney documents naming someone, but then never tell them or have a conversation with that person about what will be expected of them.

Instead, they leave the attorney’s office feeling relieved that they have a plan in place in the event something happens to them, and as soon as they get home, shove those documents into a filing cabinet, drawer or safe (not even telling anyone where they are located), knowing that when the time comes, they will let the named individual know.  Except, the purpose of most powers of attorney is to authorize your named agent to act on your behalf when you are incompetent or unable to make decisions yourself.  So, if your plan is to wait until you need the power of attorney before talking to your named agent, likely, it is too late.

The conversation needs to happen before naming anyone as your power of attorney so you can pick the right individual for the job (and it is a job, make no mistake).  Generally, a financial power of attorney authorizes your agent to manage your finances, and specifically itemizes everything your agent is allowed to do on your behalf.  However, a power of attorney does not list your assets or provide instructions regarding how those assets should be managed.  Only you know that.

 

Thus, it is imperative that you let your agent know about every asset you own – real estate, personal property, bank accounts, mutual funds, stocks, bonds, life insurance policies, retirement accounts, trusts, etc.  Where the assets are located, what company or institution holds them, how they are titled, and their values also should be disclosed to your agent.  Your agent should also know your sources of income and when you receive your income so they can pay bills accordingly.

Additionally, you should tell your agent what your wishes are in the event you require long-term care.  Do you want your assets used to keep you at home, or would you want them preserved for your beneficiaries?  Either way, your agent will be in charge and if assets need to be liquidated, are there certain assets that he or she should liquidate first?  These and many more decisions should be made and discussed with your power of attorney.

Being a financial power of attorney requires a lot of organization, work and time.  It is a commitment that cannot be taken too lightly.  You should choose a power of attorney that is trustworthy and has the time available to devote to managing your assets.  And please, make sure your power of attorney knows what you have and what you want done with it.  Call ERA Law Group, LLC today at (410) 919-1790!

 

#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!

#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!

#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!

#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.