Thursday, January 30, 2014

“I’m Getting Divorced But Hiring an Attorney Is Just Too Expensive” By Matt Howell

While I understand that sentiment, I also know that it is just wrong. The costs of handling a divorce without an attorney can far outweigh the costs of hiring an attorney to make sure your rights are protected. I have sat in court on many occasions waiting for one of my cases to be called and have observed the judge or commissioner tell the two ex-spouses that they would have saved a lot of aggravation, frustration, and money if they had only hired attorneys when they were first getting divorced. Because they did not do that the first time around, they were doomed to spend multiple rounds of litigation trying to fix problems that a lawyer could have and probably would have helped them avoid right up front. 

There are a number of things in life that are important to do right and to do them right the first time because if you don’t, the quality of your life after that will suffer significantly. One of these is getting divorced.

In a divorce there are five major questions that need to be answered:  child custody, visitation (also called parent-time), child support, division of the assets and debts of the marital estate, and alimony. If the parties cannot reach an agreement on any of these matters, the court will have to decide it. If the court decides custody and visitation, it will do so based on what is in the best interests of the child. The court will try to determine with whom it would be best for the children to live. This can be decided based on factors such as:
  • Which parent has been the primary caregiver up to that time?
  • Which parent will be more available to meet the children’s ongoing needs
  • Do either of the parents have a history of child abuse, neglect, or abandonment? 
  • Are either of the parents involved in any activities that may pose a threat to the welfare of the children 
Child support will be determined by the court determining the income that each parent has (or could have if the parent worked full-time) and running those numbers through an analysis created by the state legislature. That analysis will provide the amount that the non-custodial parent will be required to pay to the custodial parent. Absent some very unusual circumstances, the court will not change that amount.

The assets and debts of the divorcing parties are required to be divided in a manner that each party will receive one-half the value of the overall estate (whether that value is positive or negative). The court may choose to give one party more of the total assets than the other but also allocate more of the marital debt to that party. Excluded from this calculus are any “separate” assets or debts. These include any assets or debts that existed prior to the marriage, as well as any gifts or inheritances received by only one of the spouses. They also include student loans.

The last issue that the court will decide is alimony. Alimony is designed to accomplish a number of goals. The first is to ensure that neither party ends up qualifying for state welfare support. It also ensures that each party will continue to live at the same standard of living as they did during the marriage or, if necessary, that both parties take an equal step down. In the case of a long-term marriage where one of the parties was the breadwinner and the other was responsible for caring for the children, alimony will prevent the one that has spent many years developing a career and increasing their earning capacity from leaving the other, who may have been out of the work force and have no earning ability beyond entry-level work, without a fair contribution for the efforts both parties put in during the marriage.

All of the foregoing generalizations are subject to multiple exceptions and judges have a fair amount of leeway for most of them. Additionally, the parties working together can often come to an agreement that will better meet both of their needs than anything the court might decide. Mediation is a tool that is often used to reach such agreements. Even in mediation, however, it is important that you have the advice of someone familiar with the issues surrounding divorce so that you will understand whether what you are being asked to give up in the settlement negotiations may be worth what you are gaining. An experienced attorney is what you need to make sure that you avoid the pitfalls that many divorcing parties fall into.

Thursday, January 2, 2014

Will An Online Will Cover My Needs? By Stephanie O'Brien

I’m often asked, “When should I do estate planning?” The answer for the majority of the population is now. For some, the need to name guardians for their minor children is the motivator for getting planning in place. For others, the fuel to their planning fire is a special needs child, a feuding family, an upcoming foreign vacation, a child struggling with addiction, wanting to prevent minor children from getting their share of life insurance and other inheritance at the green age of eighteen, the need to reduce estate tax exposure and the list is nearly endless. 

The next question I hear in phone consultations is often, “Can I do an online will or trust?” Yes, you can, but that doesn't mean you should. Do-it-yourself will and trust software claim credibility because their documents “have been enforced in court” (or “held up” in court). While some may be sufficient, I have seen numerous documents produced by online programs that are nonsensical, don’t state what the client thought they did, or simply fail to consider the scenarios that should be covered by the most basic will or trust. Beyond that, will software cannot take the place of a licensed attorney listening to your specific situation, internalizing your objectives and creating a plan tailored to meet your needs while making the least number of concessions possible. 

A couple recently approached me with concerns about naming their son, a long time prescription drug addict, as a beneficiary of their estate.“We love our son and don’t want to disinherit him, but he is addicted to drugs and we’re worried that he’ll blow the money on drugs.We wish we had another choice,” they explained. By utilizing a living trust, we were able to provide the son an opportunity to qualify as a beneficiary contingent upon his achieving certain milestones and proving sobriety to the managing trustee after the death of his parents. The couple had been unaware of the flexibility a trust can provide and, without having sought the assistance of an attorney, would likely have disinherited the son that they very much wanted to name as an heir of their estate.

In countless other matters, I have helped clients provide for the care of their special needs child. When dealing with beneficiaries with special needs, it is important to engage in planning so that the child inherits without jeopardizing his/her ability to qualify for Medicaid or other government benefits. Too often a special needs beneficiary’s government benefits are endangered by their direct inheritance of monies from a parent or loved one. Too many families with special needs children make the mistake of either 1) disinheriting the child (because the parents are aware that government benefits may be at risk) or 2) naming a disabled child as a direct beneficiary, unintentionally jeopardizing government benefits. Government program guidelines vary from state to state and online software likely cannot tailor your plan to protect your special needs child in the way that a live and licensed practitioner can.

In short, a do-it-yourself will may be valid, but it likely won’t cover all of your bases or accomplish everything you intend for it to. Beyond that, you may be surprised at how affordable estate planning actually is.