Wednesday, August 27, 2008

Do I need a last will and testament?

It's never too early or too late to begin thinking about a last will and testament. You will want to ensure that you have provided instructions regarding the distribution of your assets.

Below is a decade-by-decade guide of what you should think about as you plan your estate.

Your 20s:

If you are in your 20s, this is the time to build the nest egg. You will want to consider putting aside a small amount each month (5-10% of your income) in an IRA for your retirement. Though it may not seem like much now, remember that this money can compound from hundreds to thousands and potentially to hundreds of thousands. It is key to remember to name beneficiaries for your accounts and keep them updated.

You probably own a car. You may have bought your first home already. Take some time to write down your assets, big and small, and make a list of who you would like to receive those things should something happen to you. Once you have your list of assets, you can create a will so that you can ensure a quick distribution of your assets.

Your 30s:

It's likely you've bought a house, gotten married and had children. With all these milestones, you will need to make sure that you have a last will or living trust in place to take care of your family and protect everything you have been saving. Once you have children, it is especially critical to create a last will so you can name a guardian for your children should something happen to you.

If you have amassed substantial assets by your thirties you may want to consider a living trust, which can help assure a fast distribution of your assets, avoid unnecessary taxes, and keep your wishes private.

You will also want to consider creating a living will and durable power of attorney in addition to your last will; these documents will enable you to name someone to take care of your financial affairs and make medical decisions if you become incapacitated.

Your 40s:

It is definitely time to sit down and create a last will or living trust. You have likely purchased a house and your children may be heading into junior high or high school. You need to have a list of your assets, including bank accounts, retirement funds, real estate, and others. Your first course of action should be to get beneficiary forms and make sure you have listed a beneficiary for each asset that allows you to do so: usually IRAs, 401ks, and life insurance policies. Take the time to create a will so that you can assign guardianship of your children and tie up any loose ends by properly allocating your property.

Chances are that you have acquired more substantial assets as well as many more responsibilities, like paying for a child's college education or getting your retired parents settled. You may also want to look into getting a life insurance policy to cover any large expenses like a mortgage or college tuition.

Your 50s:

You may still be helping children financially (college, weddings, grandchildren) as well as taking care of aging parents, so estate planning becomes even more crucial as you try to maintain your current responsibilities while preparing for your future.

You should periodically update it to make sure you've included all the beneficiaries—are there now grandchildren in the picture, for instance? Have you acquired or sold assets? Have you gotten married or divorced?

So what is next?

Follow these general guidelines and take the time to map out your estate plan by drawing up a will or living trust. Doing so will help ensure that your golden years will be as stress-free and enjoyable as possible. After all, you've earned it.

Tuesday, June 17, 2008

New Consequences for Failing to Pay Child Support

ARIZONA -- 2007 Session Law – New Consequences for Failing to Pay Child Support

House Bill 2249, Chapter 246 (2007 Legislature)
Signed by Governor, June 13, 2007

PROFESSIONAL LICENSES AND CHILD SUPPORT PAYMENTS: A state law enacted last year has given the Arizona Department of Economic Security legal authority to suspend or revoke the professional license of someone who has deliberately failed to pay child support for more than six months. House Bill 2249 was passed by the legislature on June 11, 2007, and signed by the Governor on June 13, 2007.

The Division of Child Support Enforcement (DCSE) within the Department of Economic Security (DES) administers Arizona’s child support program. DCSE services include: a) finding noncustodial parents whose whereabouts are unknown; b) legally establishing paternity for children born out of wedlock; c) obtaining a court order indicating the monthly amount the noncustodial parent must pay to help support his or her child; and d) collection enforcement through income withholding, tax offsets, asset seizures and various other remedies.

The Department’s Division of Child Support Enforcement (DCSE) is getting the word out to professional groups, including physicians, physician assistants and real estate professionals that the DES will take appropriate action to collect past due payments, and that may include suspending or revoking the professional’s license to practice in Arizona. The obligor will not be issued a new license and cannot renew an existing license until the child support is paid or an arrangement for repayment is made (A.R.S. § 25-518).

Veronica M. Hart Ragland— Assistant Director of the DCSE — notes that about 95% of cases with child support obligations are delinquent. Many of those required to pay child support are self-employed and may hold a state of Arizona professional or occupational license or certificate. Licensing agencies, boards and commissions are participating in an automated reporting system that will enable the DCSE to contact those licenses who are delinquent. Ragland would prefer that those who owe child support fulfill their obligations without her division taking such drastic action. “While it is certainly not our goal to deprive people of the ability to work, we believe that our legal authority to revoke or suspend licenses will encourage compliance with the law to make child support payments,” Ragland says. For further information, or to make child support payment arrangements, individuals may contact DCSE Customer Service at (602) 252-4045, or outside Maricopa County, 1-800-822-4151.

Note: Information as appeared in the MCBA June Newletter

Wednesday, March 19, 2008

Bankruptcy Joint Debts and Property

If I am discharged for a joint debt, what happens to the cosigner?

Your cosigner's liability for the debt is not effected by your discharge.
Cosigners are almost always joint and severally liable. This means the creditor can collect the entire debt from any person who has signed for the debt. If one of the signers receives a discharge, the creditor will still be able to collect the entire debt (plus interest, attorneys fees and collection charges, if the contract provides) from the other signers.

There has been a firm of collection attorneys aggressively pursuing me for a debt that was given to my ex-husband according to the terms of our divorce. Why are they coming after me when they know it's his debt?

The division of debt in the divorce decree affects only you and your husband. If your husband does not pay the bill, the creditor may come after you for the entire debt. You may have an action against your husband for his violation of the court order, but you may be no more successful in collecting from him may be no better than the creditor who has apparently decided that you are a better target.

Can I protect a cosigner?

If you file Chapter 13, a co-debtor stay automatically goes into effect prohibiting creditors from collecting consumer debt from co-debtors. In order to maintain this protection, your Chapter 13 plan must provide for payment of the entire debt and interest.

My husband and I divorced nearly a year ago and he was supposed to take over the credit cards part of the divorce agreement but he later found out that the bills were too much. I am unable to pay back the loans and credit cards. I have tried several times during the year to get him to go for bankruptcy but he will not do it. Can I do it and settle the debts for the final time?

Yes, you can file and discharge (or cancel) your debt under either Chapter 7 or Chapter 13 bankruptcy. However, if you and your husband are divorced, you cannot file bankruptcy together--each of you would have to file separately. If you ex-husband files, his debt would be eliminated, but creditors would still be able to pursue collection against you. You, of course, could file and seek to discharge your liability for those debts.

My wife and I are getting divorced but we have not gone through the process yet and I was wondering if I file for bankruptcy for myself will it affect her if our divorce has not been finalized yet?

Bankruptcy filed by one spouse can affect the other spouse if there are community debts or community assets. In Arizona, assets earned by either party during marriage are property of the marital community.

Will my filing Chapter 7 personal bankruptcy effect my spouse's or my own I.R.A. accounts, cash value life insurance accounts, or jointly owned land?

In general, your filing bankruptcy will not effect your spouse's property. In Chapter 7, the Trustee will be able to take property which you own if it is not exempt. The Trustee cannot take property of your spouse even if it is not exempt.

Unfortunately, the answer is not so easy if you own propety with someone else, including your spouse. Whether the property may take only your interest in the property, or all of the peroperty depends on the nature of your ownership in it.

Jointly owned property. If you own property jointly with anyone, including your spouse, the Trustee may take your share of the property. The Trustee cannot take the joint owner's share. However, dividing the property between the joint owner and the Trustee may require that the property be sold.

Community property. Community property is property which is acquired through the earnings of you or your spouse during marriage. It can be taken by the Trustee and used to pay debts for which the community is liable. Whether the community is liable depends upon state law.

The most common property owned jointly or as community property is a home. Since Arizona has a relatively generous homestead exemption of $150,000 , we do not often have to deal with the problem of the Trustee seeking to take a home.

You should be able to keep your SEP-IRA & 401K plans. In Arizona, IRAs are exempt--except for deposits made within 6 months before filing--and ERISA plans (which 401k and other retirement plans would ordinarily be) are also protected--if the documents that created them contain properly drafted spendthrift protection.

In Arizona, the cash value in your life insurance is exempt up to $20,000, if you name the proper beneficiaries and meet the other requirements to claim the exemption.

Monday, March 10, 2008

What Counts as Income for Calculating Child Support?

By James Jennings

What counts as income for calculating child support?

Usually gross income from the following† :

Severance Pay
Worker’s Compensation Benefits
Unemployment Insurance Benefits
Income from a Business
Disability Insurance (including Social Security disability)
Rental Income
Social Security Benefits
Trust Income
Capital Gains
Recurring Gifts
Spousal Maintenance (alimony)

Gross Income does NOT include benefits from public assistance programs such as Temporary Assistance for Needy Families (TANF), Supplemental Social Security Income (SSI), Food Stamps, and General Assistance (GA); and, it does not include child support payments received.


Sunday, March 2, 2008

Your Finances & Divorce

By James Jennings

Common financial mistakes of a divorce.

Financial victim:
If you suspect that your spouse is planning to divorce you. You should make copies of all important financial records. Making copies of bank statements, charge account statements, titles and deeds should be a top priority, if you think that your spouse may sell off a re-title marital assets. You should notify the holder in writing and acquire restraining order from the court. You should also watch out for cash in joint checking and savings accounts. I've seen many cases where these accounts have evaporated, and people have been left with no way to pay their bills. If these assets are taken, legal or forensic accounting fees could become very expensive.

Emotional attachments:

Try not to get emotionally attached to assets. This is a very common mistake that I have seen cost people more money than it should. Assets like your home or your pension make for emotionally charged debates during divorce negotiations. The fact of the matter is most people can't afford a house, and usually give a low priority to their retirement planning. A house is an asset that has a very low return on investment in most cases. You need to consider that in most cases, homes are a major cash expense because of the mortgage payments. Also don't forget the taxes, maintenance, upkeep, and electricity on a house.

Impact of taxes on your assets:
Consider the value of your assets, as it relates to your spouse on an after-tax basis. Don't make the mistake of not recognizing what Uncle Sam will take. Sometimes, when going through divorce, a financial planner or tax accountant can help you minimize the total tax you will pay. Don't forget you and your spouse are both liable for taxes due on joint tax returns.

Most people while they're going through a divorce or even after the divorce complain about not being able to pay their bills. It is important that you seek the help of a financial adviser to help you produce an accurate and complete budget that will help you after the divorce.

If you have a lawyer don't use them as a therapist, financial planner, or messenger:
Most divorce lawyers charge between $150 and $300 per hour. Lawyers are great for giving you legal advice. However, you should not use them to be your financial planners, emotional support, or career counselor. Most lawyers are not skilled in these areas. If you try to use them for these services you would end up more than likely paying them a lot more for these services, then you would if you hired people that were professionals in these fields.

Failing to develop and after divorce financial plan:
One thing, I think most people fail to realize is that it costs more money to operate two households than it does to operate one. Financial planning can help you transition from a married to a single lifestyle by prioritizing your financial goals. You should develop a realistic expectation and produce a good plan for the allocation of your financial resources.

Tuesday, February 12, 2008

Grounds for Divorce in a Covenant Marriage

By James Jennings

We have done countless divorces involving convenant marriage over the years and is one of the most confussing topics for people to understand.

So what is a convenat marriage and how do I get divorced if I have one?

In 1998 the State Legislature created a type of marriage in Arizona called "covenant marriage." It did not replace the kind of marriage already available. Instead it offered an additional option to couples who wish to marry.

The covenant marriage differs both in the steps necessary to get married and the reasons why a legal separation or divorce may be granted by the court.

To enter into a covenant marriage, the couple first must have premarital counseling from a member of the clergy or a marriage counselor. Then, when applying for a license to be married, both persons must show their intention to enter into a covenant marriage by signing a declaration on the application form. In a covenant marriage, legal separation or divorce may be granted by the court only for specific reasons listed in state law.

To get a divorce, any one of the following reasons must be true.

1. Your spouse has committed adultery.

2. Your spouse has committed a felony and has been sentenced to death or imprisonment.

3. Your spouse has abandoned you for more than 2 years and refuses to come back.

4. Your spouse has either (1) physically or sexually abused you, a child or a relative of either of you who lives permanently in your home, or (2) committed domestic violence (defined in Section 13-3601 of the Arizona Revised Statutes) or emotional abuse.

5. Your spouse and you have been legally separated for more than 1 year.

6. Your spouse regularly abused drugs or alcohol.

7. You and your spouse agree to end the marriage.

Monday, February 11, 2008

Does equal visitation mean no child support?

By James Jennings

One of the most common questions we get asked is: If both parents agree to 50/50 custody and neither want to pay or recieve child support will one of the parents have to pay some amount?

You must keep in mind the most important rule is child support serves the best interests of the child - NOT the parents! So even if the parties "agree" not to pay child support to each other, the court will have an independent legal obligation to ensure that your agreement doesn't hurt the kids.

A 50-50 division of parenting time often results in a minimal need for child support payments. But not always! Much depends on your respective incomes, who pays the medical insurance, extraordinary child expenses, daycare, and spousal maintenance. The judge will also consider whether either party is already paying support for other children from a different relationship.

In other words, there are many factors that play an important role in the child support calculation, and 50-50 custody is just one piece of the puzzle.

Tuesday, February 5, 2008

Some Issues Concerning Residency

By James Jennings

If one spouse meets the residency requirement of a state (such as having lived there from six months to a year depending on the state), a divorce obtained there is valid, even if the other spouse lives in another state. The courts of all other areas will recognize the divorce.

However, any decisions a court makes regarding property division, alimony, custody, and child support may not be valid unless the nonresident spouse consented to the jurisdiction of the court. A nonresident spouse consents to jurisdiction if the nonresident spouse shows up at a court date or signs an affidavit of service, acknowledging receipt of the filed legal documents.

Moreover, one of the judges in the Maricopa Superior Court takes this one step further and requires specific wording in the acceptance of service, stating that the other spouse is waiving their rights and accepting Arizona's jurisdiction.

Also, it can also happen if the nonresident spouse abides by the rulings of the court; for example, by paying court-ordered child support.

Monday, February 4, 2008

Misconception Regarding Legal Separation

By James Jennings

It is a common misconception that some people have that a legal separation is a shortcut to ending a marriage in Arizona. The practical truth is that legal separations can take just as much time, effort and resources as a divorce. That's because they involve pretty much identical issues as divorces --property division, debt division, child custody, visitation, child support, alimony, etc. Legal separations can end up going to a full-on trial, not to mention temporary evidentiary hearings prior to trial. Thus, if you're looking for a shortcut, a legal separation may not be the answer.

Furthermore, legal separations end with you still being officially married. Although everything has been divided up, you remain married, meaning that neither may legally remarry if that special someone comes along. In my experience with legal separations one party or both almost always later decide that they want a full divorce with more paperwork that must be submitted to the court to convert the legal separation to a divorce, resulting in more time and expense.

So, if you want to same time and money, and you know you’re headed for a divorce anyway, just start off filing for the divorce in the first place. If you honestly believe the marriage can be saved and you just need time apart, then a legal separation maybe the best course of action.

Friday, February 1, 2008

Discloser Statement

By James Jennings

Sr. Paralegal

Discount Divorce Pro., LLC

Often when the other spouse files a Response with the Court, the judge assigned to the case will issue an Order to Appear for an Early Resolution Conferance or an Evidentiary Hearing. This is because the case is now considered contested.

When our clinet's show us these Orders to Appear oftentimes they will state that discloser and Discloser Statements must be completed within 5 days and exchanged with the other party prior to the hearing date. Also, it is not uncommon that the judge will also want a Resolution Statement, List of Witness & Ehibits, and a Certificate of Readiness to filed along with the Discloser Statement.

If children are involved, the judge will also want a Parenting Plan for Child Custody and Vistiation, and a Parent's Worksheet for Child Support Amount.

So what is a Discloser Statment?

The Discloser Statement is a statement to the other party and the judge that tells what the factual basis for each claim or defense in a case is. It also tells the court and the other party what you are seeking, either money and/or an for a specific remedy. For example alimony, child support, child custody, half the equity in the home, etc.

Furthermore, a Discloser Statement also describes in detail to the everyone envolved which legal theories apply and why. It tells everyone exactly which laws and/or case law makes your case.
For example if you are seeking child support, in your Discloser Statement you would site Ariz.Rev.Stat. 25-320. This law tells the judge that child support should be calculated as per the states guidelines. It aslo tells everyone that the non-custodial parent should pay the custodial parnent child support because this is in the best interest of the child. That the non-custodial parent not only has an obligation to pay support for their children, but a duty.
Another example, if you wanted to show the court in a modification of child support hearing that the court no longer had jurisdiction to modify support because the child and both parents no longer resided in Arizona, then you would site McHale v. McHale, Ariz. Ct. App., 1 CA-CV 04-0022. Therefore, you could then maybe move the child support case to the state where you now reside. These are just a few expamples.

Also, a Discloser Statement tells everyone which witness are going to appear to help you make your case but also which exhibits you plan to show the court. If you do not disclose this information to the other party and the court in your Discloser Statement then you will not be allowed to present this information at your hearing. Which could have very serious repercussions.
For example if you were seeking alimony or child support, you would need to provide your W-2's or tax returns to show what your income was. If you do not list these as exhibits, then you may not be able to show them as proof.

So, where do you get a Discloser Statement?

Some people think you can go to the Self-Help Center or an online publication company and get these documents. Truth be told these types of places do not have these documents because of the complexities of the issues involved, these documents must be custom prepared. I highly recommend that you have a professional prepare these documents. These are very complicated documents with complicated procedure for preparing. They also require legal research which is a skill set most people do not have. I recommend getting someone that is well versed in family law and family procedure. We have prepared hundereds of these statements for clients over the years and have helped a great many people with these.

One final note. There are serious consequeses for the failure to prepare these documents as ordered by the court. The court can sanction, fine, and or have the other party get everything they are asking for if they prepare these documents and you do not. I have even seen the court dismiss the entire case if neither party files these documents.

So, if you receive and Order to Appear please contact us or an attorney immediately. Do not blow this off or wait until the day before your hearing to worry about this.
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Tuesday, January 29, 2008

Taxes and Income Tax Refunds

If a debtor is currently owed a refund for any year prior to the year of filing bankruptcy, the estate is entitled to 100% of the proceeds to which the debtor would be entitled. If a single person or a married couple files bankruptcy, that typically means 100% of the refund goes to the estate, but if a married person files individually, typically 50% of the refund becomes property of the bankruptcy estate. The non-debtor spouse would be entitled to keep 50% of the refund.

PROBLEM – Tom files a bankruptcy on January 15, 2008, but his wife does not file bankruptcy. They have not yet filed their 2007 federal income tax return, but when they do file on April 15, 2008, they realize they will get a $2,000 refund. Since the wife did not join Tom in filing bankruptcy, only half of the refund ($1,000) becomes bankruptcy estate property. Every rule has exceptions, so you need to discuss your specific tax scenario with a bankruptcy lawyer prior to filing for relief.

STRATEGY- If practical, file bankruptcy AFTER receiving and consuming your income tax refund. A debtor should not spend a refund on the purchase of new assets because those assets will become property of the bankruptcy estate. The funds should be used to pay ordinary and necessary expenses. Bankruptcy clients often flood law firms in the second quarter of the year because they use their tax refund to pay for their bankruptcy fees and costs. This is one of many perfectly acceptable uses of the tax refund.
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