Risks and Benefits of Separating before filing for Divorce

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I don’t know if I have said this before (in written form, of course) but if I have, I am going to say it again: Americans are ready to start spending money again.  I know that the stock market says otherwise, but I can tell the economy is recovering because people are finally pursuing divorce again.  For several months at the end of last year, and for several months at the beginning of this year, couples were separating, but not pursuing divorce.  The domestic relations courts were deserted.
Getting divorced is expensive, not only because both parties have to pay attorney fees but also because prior to the divorce, they had two incomes and only one household.  Once the parties separate, each only has one income available but each has an entire household to support.

Being separated prior to pursuing a divorce usually makes the divorce/dissolution process easier and less expensive because the separation allows the parties to divide up property and debts that can easily be divided, and by the time the parties are dealing with more difficult decisions, they are no longer angry, they have already moved on and they just want the paperwork to reflect the divisions they have already made.  Separating before pursuing a divorce makes sense for a lot of reasons but I wouldn’t recommend it under all circumstances.

I do not recommend leaving the marital home if the parties have children.  Both parties should seek the advice of an attorney before leaving the martial home when there are children of the marriage.  A parent’s right to custody or shared parenting could be affected by leaving the home and this may be avoided by seeking the advice of an attorney before leaving the home.

If the parties don’t have children, there isn’t much risk in leaving the home; however, seeking the advice of an attorney to discuss your rights in regards to marital property is recommended.

If you do not have children and your financial situation is improving and you are ready to separate and begin the divorce process, being separated for approximately 6 months should provide an adequate amount of time to cool off from the marriage and allow the parties to negotiate with a calm head.  Often, parties that have separated first are able to pursue a dissolution, which is much more friendly and cost-effective than a divorce.

National “Make a Will” Month

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Recently, I have had many clients contact me about making a will; more so than in any other month.  I knew that it was National “Make a Will” month but I did not think that anyone else knew that.  Even if they did, I didn’t think that “national -anything-months” actually moved people to action.  I’m beginning to beleive I was wrong about that. 

By making July the National “Make a Will month, “they”, whoever “they” are, are reminding us to do something that we all should do.  I am the first to say that not everyone needs a will.  I have had many young professionals ask me if they need a will and depending on the circumstances, the answer is “no.”  In fact, I do not have a will myself.  I have no problem telling my clients that they don’t need a will because by doing so, I am saving them time and money.  Those young professionals that I have spoken to now have peace of mind knowing that they don’t need a will (for now).  The people that I am concerned about are the people that I have not spoken to because only an attorney (and an honest one) can tell you whether you need a will or not, and you don’t know until you speak to an attorney. 

One thing that I have done recently to make making a will easier for my clients is that I have purchased fantastic (and expensive) software that makes making a will quicker and easier than ever.  The thing that I love about having this software available to me is that if I meet with a young person today and make their will, once I enter the information into the computer, I do not have to enter that information again.  If that person wants to make changes, I can go to the section where the changes will be made, instead of going through the entire program again.  Because this process is faster, it is also cheaper for my clients.  I have the software downloaded on my computer and when I am finished I am able to go back to my office and review the document to make sure it meets my client’s needs.

National “Make a will” month is not necessarily about “making a will” in July but rather reminding all of us to review our will to make sure it will carry out our wishes, which may have changed since last updating.  It is also about reminding everyone to schedule a free consultation with an attorney that can review your personal situation and help you decide whether a will is right for you or whether some other estate planning tools will better fit your needs.  In the meantime, happy will making to you all.

Attorney-Client Relationship

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Attorney-clients relationships can be complicated.  It has been said that you aren’t an experienced attorney until you have fired at least one client.  If that is true then I am officially an experienced attorney.  There are generally only two reasons that would prompt me to fire a client.  Either 1) there is a conflict, in which case I cannot represent the client without violating the Ohio Rules of Professional Conduct or 2) the client is not following my advice and would be better served by another attorney that he/she trusts.

If you ever find yourself fired by your attorney, you shouldn’t take it personally.  Some people’s personalities just don’t go well together.  When I meet a client, I do my best to follow my intuition about people and only accept clients that I think I will work well with.  When that system fails, I do my best to work with the client and have been mostly successful in doing so.  In a small number of cases, I have felt as though the client would be better served by another attorney.  I want those clients to realize that although I may no longer work for them, I still have their best interests in mind.  By removing myself from the case, I am trying to help the client move on and find another attorney that will be better suited for that particular case.

This instance does not occur very often, but when it does, it is most helpful when the client realizes that it is in his/her best interest to find a new attorney that will work well with the client.

Living Trusts as an Estate Planning tool

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A living trust is a trust that is funded with assets which can be amended and/or revoked by the settlor (creator).  A living trust can be used to handle financial affairs while alive and dispose of property after death.  As an attorney, many clients have shown an interest in living trusts because of the fact that they are an alternative to probate court.
 
Many financial planners and insurance agents (and even some attorneys) have cashed in on the phrase “avoiding probate court” by offering a trust to every client that walks through the door to discuss estate planning.  There is a lot of confusion about what “avoiding probate court” means and many people believe that it means “avoiding estate taxes.”  This is incorrect.  Avoiding probate does not mean avoiding taxes, but rather avoiding the process of probate.
 
The advantages to creating a living trust are that a living trust provides the settlor with greater privacy, lower court costs for the beneficiaries, lower attorney fees for the beneficiaries, lower appraisal fees, lower executor fees (as compared with trustee fees), living trusts often reduce the probability of litigation, and living trusts also offer almost immediate access to the assets after death.
 
The disadvantages to a living trust are that it is more expensive to create a living trust than a will, living trusts have higher annual expenses than a will, and living trusts require a lifetime of effort to manage and maintain until death.  In addition, living trusts do not protect assets from medicaid rules.

Credit Repair

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If you have ever made a large purchase with a boyfriend or girlfriend, you probably know what a nightmare it can turn out to be.  It is an even bigger hassle if the big purchase is a house and the other party doesn’t contribute to the payments after the breakup.  If you would like to get married some day, I would not recommend making any large purchases with someone you are not related to or married to; however, just like a lot of advice coming from an attorney: this may be too little too late.
If you purchased a home with someone who is no longer contributing to the payments, there are a few options.  Do not consider foreclosure just because you want closure with the person (believe it or not, clients have suggested this option).  Do not panic.  It is understandable that you want this person to be removed from the loan and title; however, it is not imperative that you act (irrationally) today.  You should not be too concerned about getting them removed from the loan (since this is an obligation and not necessarily a right) unless the person is insisting that they be removed from the loan in exchange for being removed from the title.  You may be able to get the person removed from the loan by refinancing.  If you are unable to refinance due to a low credit score, you should call Credit Smart Solutions owned and operated by Joe Frey, a credit specialilst.  Joe can evaluate your situation in a free consultation and tell you whether he can help and by how much.  Once your credit score has improved and reached the goal score, Joe can put you in contact with a mortgage company that he does business with that should be able to help you refinance.
If you are unable to refinance, you should not panic.  If you sell the home, or otherwise pay off the home, an attorney should be able to prepare a quit claim deed for around $100-$150 to send to your significant other.  If the other party refuses too sign the quit claim deed, the attorney can explain your other options.

Transfer on Death and Probate

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I got into probate practice on accident.  It all started when I worked for my previous employer as a law clerk (after I had taken the bar but before I had received my results).  Our firm had received a telephone call from a client/investor.  Our client had an investment property and the person staying in the property had passed away.  Our client needed us to somehow get the property released from administration so that our client could re-rent the property without having to foreclose (actually, you have to open probate to foreclose but that is a long, complicated story.  He definitely did not want to foreclose if he could avoid it).

Since working on that case (and since receiving my license) I have worked on several similar cases, I have administered several estates and now my firm is expanding into estate planning.  A very common question that I am asked (usually from financial advisors) is about retirement accounts and probate.  People want to know the following: if they set up their retirement account to transfer on death to the designated beneficiaries, will the beneficiaries still have to pay “probate fees and taxes” on that money?

If a retirement account is set up to transfer on death, that money is still taken into consideration for federal and state estate tax purposes.  However, setting up the account so that it transfers on death, still keeps a considerable amount of money in the beneficiaries’ pockets.  Attorneys fees are generally calculated as a percentage of the probated and non-probated estate.  The percentage paid for non-probated property is much lower than for probated assets because the amount of legal work required to liquidate and distribute non-probated assets is much less.  In addition, the fiduciary of the estate gets paid according to a percentage of the probated and non-probated assets.  By keeping large accounts outside of probate, you are paying less to the attorneys and the fiduciary.

Transfer on death designations keep money in the family in other miscellaneous ways as well.  Less paperwork will be required for filing, which saves the family money because probate courts generally charge per page.  Also, if a bond is required, the bond will cost less.  Bonds are required to be secured for double the amount of the probated assets; the more in probated assets, the more the bond will cost.

Life Insurance and Divorce

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Recently, I was contacted by two insurance agents regarding life insurance.  Both insurance agents had similar questions regarding life insurance and divorce.  First, they wanted to know whether courts require child support obligors to obtain and hold life insurance policies for the benefit of the children, in the event that the obligor passes away.  Basically, the answer to this question, as written, is “no.”  The insurance agents were taken aback by this.  They were appaulled by the fact that if something happened to the obligor, the parent caring for the children would be left with no support or help.

While I certainly understand their concern, my response is that many of my clients (and their ex-spouses) can’t afford to pay their court ordered child support, let alone an additional insurance premium each month.  If an untimely death occurs, the beneficiaries of the obligor’s estate may have a wrongful death suit, which would reduce or eliminate the need for the life insurance policy.   (Of course, the insurance agents could probably come up with a list of the benefits of having the insurance policy in place, despite the above statements.  I’m not saying there aren’t any, I just have to keep in mind that my clients have budgets & priorities).

There are many shortfalls of our court system and especially our domestic relations divisions; however, I would not categorize this as a shortcoming of the court system.  If you believe this to be a short coming, it is really a short coming of the attorneys working in the domestic relations court system.  When I am filing a divorce for a client that is asking for custody and child support, the opposing party either has a life insurance policy in place or he/she does not.  If they do have a life insurance policy in place, I usually include in the decree that the party is required to keep the life insurance policy for the benefit of the children until the youngest child turns 18.  When this is included in the decree, the court will generally grant this request.

If the opposing party does not have a life insurance policy, I do not usually address whether he/she wants the other party to be required to obtain one.  Often times, if there is not a policy in place already, that is because there is no money for a policy.  It is not guaranteed that the court will grant the request for the order requiring the other party to obtain a life insurance policy and it may cost more in legal fees to persuade the court that such a provision is necessary.  In addition, as with any provision in the decree, such a provision is only enforceable by contempt of court.  This means that even if the court grants an order requiring that the opposing party obtain a life insurance policy for the benefit of the children, if he/she chooses not to get one, the plaintiff can only enforce it by filing a motion to have the other party held in contempt and by doing so, will incur more legal fees.

My personal opinion regarding insurance is that you can’t insure your entire life.  Bad things are going to happen, unexpected tragedies are going to occur, and losses will result.  I personally don’t like the idea of paying a premium every month to minimize that damage because there are always going to be aspects of your life that you cannot insure, or that you don’t insure (and with my luck, those are the aspects that will be affected when bad things happen).  However, I did appreciate that these insurance agents brought this issue to my attention.  Just because I personally don’t beleive in insuring all aspects of my life, it doesn’t mean that my clients may not benefit from discussing this issue with a knowledgable professional.

In the future, I will be discussing life insurance with my divorce clients and hopefully, they will learn and benefit from it, even if they choose not to request that the other party obtain a life insurance policy.

The Memory of Memorial Day

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Like most american families, I have close family members that have served in the military.  Specifically, my grandfather served in the Army when he was in his 20s.  I was lucky enough to have a great-grandmother (my grandfather’s mother) who lived until 2002, she died only a few days before my 18th birthday.  My grandmother used to sit around and talk about how my grandfather didn’t take his duty to serve very seriously and went AWOL with his brother (also in the military) on several occassions.  I don’t remember all of the specifics of the stories she told since it has been almost 10 years since I have heard any of these stories but I do know that there were many and I know that based on the number of times I have probably heard these stories, I should know more details.

On this memorial day, I would like to dedicate this blog to thanking all members of our military for their service.  I’m pretty sure that my grandfather will never read this (I don’t even think he has a computer or the internet); however, I’m not thanking him or any other service member because I want any recognition for doing so.  To me, just saying thanks is enough.  If you know any service members, pass my words of thanks along, I am thanking them too.

Why Probate?

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I have never met a law student that left law school thinking, “I want to be a probate attorney!”  It just doesn’t happen.  Mainly because many other practice areas catch our eye before we even get to that subject in school but also because it just isn’t a “sexy” subject.

I got pulled into probate practice by chance.  When I worked for my previous employer, our firm represented investors and banks that owned property where the purchaser/occupant had passed away.  Our client wanted possession of their property back and although there were several ways of achieving this, all options included the participation of the probate court.

In one case, we were contacted by a real estate agent who had already found a buyer for a property where the owner had passed away.  We were able to get the property released from administration within two months and as a result, the sale was completed.  This is why I recommend that every real estate agent make a connection with a good probate attorney.  You never know when your next sale will depend upon being able to get the property released from administration so that you do not miss that sale.

One of the reasons that I like this area of the law is because the probate process was developed so that all people could maneuver the probate system in order to administer the estate of a loved one and wrap up their affairs without the help of an attorney.  No other practice area is this user-friendly.  I find that because it is more user-friendly than other areas, my clients are much more receptive to my advice and guidance.  Although probate is user-friendly, I would still recommend retaining an attorney in many cases, including cases were real property and motor vehicles need to be transferred or sold and cases where there are over $500,000 in assets.

After helping investors, real estate agents, and banks get back possession of their property, I continued practicing probate and as it turns out, I like it.  I have expanded my probate practice into creating trusts, administering estates, and some estate planning.

The best compliment we could receive is a referral to a friend or family member

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There have been many instances where a client has retained me to fix something that their prior attorney didn’t do right the first time; or even worst, they were their own attorney and they didn’t do it right the first time.  If there is one piece of advice I would give all of my potential clients, it is that you should not do it yourself without seeking the advice of an attorney.  Many attorneys will be willing to give you advice on how to do it yourself and then, at least you can contact that attorney to help you if things are not going well in the DIY world.
When you are preparing to enter into a contract, it is always better to have your attorney look at it.  The attorney will point out where the contract should be more specific to protect you (especially with dates) because there are almost no circumstances under which having a vague contract will protect you better.
If you find that your attorney did a good job for you, you should refer your attorney to your friends and family members.  I am an attorney that does not have a presence in the phone book and getting referrals is the best “thank you” I can get.  If you know an attorney that has been honest with you and has done a good job informing you of your rights and obligations, you should tell your friends and family members so that they are not left playing eenie meenie miney mo through the endless list of attorneys in the phone book.
I get all of my clients through face-to-face introductions and referrals from my existing clients (along with a small presence on the internet i.e. this blog).  A yellowpages ad is just too expensive for my taste and I am able to keep busy with my current system.  My personal belief is that if an attorney has to advertise in the phonebook to get clients, that attorney either has such a small niche that it is difficult to find prospective clients, or that attorney’s previous clients are not satisfied enough to recommend that attorney to others.