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Aug212013

Bad Pennies: Financial Arguments Top Predictor of Divorce

Encino Tarzana Divorce LawyerSpousal Support Attorney

 

by Vanessa Soto Nellis
818.907.3274

 

Money.

According to a recent study at Kansas State University (KSU), arguments about finance are top ranking predictors of divorce.

Divorce and MoneyThe actual causes of divorce are a bit more complicated. Recent Census Bureau statistics cite education levels, income, religious beliefs and other elements that may be contributing factors. And every person will have a different opinion on why s/he is divorced, saying infidelity, growing apart, unrealistic expectations, or irreconcilable differences are the causes. Those last three can cover a wide range of problems, including financial arguments.

So back to predictors: Sonya Britt, program director of the Institute of Personal Financial Planning and assistant professor of Family Studies and Human Services at KSU, conducted the study of 4,500 couples. She has a master's degree in marriage and family therapy, and a doctoral in personal financial planning. Britt states, "It's not children, sex, in-laws or anything else. It's money – for both men and women."

Britt found that couples arguing about money early on in the marriage have a good chance of dissatisfaction with their relationship. A couple's income level, debt obligations and net worth didn't matter – the financial arguments were the common denominator for predicting divorce.

She's not alone in her findings. Jeffrey Dew of the National Marriage Project says, "Couples who reported disagreeing about finances once a week were over 30 percent more likely to divorce over time than couples who reported disagreeing about finances a few times per month."

Even for couples who stay together to avoid the costs of divorce (that happened quite often during the recent economic recession, if you'll remember), constant financial bickering leads to more stress on the relationship. Britt says it takes longer to recover from money arguments – more so than any other kind of argument – because the parties use harsher language and the disagreement lasts longer.

It's not all bad news, for couples who argue about the finances. Britt recommends young couples see a financial planner, pull credit reports and discuss how each spouse will handle their own and shared economic responsibilities.

Prenuptial agreements are an obvious option for some couples. And postnuptial agreements can actually save a marriage when money worries get to be too much. Read my blog, Postnuptial Agreements Relieve Pressure for more information.

Divorce Lawyer

The important factor in surviving financial arguments with your spouse or soon-to-be spouse, is the same factor in addressing other issues:

Recognize the problem, and then take steps to correct it. If both parties have completely different financial management styles, there are going to be arguments, unless each party can either compromise or find a way to adjust.

As a family law attorney, I work with financial planners and family therapists regularly – contact me if you need a referral.

 

Vanessa Soto Nellis is a Divorce and Mediation Attorney at our Firm. Contact her via email: vnellis@lewitthackman.com.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.
Tuesday
Aug132013

Creating a Living Trust Makes (Dollars and) Sense

 

by Robert A. Hull

“How much will it cost?"

For estate planning attorneys, this is usually the follow-up question we’re asked after “Do I need a Trust or Will?" After discussing a prospective client’s estate planning needs, some are surprised and a bit bothered at the approximate cost.  

Rightfully so. It is a fair amount of money for most of us. But, when you actually break down the potential costs to the beneficiaries of your estate without having a trust in place, that amount becomes much less daunting (also, the cost includes so much more than a trust – namely, a complete estate plan including wills, financial powers of attorney, health care powers of attorney, an assignment, deed, document summaries, etc.).

Why Do You Need an Estate Plan?

Some background: If you die with only a will – including those cheapies you can get online, or without any will at all – your assets can pass to beneficiaries in generally two ways: 

1. Via non-probate or probate transfers (more on “probate” in a minute). Non-probate assets include assets in a living trust, proceeds from life insurance, assets held in joint tenancy/community property with a survivorship right, payable/transferable on death accounts or retirement accounts with beneficiary designations.

Non-probate assets can generally be transferred without court supervision and approval. Contact the bank, insurance company, etc. and provide the death certificate/fill out a short form and bingo, assets transferred.

2. Your other assets are generally probate assets. Transferring probate assets requires Court confirmation that the correct assets are to be transferred to the correct beneficiaries (i.e., those named in the will or those listed in the intestacy statutes, if there was no will).

But, before those assets can be transferred, you must first open a “probate” with the Court, publish the probate with a newspaper of record, appraise the assets, send notice to the decedent’s creditors and pay any outstanding debts, file one or more accountings of the assets subject to probate, etc. ALL of these actions are performed under scrutiny by the court.

 

The Costs of Probate in California

 

Probate attorney’s fees are statutory, meaning they are set by California law. Absent any unusual circumstances, the normal fees paid by the decedent’s estate for the probate will be a pre-set percentage of the assets probated. This percentage is 4% of the first $100,000 of the value of the probate assets; 3% of the next $100,000; 2% of the next $800,000; 1% of the next $9 million (we’ll stop at the $10 million estate, for now).

So, if you die with probate assets worth $1,000,000, which is easier to reach than one might think given Southern California home values, your estate would pay $23,000 in statutory attorney’s fees to probate those assets – and all with the extra hassle of being supervised by the court, on the court’s timetable.   If your home is being probated and has a mortgage, the mortgage balance will not be considered when calculating statutory attorney’s fees (such fees for a home valued at $500,000 with a $400,000 mortgage will be calculated using the full $500,000 value).

The cost of an average estate plan is NOWHERE NEAR this amount – not in the same ballpark or even in the same universe. And, as mentioned, you can generally administer the estate generally without court supervision if your assets are in a trust.

Also, in a probate the Executor of the estate may claim an additional $23,000 in statutory fees, leaving that much less to the beneficiaries.  If you die with probate assets worth $500,000, your estate would incur $13,000 in statutory attorney’s fees plus, another potential $13,000 in executor fees (the executor may choose to waive those fees).

If you had your assets in a trust, the trustee could handle all of the property transfers per the terms of the trust, without court supervision, and perhaps with only some small attorney’s fees for assisting with deeds or other transfers, if desired.

If there’s a legal dispute, that could increase the attorney fees significantly, but would also increase the statutory fees in a probate significantly because such fees would be “extraordinary”, and the attorneys are entitled to such fees as long as they’re reasonable. Attorneys are also entitled to extraordinary fees in probate for activities not in the normal course of a probate, such as buying/selling real property or running a business.

So, is the cost of a trust and estate plan money well spent? Significantly smaller out-of-pocket costs now and perhaps some small attorney’s fees at your death.  Versus, a percentage of your entire probate estate (cash out of your beneficiaries’ pockets) later?

Seen in this light, getting a complete estate plan sure makes dollars and sense. How much will your estate plan cost, and what else can having an estate plan do for you? It all depends on how you want your estate handled, and the complexity of what you want done. 

 

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.
Thursday
Aug082013

Mmmmm…Donuts – Slam Dunkin' a Sweet Opportunity for Franchisees?

 

Franchise Agreement LawyerState Bar Certified Specialist, Franchise & Distribution Lawby Tal Grinblat
818.907.3284

 

Some say it's the coffee. Others say it's a fresh, hip menu and new look to go with the old favorites. Whatever the case, potential franchisees should chew on this: Dunkin' Donuts is set to shower Los Angeles and Orange counties in sugar-laden pink.

The donut chain is scheduled to open 45 new stand-alone stores in Southern California later this year. They've been selling franchises in Southern California since January.  Their first Southern California location opened at Camp Pendleton last year. And wait…there's more coming.

The donut chain is offering “non-traditional” locations to the franchisee-hungry market, in a baker's dozen of choices:

  • Airports
  • Big Box Retailers
  • Bus Stations
  • Casinos
  • College Campuses & Universities
  • Concert Venues
  • Healthcare Facilities
  • Supermarkets
  • School Campuses
  • Sports Stadiums
  • Theme Parks
  • Train Stations
  • Turnpike Service Plazas

Dunkin' Donuts says these unique venue storefronts have the benefit of captured audiences and high traffic.

 

A Sweet Deal for Franchisees?

 

For the time being, the franchisor is prepared to offer some incentives to buyers willing to set up shop. According to the Los Angeles Times, the donut chain will reduce royalty fees for the first few years of operation, and will kick in $10,000 for marketing.

The company expects to increase the number of units by about five percent this year, citing "incredible passion for the brand" in California, according to Chief Executive Officer Nigel Travis:

Expansion to California has always been part of our plan to grow Dunkin’ Donuts’ presence in the U.S. We have maintained our disciplined approach to expand steadily while focusing on initiatives to improve restaurant economics and franchisee profitability. These initiatives include our recent agreement with our franchisee-owned and operated distribution and procurement facility, which ensures the same cost of goods to franchisees in both established and new markets by 2015.

If you're considering purchasing a Dunkin' Donuts franchise, or any other franchise for that matter, you may want to read my blog: Before You Buy a Franchise, for more information.

 

Tal Grinblat is a Certified Specialist in Franchise and Distribution Law, designated by the State Bar of California's Board of Legal Specialization. Contact him via email: tgrinblat@lewitthackman.com for more information. 

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Thursday
Aug012013

Maximizing Annual Gifts

Trusts & Estate Planning Attorney

by Kira S. Masteller
818.907.3244

 

Individuals with estates that are valued over the Federal estate tax exemption ($5,250,000 in 2013) should consider making annual gifts to their family now so that those assets that would be received by the family anyway, will NOT be exposed to estate taxes unnecessarily.

Your estate includes your real estate, your bank accounts, investments accounts, retirement assets, life insurance, personal property and all other assets.

You are allowed to give $14,000 to as many individuals as you desire each year prior to December 31st without having to report the gift to the IRS and a gift of $14,000 or under will not be taken against your lifetime Gift Tax Exemption. This means that you can give your son $14,000, his wife $14,000, and each of his three children $14,000 so that you have removed $70,000 that would be taxed at a rate of 40 percent (in 2013) if you left it in your estate and paid estate tax upon your death.

You can also directly pay tuition for students (your children, grandchildren and great- grandchildren), and health care expenses for your family that will not be included in your lifetime Gift Tax Exemption. This is another way to help your family and reduce your exposure to Federal estate tax at the same time.

Of course when you have less assets in your estate, you may earn less income. This is something to consider prior to making gifts. Alternatively, if you are paying excessive income taxes, by reducing your income annually, you will pay less income tax annually.

If you have any questions regarding making annual gifts, you should contact your estate planning attorney or accountant to determine whether or not you should plan to make annual gifts to reduce the value of your estate.

 

Kira S. Masteller is a Trusts & Estate Planning Attorney and Shareholder at our Firm. Contact her via email: kmasteller@lewitthackman.com for further information.

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Thursday
Jul252013

How Does the DOMA Ruling Affect Estate Planning?

Trusts & Estate Planning Attorney

by Kira S. Masteller
818.907.3244

 

 

The United States Supreme Court's ruling on Section 3 of the Defense of Marriage Act (DOMA) on June 26, declaring the definition of marriage as a union between one man and one woman unconstitutional, means same-sex couples in several states can now take advantage of certain tax savings when estate planning. For federal tax purposes, homosexual married couples will now be treated the same as heterosexual married couples.

Granted, the IRS is still struggling to determine how they will deal with individual and joint tax returns for same-sex couples. But federal estate planning benefits may now apply to same-sex married couples in California:

  1. Company Retirement Plans: The Employee Retirement Income Security Act of 1974 gives spouses the right to be sole beneficiaries of certain accounts.

  2. IRA Rollover Rights: When a spouse inherits funds from an IRA or other qualified plan, s/he can roll those assets into her or his own IRA account to postpone the required minimum distributions.

  3. Annual Exclusion Gifts: Any individual taxpayer can gift up to $14K per year, to as many beneficiaries as needed, without triggering gift taxes. Together, spouses can gift up to $28K either from individual or joint accounts.

  4. Lifetime Gift Tax Exclusion: This one amounts to $5.25M for individuals, and $10.5M for married couples – significant savings for your estate.

  5. Portability: Speaking of the gift tax exclusion, portability allows the widow or widower to add the deceased spouse's unused exclusion to their own exclusion, totaling up to the limit of $10.5M.

  6. Other Tax Breaks: Using a marital deduction, spouses can make transfers to each other during life or at death.

Keep in mind that a same-sex spouse who moves to a state where gay marriage is not recognized, may not qualify for these benefits. The ruling in United States v. Windsor simply says the federal government will recognize a couple's marriage if the state where they reside recognizes the union.

Remember too, that the Prop 8 and DOMA rulings broke new ground in the legal landscape, and that for same sex couples in California and other states that recognize gay marriage, estate planning may be constantly changing for a while. Contact me if you need help keeping track of the current benefits and financial liabilities.

Kira S. Masteller is an Estate Planning Attorney and Shareholder at our firm. Email her at kmasteller@lewitthackman.com for more information.

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

LEWITT HACKMAN | 16633 Ventura Boulevard, Eleventh Floor, Encino, California 91436-1865 | 818.990.2120