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Entries in spousal and child support (5)

Thursday
May072015

Benefits of an Irrevocable Life Insurance Trust as Security for Support

 

by Kira S. Masteller and Anthony D. Storm

 

Divorce or separation agreements often require one spouse to maintain life insurance as security for their support obligation. Attorneys often do not address the tax implications if the insured spouse owns the policy. 

Often life insurance will create an estate tax that would NOT otherwise exist by adding a windfall to the insured’s estate upon death. The death benefit of a life insurance policy owned by the insured spouse will be included in his or her estate for estate tax purposes. When the insured owns his or her life insurance policy, he or she has “incidents of ownership”, such as withdrawing cash value, assigning the cash value as collateral, or changing the beneficiary during his or her lifetime. 

In order to keep the death benefit OUT of the insured’s estate for estate tax purposes, the insured can create an Irrevocable Life Insurance Trust, commonly referred to as an ILIT.

Once created, the Trustee of the ILIT will own the life insurance policy, NOT the insured. As a result of having the ILIT own the policy, the insured avoids incidents of ownership and the tax implications associated therewith. 

The ILIT will also be the beneficiary of the life insurance policy resulting with the death benefit being held for the ex-spouse, children or other beneficiaries until certain ages, and can provide liquidity to an insured’s taxable estate, without having the death benefit itself be exposed to estate tax.  

Should the insured pass away before a support obligation is complete, the death benefit related to the support for the benefit of the ex-spouse would be administered by the Trustee of the ILIT pursuant to the terms of the Marital Settlement Agreement/Judgment. The residue of the death benefit, if any, would pass to the other named beneficiaries via the ILIT with no Court proceeding. 

Kira S. Masteller is a Trusts & Estate Planning Attorney. Contact her via email: kmasteller@lewitthackman.com, or by phone: 818.907.3244.

Anthony D. Storm is a Family Law Attorney. He can be reached via email: astorm@lewitthackman.com, or by phone: 818.907.3248.

 

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.

Friday
Jan032014

Why Get a Prenup? Marriage Is a Financial Partnership Too

Marriage and Money: Prenups

by Lovette T. Mioni

 

Most people wouldn't go into business without insurance. So why do so many couples get married without a prenup? 

Marriage, like it or not, is a financial partnership – whether or not the couple decides to keep their finances separate or comingle them. If they're smart, they'll talk about their expectations and responsibilities before they tie the knot, whether they have a few grand tucked away in a savings account, or millions of dollars invested in complicated portfolios.

The financial conversation is necessary to every couple. The prenup conversation though, will particularly benefit anyone who:

  • Owns a home, real property, or valuable collections/heirlooms

  • Owns a business

  • Has a stock or retirement fund

  • Expects, or already has an inheritance

  • Has a child or children from a previous marriage

  • Has loved ones that need special care/elder care

  • Is pursuing a degree or license in a potentially lucrative profession

  • Expects dramatically increased earnings in the future

A legally enforceable prenup is fair to both parties, and is not signed under duress.

It should define and protect community and separate property, support an estate plan, save time and money by reducing conflicts in the event of a divorce, and lay down some ground rules for deciding future problems.

Since California is a no fault state, the parties can't write in financial penalties for bad behavior or making lifestyle decisions, such as cheating, refusing to have children, or taking up gambling.  

They can however, protect themselves from debts one of the parties incurs should s/he make some of these choices. That's why prenups are like insurance.

When Should You Ask for a Prenup?

Some people find it easier to mention their preferences for a prenup very early in a relationship, as part of a general conversation regarding marriage, for example. This way the boyfriend or girlfriend will know what to expect further down the road, should the relationship progress more seriously.

Others ensure they talk about prenuptial agreements before the engagement; while some others wait until the 11th hour, fearing hurt feelings and the potential end of what was once a good relationship.

Generally speaking, the earlier you bring up the idea, the better.

Whenever you decide to pop the question – the prenup question, that is – know that California law requires there be seven days between presentation and execution of the prenuptial agreement, Family Code §1615(c)(2). This gives time for the person receiving the prenup to seek legal counsel to protect his/her own assets.

Contact one of our Prenuptial Agreement Attorneys 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.

Tuesday
Oct292013

Presumptive Parents - It May Take Two or More in California

Encino Tarzana Divorce LawyerChild Custody and Support Attorney Los Angeles

by Vanessa Soto Nellis
818.907.3274

San Fernando Valley Custody Lawyer Los Angeles

Remember Hillary Clinton's 1996 book, "It Takes a Village"?

It seems California Family Law Courts will now play by that theme, when circumstances warrant such consideration. Governor Jerry Brown signed Senate Bill 274 recently, which allows the state to legally recognize more than two parents for a child.

This will only happen in certain situations, specifically, when recognizing only two parents is in some way detrimental for the child – family law courts will take into account health, welfare and safety to determine whether or not a child is best left in custody with Parent A, Parent B, Parent C or D, or placed in foster care.

Child Support Attorney

Necessity of Recognizing Multiple Parents

 

The senate bill was written largely in response to a rather bizarre 2011 Dependency Action in which a child, known as M.C., was conceived by Melissa and Jesus in 2008, but was born when Melissa was married to her partner Irene in 2009.

The two women have a volatile history of substance and physical abuse – Melissa previously sought dissolution of her domestic partnership to Irene and a temporary restraining order, months before they married. Melissa also suffers from bipolar disorder and depression.

Jesus acknowledged and demonstrated responsibilities for M.C. before she was born, but did not assert parental rights or responsibilities after her birth in 2009. Melissa married Irene in 2008. Several weeks after the birth of M.C., Melissa moved out again, taking the baby with her.

Irene filed a request for child custody and visitation, and joint legal and physical custody of M.C. Melissa obtained another restraining order against Irene, and then approached Jesus for financial help, which Jesus gave, along with requests that M.C. visit his family regularly.

In September of 2009, Melissa's new boyfriend Jose attacked Irene with a knife, critically injuring her. Melissa was charged as an accessory to attempted murder and M.C. was placed in foster care, despite Jesus' attempts to obtain custody.

This situation prompted SB 274, so that more than one parent can be recognized to prevent detriment to a child. Given the evolving definition of family, the new law makes sense in protecting the best interests of children.

 

Child Support, Custody & Paternity in California – Where Do We Stand Now?

 

Senate Bill 274 does not change the requirements for establishing parentage under the Uniform Parentage Act of 1973 - it merely gives Courts the option of recognizing more than two parents when necessary. The best interest of the child is the focus here, to include physical, emotional and financial considerations.

Under this new bill, child support obligations can be divided among all of the parents, based on their individual incomes. Visitation rights may also be divided to include a third parent. Joint custody between two parents will be the preferred option, but a third individual can now be factored into the equation.

The bill will give Family Law Courts a bit more flexibility in doing what's best for the child.

 

Vanessa Soto Nellis is a Child Support and Custody lawyer in our Family Law Practice Group. 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.
Thursday
Sep122013

Modifications to Orders – Not All Family Law Decisions Are Set in Stone

Encino Tarzana Divorce LawyerChild Custody and Support Attorney Los Angeles

by Vanessa Soto Nellis
818.907.3274

 

When a divorce becomes final, a court issues rulings regarding spousal or child support, and child custody and visitation. These rulings are based on the circumstances of each spouse at the time of the divorce.  However, those circumstances often change, sometimes drastically.

One parent may make a dramatic career change; lifestyles evolve or regress; and health can improve or deteriorate because of a variety of causes. These are all good reasons to seek modifications, whether  you think you are paying too much, or receive too little child support.

The following changes may justify seeking a modification to previous agreements:

  1. Care Requirements: If a child requires substantially more (or less) care, than at the time of divorce, you may want to have your support order modified. This usually happens when children go to school and no longer need day care; or if ongoing medical treatment or prescriptions are no longer needed, or are suddenly required.

  2. Parent's Relocation: One parent moving out of state could affect the visitation vs. custody balance previously ordered fair by a family law court.

  3. Parent's Lifestyle: If one of the parents loses a job; engages in chronic, risky behavior (i.e. becomes addicted to drugs or alcohol); remarries – which can either add more fiscal obligations or merely increase household income.

  4. Parent's Health: Mental or physical health can change in a moment, affecting the welfare of the child. A traumatic accident or the development of a chronic condition can impose both physical and emotional burdens.

  5. Family Preferences: An older child's preferences are sometimes taken into consideration. Other times, both parents may agree that a child living with one parent rather than the other is better for the child.

Whether you seek an increase in child support, or are hoping to decrease your payments, proceed with caution. Often, more than one factor applied to a child support calculation changes over time.  While you are counting on your or your ex's change in career to work in your favor for example, be warned that the Court may also consider a changed visitation schedule, your child's increased age, etc. to weigh against you.

A family law court will have final say, but a good family law attorney can help you evaluate the risks beforehand.

Vanessa Soto Nellis is a Family Law Attorney experienced in modifications to child and spousal support agreements. Contact her via email: vnellis@lewitthackman.com, should you have any questions.

 

 

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
Oct042012

Postnuptial Agreements Relieve Pressure on Marriage

Encino Tarzana Divorce LawyerPostnuptial Agreement Lawyer

by Vanessa Soto Nellis
818.907.3274

San Fernando Valley Custody Lawyer Los Angeles

 

This may sound counterintuitive, but sometimes a postnuptial agreement can save a marriage. That's especially true if money is a major source of tension, or if one partner comes into an extra income or windfall that wasn't expected before the couple got married.

This scenario could stem from an unexpected rise in business profits, or receiving a substantial inheritance, or even winning the lottery.  

Some partners ask for postnups because of a spouse's lifestyle, i.e., excessive shopping, drinking, or gambling habits.

Whatever the case, divorce lawyers across the nation have seen a rise in couples putting postnuptial agreements, also known as marriage agreements, in place over the last few years. Interestingly, these attorneys say more and more wives are the ones seeking security in a postnup – especially now, when women have steadily been increasing their earning power over the last few decades and taking control of the finances.


Why Bother Drawing Up a Postnup?

 

Whether you're male or female, newly wed or married for many years, a postnup may very well be a good way to keep the peace in your marriage, or even to keep the peace in your own mind.

It's a way for you to save your personal assets in the event all goes awry in your marriage – and if nothing else, it's a pressure release valve that will hopefully relieve some financial tension. Even happy couples disagree on how money should be spent.

A good postnuptial agreement could help resolve issues regarding:

  • Assets (business and personal)

  • Support

  • Children's College Tuition & Expenses

  • Debt

  • Inheritances (past or future)

  • Property (everything from the art collection to the golf gear to the timeshare in Zanzibar)

  • Protections for Step-Children

  • Retirement Benefits

If one or both of you are worried about the financial future, a postnuptial agreement may be the very tool to relieve some of the pressure and even act as a reset button for your marriage.

Vanessa Soto Nellis is a Family Law Attorney experienced in divorce and division of assets, prenuptial and postnuptial agreements, and support modification agreements. Contact her via email at 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.
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