Posted August 28, 2015 in Family Law by Jillian Green.
With the rising cost of colleges around the nation, many parents have planned ahead for their children’s future and have started college savings accounts for their children shortly after birth. However, there is no question that tensions rise surrounding financial matters during divorce. Nonetheless, when it comes to a child’s college fund there needs to be a process of communication for the sake of the child’s educational and financial future.
In order to make communication easier, a framework should be set up during the divorce settlement process. Usually the hardest, and initial question, to address during the creation of the framework, is who will own the college savings plan (or 529).
As many parents know, a 529 plan is an education savings plan that is operated by a state or educational institution designed to help families set aside funds for future college costs. While many parties believe that a 529 plan is their child’s asset, it is actually an asset of the marriage and needs to be planned accordingly. Thus, parties need to discuss who will own the 529 plan. There are several options for the parties: 1) parents may either decide who will take individual control of the account, 2) freeze the account, or 3) split the account
1. Individual Control
If the parties decide to have one parent take individual control, that parent would be the only person who can make decisions regarding the use of the funds. It is recommended by experts for the control to go to the noncustodial parent. As certified financial planner Joe Orsolini says, “The noncustodial parent should own the 529 because the noncustodial parent’s assets and income are not included on the FAFSA. If the custodial parent owns the 529, then the value of the 529 will be included on the FAFSA, and this is especially important as the FAFSA asset protection allowance drops significantly next year.” This drop potentially means that families will be able to subtract less of their assets held in savings and investments from their net worth, which could decrease the student’s financial aid eligibility. If the non-controlling parent wants some security with the funds, he or she could be set up as an authorized user, which would allow him or her to see what is going on in the account and that parent should also be designated as the successor owner of the account.
2. Freezing the Account
Another option is freezing the funds, which would mean deposits are no longer made into the account and the money that is frozen in the account could only be designated for education purposes. Freezing the account prevents a former spouse from withdrawing money at any time for any reason. It also prevents a parent from using account funds to pay for the education of a child from a new marriage.
3. Split the Account
The last option is to split the 529 plan, which the judge can order and the state has to abide by. By splitting the plan, each half of the plan would be set up as a new account and owned by each individual spouse. However, if one party is worried about an irresponsible ex-spouse, he or she could set forth some clear language in the divorce decree that specifies funding to be used only for the child’s education. The court could also mandate the percentage that each parent will contribute toward the child’s education.
This divorce process is already difficult enough for all parties involved. Children should not be additionally burdened by the lack of a proper framework for their college education. For this reason, parents need to communicate and set up a proper plan for their child’s educational and financial future in order to ensure their child’s success for college.
If you have any questions about planning your child’s college funds during divorce or any other issue, the Certified Family Law Specialists at Lonich & Patton have decades of experience handling complex family law matters. Please contact the Certified Family Law Specialists at Lonich & Patton for further information. Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may include legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.
Posted August 7, 2015 in Family Law by Michael Lonich.
“Children are the best part of ourselves-the sum of our past and the promise of our future, the guarantee that our lives and values and dreams will flourish long after we are gone,” said then President Bill Clinton when he made an official declaration in 1995 that recognized the month of August as Child Support Awareness Month.
Child Support Awareness Month is a time to highlight the vital role child support plays in the well-being and lives of millions of families in the United States. “Child Support Awareness Month is a time to salute parents who work hard to ensure their children grow up in stables homes and look forward to a bright future,” stated Yolo County Public Information Officer Beth Garbor. “It is also a time to help remind parents who are not always present that they are an important part of their children’s lives.”
Child support has become a widespread problem in the United States. According to the U.S. Census Bureau’s 2009 report: among the 6.9 million custodial single parents who were awarded child support in 2009, only 41.2% received all of the child support that was due- a 46.8% decrease from 2007.
When a non-custodial parent does not pay the child support order, it likely means that his or her children are missing out on income that they count on and will have to sacrifice accordingly. For many children, these monthly payments are all that stands between them and poverty.
“Children who receive support from both parents tend to do better in school and tend to have fewer behavioral problems through their lives,” said Yolo County Department of Child Support Services Director Natalie Dillon. “This support comes in many forms; emotional, mental, and financial.”
If you have any questions about child support or any other issue, the Certified Family Law Specialists at Lonich & Patton have decades of experience handling complex family law matters. Please contact the Certified Family Law Specialists at Lonich & Patton for further information. Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may include legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.
Posted July 27, 2015 in Business Law, Estate Planning by Michael Lonich.
After years spend building up a successful family business, many want to pass on their success to their next generation of family members. Unfortunately, conflicts in family businesses are likely to occur when the owner and other family members begin to consider and examine the transfer of the ownership and control of the business. One of the largest conflicts to result often rises in situations where there are two or more children in line to take charge and sibling rivalry erupts. However, in planning the succession of a business, the transition may go smoother with the creation of a trust outlining the steps to be taken in the succession.
The advantage of a business trust is that a plan would have been put in place in the case of an unexpected death. However, there is still a problem with choosing which child to take charge of the family business. One of the greatest challenges in choosing which child to take over is their lack of experience, though this issue can be addressed with the following tips.
- First Option: Trial Run
- You can give each child about six months or so to be in charge.
- Objectively list the qualities that you are looking for before the trial begins.
- Also, make sure to let the other employees know that the child is in charge.
- Third Option: Leave It Up to the Children
- If there are several children, a good option may be to allow them to set up a board and let them choose who they believe would be the best successor.
- This can even include outside advisors.
- Fourth Option: Have a Trustee in Place
- Put a Trust in place with a trustee running the business until he or she believes the children are ready to take over
The options above are just a few possibilities that a family business owner can try. Nevertheless, they may be able to help family business owners who are troubled by the fear that a child cannot develop the leadership qualities necessary to run the family business. But after getting through this first hurdle and putting these details in a trust, the owner will no longer have to worry about succession of the family business as they will be in capable hands.
Estate planning is a highly complex area of law. If you are interested in creating a trust for your family business or have any questions regarding your current estate plan, please contact the experienced estate planning attorneys at Lonich & Patton for further information. The attorneys at Lonich & Patton have decades of experience handling complex estate planning matters, including family business trusts, and we are happy to offer you a free consultation. Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.
Source: Charles D. Fox, Keeping It In The Family: Business Succession Planning, SS039 ALI-ABA (2011)
Posted July 20, 2015 in Estate Planning by Jennifer Mispagel.
Special Needs Trusts are imperative for beneficiaries who are disabled and receive some form of government benefits. The beneficiaries of Special Needs Trusts may be either a developmentally or physically disabled minor or adult.
A standard Family Trust may not be appropriate for a Special Needs person because they do not address the specific necessities of the disabled beneficiary, such as governmental programs and benefits. In California, a Special Needs Trust is generally an irrevocable trust that “gives the trustee discretion to supplement… whatever is provided by government programs to the trust’s beneficiary.” Most commonly, Special Needs Trusts allow for an individual with disabilities to benefit from funds in the trust without the funds counting as a financial asset and interfering with the government benefits that the beneficiary may be receiving. Even in rare cases where a beneficiary never needs Federal or State public benefits and services, Special Needs Trusts may still be a valuable tool and can be used as part of a comprehensive plan to meet the special life management needs of the beneficiary.
While the trustee of the Special Needs Trust cannot give money directly to the beneficiary (as it will interfere with eligibility for Medicaid, subsidized housing, Social Security Income and other government services), the trustee may spend the trust assets on a wide variety of goods and services for the benefit of the beneficiary. Typically, trust assets are used to pay for personal care attendants, vacations, physical rehabilitation, and recreation.
Concerned families and people with disabilities no longer need to worry about limited options regarding estate planning. In the past few years, there has been increasing public awareness of the estate planning options available for families with loved ones with disabilities. There has also been an increase in professional advisors who are able to render competent advice and provide their clients with numerous estate planning options, including Special Needs Trusts.
Estate planning is a highly complex area of law. If you are interested in creating a Special Needs Trust or have any questions regarding your current estate plan, please contact the experienced estate planning attorneys at Lonich & Patton for further information. The attorneys at Lonich & Patton have decades of experience handling complex estate planning matters, including Special Needs Trusts, and we are happy to offer you a free consultation. Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.
Source: Purpose of Special Needs Trust, 3 Cal. Transactions Forms- Est. Planning § 17:1 (2015)
Posted July 14, 2015 in Family Law by Jillian Green.
Ten years of marriage and three kids later, Ben Affleck and Jennifer Garner have announced their decision to split. The pair, who previously worked in two films together, made the announcement one day after their 10th wedding anniversary. While ten years is a significant milestone in its own respect, it may also give rise to legal implications in California.
There is a frequent misunderstanding that when a couple divorces after more than ten years of marriage, there is a law requiring the courts to order payments of long term support to be paid until a spouse dies, remarries, etc. However, this is not necessarily the case. This misconception may arise from California Family Code § 4336, which establishes a rebuttable presumption that a marriage of 10 years or more is a marriage of “long duration” for purposes of retaining spousal jurisdiction. This statute does not automatically force the courts to order long term support, rather it creates an indefinite reservation of spousal support jurisdiction that allows it to continue making decisions regarding the support if circumstances warrant such change. While the court may consider the duration of the marriage in making an order for spousal support, under California Family Code § 4320 there are also several other significant factors for the court to consider.
In Ben Affleck and Jennifer Garner’s upcoming divorce, Ms. Garner could potentially seek a bigger share of Mr. Affleck’s reported $75 million. Ms. Garner reported in March of this year that while Mr. Affleck was working on various motion pictures, she chose to stay at home for a year to take care their three young children. While Ms. Garner is eager to return to her career, as the lower earning spouse, the court may still award long-term spousal support[i] to Ms. Garner. While Ms. Garner may not necessarily receive spousal support forever, it is still likely that she will receive a large portion of Mr. Affleck’s assets.
If you have any questions about divorce or any other issue, the Certified Family Law Specialists at Lonich & Patton have decades of experience handling complex family law matters. Please contact the Certified Family Law Specialists at Lonich & Patton for further information. Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may include legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.
[i] Long term spousal support is granted in order to place the supported spouse at or near the “marital standard of living” (the financial standard of living established during the marriage) after the divorce.