Do you own a business? Without an estate plan, your family could lose control of the business. With an estate plan, you choose who will own and control the business after you die. Plus, you can avoid having the business and its assets frozen after you die.
The majority of Americans have heard of estate planning and know that it’s an important thing to think about before tragedy strikes. However, most people underestimate the value of their estates because they do not fully understand what an estate is and what it is comprised of. An estate is comprised of everything that an individual owns: a car, home, other real estate, checking and savings accounts, investments, life insurance, personal possessions. No matter how large or how modest, everyone has an estate and something in common, these material possessions get left behind when they die. By definition an estate plan the anticipatory act of preparing for the transfer of an individual’s wealth and assets after his or her death.
The Advantages of Having an Estate Planning Attorney
It is no secret that estate planning attorneys can be a costly investment. Some attorneys charge hundreds and sometimes thousands of dollars for an estate plan while legal document preparation companies charge as low as four hundred dollars. However, hiring an attorney who specializes in estate planning can be advantageous for a plethora of reasons.
First and foremost, and estate plan is an important legal document that will most likely effect an individual’s family for generations. With a document of this importance, it is best to trust an attorney who specializes in estate planning. Secondly, legal document preparation companies create attorney drafted legal documents that are similar to question and answer worksheets. Documents that are drafted in this fashion, are not tailored to a person’s specific situation. Though these documents are legally binding, due to their impersonal nature, there are key elements that can be missed. For example, an estate planning attorney will counsel individuals by listening to their concerns and goals for their families and future generations. A knowledgeable attorney will utilize their background in family law, community property, and real estate and taxes in estate planning meetings with their clients. Finally, at the conclusion of estate planning meetings attorneys will ask about the outcome of decisions that their clients have made to ensure that they feel prepared and empowered to provide for their families with their completed estate plan.
Funding a Living Trust
Upon meeting with an attorney and completing an estate plan, it’s important to begin funding the living trust. A living trust is funded when it owns something, real-estate, bank accounts, a business, or other personal property. A living trust owns something by transferring the title form the owner as an individual to the owner trustee of his living trust.
Making Estate Plans Bulletproof
Estate planning is an important tool in protecting an individual and their spouse in retirement and in leaving a legacy for an individual’s heirs. It would be a lengthy process to come up with an exhaustive list of the ways to make an estate plan as invulnerable as possible. Instead, listed below are common mistakes that people make when they construct their estate plans:
What is the Recapture Rule?
If your alimony payments decrease or end during the first 3 calendar years, you may be subject to the recapture rule. The reasons for a reduction or end of alimony payments that can require a recapture include:
The recapture rule forces the alimony payer, usually the ex-husband, to report as income the alimony payments he previously deducted, which means the ex-wife is entitled to reduce from income the alimony payments she previously received.
When does the Recapture Rule Apply?
The rule applies when the payments decrease or terminate during the first three calendars years post-divorce and:
1.) The total payments made in the third year decrease by $15,000 or more from the payments made in the second year; or
2.) The payments made in the second year and the third year are substantially less than the payments made in the first year.
Recapture Rule & Filing Taxes:
a) Including the recapture amount in your income: If you must include a recaptured amount in income, show it on Form 1040, line 11 (“Alimony received”). Cross out “received” and enter “recapture.” On the dotted line next to the amount, enter your spouse's last name and SSN or ITIN.
b) Deducting the recapture amount: If you can deduct a recaptured amount, show it on Form 1040, line 31a (“Alimony paid”). Cross out “paid” and enter “recapture.” In the space provided, enter your spouse's SSN or ITIN.
Exceptions to the Recapture Rule?
The Recapture Rule does NOT apply to the following:
If you need to speak with a family law attorney in regards to alimony, contact Adkins Law. Adkins Law has offices in Huntersville and Ballantyne for your convenience.
Step 1. Determine which payments you made qualify as alimony.
Payments that are NOT alimony: Not all payments under a divorce or separation instrument are alimony. Alimony does not include:
Requirements for a payment to be alimony:
General Rules for alimony payments:
Step 2. Mark down alimony payments made or received on your taxes:
a) How to Deduct Alimony Paid on your Taxes:
b) How to Report Alimony Received on your Taxes:
For more information go to https://www.irs.gov/publications/p17/ch18.html.
If you would like to speak with a family law attorney in regards to alimony, contact Adkins Law. Adkins Law has offices in Huntersville and Ballantyne for your convenience.
At Adkins Law, we believe in providing top-notch, quality legal services at affordable prices. If you need to speak with an attorney regarding a family law matter, traffic citation or issue, or for your estate planning needs, contact Adkins Law to arrange a consultation. Adkins Law has offices in Huntersville and Ballantyne for your convenience.
Alimony is protected from discharge through bankruptcy. Divorce decrees and separation agreements are covered by 11 U.S.C. Section 523(a)(15). This section states that these debts are not dischargeable unless:
(A) the debtor does not have the ability to pay such debt from income or property of the debtor not reasonably necessary to be expended for the maintenance or support of the debtor or a dependent of the debtor and, if the debtor is engaged in a business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business; or
(B) discharging such debt would result in a benefit to the debtor that outweighs the detrimental consequences to a spouse, former spouse, or child of the debtor.
What does this mean? Fortunately for the dependent spouse, it means that alimony is not wiped out if the supporting spouse declares bankruptcy. Alimony is considered a priority, non-dischargeable debt, which a debtor cannot eliminate by filing for bankruptcy.
Depending on what type of bankruptcy you file, however, may determine whether you are able to enter into a repayment plan for any back-owed alimony. In a Chapter 13 bankruptcy, you may repay your portion of back-owed alimony over a period of three to five years. The dependent spouse will still get the money they are owed, it just may be repaid over a longer period of time. This helps the supporting spouse by giving them a longer period of time to repay their debt so that they may avoid potential jail time.
Occasionally, in separation agreements, the parties agree to label an obligation alimony so that the paying spouse may deduct the payments from his or her taxes. These types of payments are not really alimony and may potentially be discharged through bankruptcy.
If you pay or receive alimony and believe that a potential bankruptcy may impact this, you may want to seek a consultation with an alimony attorney. Adkins Law is located in Huntersville NC and primarily serves Mecklenburg County and the Lake Norman area. Contact Adkins Law to schedule a consultation with a family law attorney.
What constitutes marital misconduct in North Carolina and why does it matter? Several things may constitute marital misconduct in North Carolina, including illicit sexual behavior, abandonment, cruel or barbarous treatment, or excessive use of alcohol or drugs. This is important because marital misconduct may guarantee or bar alimony.
In North Carolina, alimony may be awarded when there is a dependent / supporting relationship. This means that one spouse, the dependent spouse, relies upon the income of the supporting spouse to maintain his or her lifestyle. If the dependent spouse commits marital misconduct during the period of marriage, prior to separation, the dependent spouse is barred from alimony. On the other hand, if the supporting spouse commits marital misconduct during the period of marriage, prior to separation, the dependent spouse is guaranteed alimony.
If you need to speak with a family lawyer in Huntersville NC concerning marital misconduct or alimony, contact Adkins Law. Adkins Law is located in Huntersville NC and primarily serves the Lake Norman area.
North Carolina General Statute 50-16.1A defines marital misconduct. The relevant portion of the statute has been included below:
N.C.G.S. § 50-16.1A
"Marital misconduct" means any of the following acts that occur during the marriage and prior to or on the date of separation:
a. Illicit sexual behavior. For the purpose of this section, illicit sexual behavior means acts of sexual or deviate sexual intercourse, deviate sexual acts, or sexual acts defined in G.S. 14-27.1(4), voluntarily engaged in by a spouse with someone other than the other spouse;
b. Involuntary separation of the spouses in consequence of a criminal act committed prior to the proceeding in which alimony is sought;
c. Abandonment of the other spouse;
d. Malicious turning out-of-doors of the other spouse;
e. Cruel or barbarous treatment endangering the life of the other spouse;
f. Indignities rendering the condition of the other spouse intolerable and life burdensome;
g. Reckless spending of the income of either party, or the destruction, waste, diversion, or concealment of assets;
h. Excessive use of alcohol or drugs so as to render the condition of the other spouse intolerable and life burdensome;
i. Willful failure to provide necessary subsistence according to one's means and condition so as to render the condition of the other spouse intolerable and life burdensome.