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Palm Springs Law Blog

Friday, January 12, 2018

How to Survive a Divorce


The best of intentions just don’t work out, sometimes. The fantastic advance of legal same sex marriage was a euphoric event for so many in the LGBTQ community. Some who hadn’t quite thought it through were caught up in the excitement. Others were so committed to their long-time partnership they didn’t realize how marriage would change their relationship. And some, like many humans, just couldn’t stick out the legal and binding commitment.
Read more . . .


Friday, December 29, 2017

Mid-Century Modern - Can You Sell Those Designs Again?


I was thinking about the mid-century modern phenomenon and how much I like some of the architectural and furniture design elements when it occurred to me that I don’t really know how to define “mid-century modern”. I checked with my assistant, who claims to have lived through most of that era. She says that depending on with whom you talk, the term can apply to the new designs in architecture, furniture, fabric design and even clothing fashions, all the way from before the German Bauhaus movement in the 1920’s to the growth of the U.S. civil rights era in the 1970’s.
Read more . . .


Saturday, December 16, 2017

Holiday Gifts That Keep Giving


We wrap holiday gifts in gleaming foil – contributions to our loved ones to celebrate the season. What did you choose for your partner or spouse? That slick little metal sculpture you found at the street fair? A gorgeous pinkie ring you discovered together in that West Hollywood back-alley jeweler’s? A cruise to the Bahamas to get out of Palm Springs’ or LA’s cruel winters? 

Let me suggest some more permanent and life changing gifts. These may not be as pretty as flashy, gift-wrapped boxes with fancy bows on top, but they will be with you and your loved ones in a much more dramatic way. You can share a gift with someone and both of you will be thrilled. 

Do you have a committed partner? Consider the gift of marriage! Huh, you say? What? Get out of here!  But think about it.
Read more . . .


Thursday, November 10, 2016

2016 Election Analysis for LGBT Issues


Many of my LGBT clients have reached out to me in a panic wondering how the election of Donald Trump will impact their families, benefits, marriages, and other legal issues.  My advice….breathe, try to relax and let’s take a look at what the election MAY mean in the future.

In my opinion, the biggest issue is the future of the Supreme Court.    There is one vacancy that will now be filled by President-elect Trump.
Read more . . .


Monday, September 21, 2015

Food for Thought - Legal Punch

Food for Thought – Legal Punch

Every now and then, I need to stop and remind everyone about the perils of forgetting to create a Will or a Trust. Sometimes I meet people who say “Who cares about a Will? I’ll be gone! It won’t hurt me!”. I also know lots of people who nod their heads and say “Oh yes, I know I need a Will and I’m really, really going to do it…soon”. Folks who pass away or become seriously ill without estate plans are practically guaranteeing that lawyers will earn hefty fees to clean up the mess. Put some legal punch into your life, and prevent troubles and woes.

Here are some real-life examples of what can happen:

Out in the Cold
Bob and Stu were life partners who never registered or married. They were comfortable in their 24 year relationship. When Stu suddenly passed away, Bob was left with a major problem – Stu never created a Will or Trust. Stu’s two adult children, Laura and Willy, filed a probate petition, and the court appointed Laura as administrator of the estate. The house was in Stu’s name, and Laura decided to sell it to get cash, so it could be divided equally between the siblings, who were Stu’s legal heirs. In spite of living there and sharing expenses for all those years, Bob got nothing and had to move out. The only asset he could claim was Bob and Stu’s joint checking account with $1,516.32 in it.

Under the law, Bob was nothing more than a stranger to Stu. Friends and other relatives were shocked. Bob and Stu cared deeply for each other, and Stu would never have wanted Bob put out in the cold like that. Stu was always certain that Bob would be provided for by the children, but he never did anything to make sure that would happen. Now Stu is gone (and it’s true - he isn’t hurting), but Bob will suffer for the rest of his life. Will your children or other heirs actually do what you want when you’re gone? Only if you put some legal punch into those hopes and wishes.

War Story
Sharon and Jeff’s mother recently passed away without a Will or Trust. Because mom had been in poor health for some time, Sharon held a power of attorney to handle her mother’s financial and health care matters during the last year of her life. When mom died, Sharon transferred her checking account to a new bank and took most of the funds from mom’s sizeable savings account to invest in some stock that her boyfriend thought was a “terrific deal”.

After a month or two, Jeff began worrying about how he was going to get his share of the estate. He checked with a lawyer, who told him that a probate needed to be opened in court, and an administrator appointed to pay bills, distribute the assets to the heirs, and then close out the estate. Sharon had no authority to touch the money. Her power of attorney expired when mom died. Sharon was frantic. The stock was going south, and she could be in a lot of trouble.

Jeff petitioned the court to be appointed as administrator. Sharon petitioned the court to be appointed administrator. They battled it out in a series of hearings over many months until the court finally determined that Sharon was unfit to serve because of her unauthorized use of estate assets. Jeff is now the administrator, but the assets are, unfortunately, half of what they used to be. Can you always trust a sibling or other heir to know the law and do what’s right? Only if you put some legal punch into the mix.

Man’s Best Friend
Waldo, age 65, was pleased with his simple life. He had enough money to be comfortable, and he loved his best friend, Tonto, a Cockapoo. One day, Waldo suffered a stroke and was rushed to the hospital. It was clear that Waldo’s memory and speech were seriously affected, and he would likely be incapacitated for a long period.
Waldo’s nearest relatives, a nephew and his wife, came 2 days later to see if they could help. They found a key for the house and went to check on things. Poor Tonto was there, unfed, un-walked and frantic.

The relatives had no place to keep the dog, and no access to Waldo’s checking account to pay someone for its care. They decided to take the dog to the local shelter for adoption. Several weeks passed and Waldo was recuperating in a nursing facility. As his speech and memory improved, his first questions were about Tonto. Was he all right? Who was feeding him? Was it the right food? Could Tonto come to see him?

You know the rest of the story. If only Waldo had planned ahead for incapacity – something that a majority of us will experience some time in our lives – he would have authorized someone to handle his financial and personal affairs, providing a safe haven for Tonto, and assuring his best friend would be at his side as he took his long journey back to the comfort of his home. Have you planned for your possible incapacity? Please put some legal punch into your pet’s future.





Monday, September 14, 2015

The Art of Collecting Art - Under the Law

The Art of Collecting Art – Under the Law

Most of us will never own a million dollar art or antique collection, but we always wonder if our own little treasures – 141 different vintage nutcrackers, a sketch by that street artist in Quebec, 17 stuffed pigs in all shapes and sizes, cocktail napkins from every major bar in Chicago - might someday be worth a tidy sum. Here are some interesting facts about art collections of all kinds:

Building your Collection - Art, antiques and collectibles are available from a wide range of sources. Established dealers and auction houses such as Bonham’s and Butterfields’, Sotheby’s and Christie’s have long handled direct sales, auctions and transfers of art. Now it is possible to buy or sell art online at all kinds of sites from amazon.com to ebay.com to shopgoodwill.com. It is unlikely that any expert or art connoisseur would recommend picking up important pieces from these internet sites, but if you are just putting together a little collection of comic books or a few interesting watercolors by unknown artists, it might get you off to a good start.

If you are, or hope to become a serious collector, it is necessary to keep detailed records and attend to all the other issues of managing what is really a business. Your records should give details and description of the item, where and when it was purchased, its provenance (ownership history), what and how you paid for it, and where you keep it. There should be photographs and it should be listed in an inventory together with all of the other art pieces you own.

Each piece in your collection should be appraised and insured. You may want to create an LLC to hold the collection and all its transactions, so it is separate and protected from your personal finances and assets. And the IRS must, of course, be a part of your planning. Are your collection activities for profit or for pleasure? Do you have to report on-line sales? Do you meet the definition of being a “dealer”? The way you buy, sell and manage your collection will determine how it will be taxed if you sell it, or when you pass away. Check with your CPA as soon as you decide to become a collector, and before making any declarations to the IRS or state tax board.

The Criminal Element - According to the US Department of Justice and UNESCO, art crime is the third highest-grossing criminal trade, just after drug and weapons traffic. Art trade is a lawful business, but almost totally unregulated around the world. There is little or no paper trail when art changes hands. Few transaction records. No public listing of art sales or transfers. It is an open invitation to shady deals, unscrupulous dealers and thieves.

Private art sales are estimated at $30 billion per year; and art crime may account for $6 to $8 billion of this total. Art thieves count on resale or ransom of the stolen pieces. Around the world, as many as 100,000 works of valuable art are stolen each year. It is likely that only 10% are ever recovered. There are also thousands of fakes and forgeries on the market, and many are likely to be found in museums or private collections everywhere. Dealers and private sellers are sometimes unethical, or prone to look the other way when questions of authenticity or true ownership come up.

Art crime and museum heists have been the focus of many popular films over the years. Topkapi, How to Steal a Million, The Thomas Crown Affair, Entrapment, The Monuments Men, and the Grand Budapest Hotel are a few of the films that have fascinated us, often clever and full of Hollywood glamour and intrigue. Captivating, but they also make us think about the serious side. How do you know if your art piece or collection is authentic, or truly valuable? How do you protect it? And what do you do with it when you die?

Where Will My Collection Go? Art is a unique possession, an asset that family members and friends may feel a strong emotional connection to. It is a part of your estate that requires special thought and planning for its future after you pass on. For a few pieces or small collections, you may wish to pass them along in your Living Trust to family and friends who will value and care for them. But depending on the dollar value of your art pieces or collection, there can be substantial tax implications for your estate based on how and when they are distributed to your beneficiaries.

Many serious collectors choose to make a charitable gift of their art pieces to a museum or other organization that can accept and maintain them. You could make the gift prior to your death, or gift it from your estate after you pass away. The tax laws regarding non-cash charitable gifts are especially complex, and you will need to consider the best way to donate your collection with a minimum of tax liability. Something as simple as whether you received an art piece as a gift or purchased it can make a difference in whether it is a deductible donation. The legal status of the organization receiving your gift, how it will be used, and whether the art is capital gain property or ordinary income property are a few of the many other issues that will affect the tax treatment of your art.

Whether your art collection is small or substantial, check with your attorney and CPA before deciding how to plan for its future and protect your estate.



Monday, August 31, 2015

Travel Forecast - Crossing the Line into a No-Comfort Zone

Travel Forecast - Crossing the Line into a No-Comfort Zone

Crossing state lines and international borders is something millions of us do every day. As long as we pack what we need, have our maps, GPS, and our tickets or gas in the car, we are pretty much ready for anything when we hit the road. But for the LGBT community, travel requires careful planning and an extra layer of protection. Both the journey and the destination determine our level of comfort on the trip. Using same-sex marriage equality and other non-discrimination laws as a guide, here are some of the things you should consider when you decide to travel for business or pleasure, or move to a new location:

U.S.A. - Currently, 37 states and Washington DC recognize same-sex marriage and/or registered domestic partnerships. If you are married or registered partners, you are likely to be treated fairly in these states, and especially in the larger cities. Smaller towns may still be catching up, and there are pockets of resistance in some states. Some businesses have invented a “religious exemption” excuse for not serving LGBT people. They claim that discrimination against homosexuals is permitted (and even required) by their religious beliefs.

For the states that have a ban against or don’t recognize same-sex marriage, there will soon be a resolution to our quest for equality. The Supreme Court of the United States is considering whether such marriages are constitutionally protected in every state, and their decision is expected sometime in June. But even if they decide in favor, there will be states and areas that will delay our civil rights in every way they can think of. We are unlikely to feel comfortable in many of those places.

So the U.S. is a checkerboard of states that may or may not be welcoming to LGBT travelers. When planning a trip, check where you have to pass through to get to your destination, and what you can expect when you get there. Look at the same-sex marriage record, and state or city laws regarding fair housing, employment, safety of LGBT youth, and HIV care and prevention. These are indicators of the comfort level of your stay in those communities.

Canada and Mexico - Our nearest neighbors are two sides of a coin. Canada permits same-sex marriage and has long had laws in place regarding other types of LGBT discrimination. Mexico is on the move toward equality. Mexico City permitted same-sex marriages several years ago, and court rulings since then have found that a ban on such marriages in many other areas of the country is unconstitutional. However, the rulings do not always give blanket permission to marry. They are sometimes limited only to the people bringing the suit. Progress toward equality in Mexico will likely take some time. And many other areas of discrimination have yet to be addressed.

Elsewhere in the World - A total of 18 countries have legalized same-sex marriage. 13 countries in Western Europe, 3 in South America, and New Zealand and South Africa now permit and recognize such marriages. A few other countries recognize same-sex civil unions, including Ireland, which may soon become the first country to legalize same-sex marriage through a popular vote. Some of these also have fair employment, housing and other non-discrimination rules. It is likely that all of these countries will be welcoming to LGBT individuals and couples.

At least 80 countries or entities around the world criminalize homosexual behavior, with 5 countries imposing the death penalty for such offenses. Most of the countries are in Africa, the Middle East and Indonesia. Others, such as Russia, have repressive laws against homosexual propaganda. When you cross the borders into these areas, you have entered the no-comfort zone. Plan your itinerary carefully, and be super-aware of your actions and speech that might run afoul of the local laws.

Pack That Extra Layer of Protection – Wherever You Go

You need these to insure wellbeing at home, and especially when traveling:

- Advance Health Care and Medical Care Directive: A detailed, notarized statement appointing agents to decide for you how your medical care will be handled if you are unable to make your own decisions. You will decide what kind of medical treatment you do or don’t want to keep you alive, manage pain or provide other care at end of life. There are issues of resuscitation, tube feeding, organ and tissue donation, and other critical matters.

Single travelers especially need this document, since there is no-one with them to provide information. Same-sex couples, married or not, will likely find that, even in comfortable locations, one partner or spouse may have little legal standing to make decisions as an agent for the other. It needs to be in a legal document.

- Emergency Medical Card: A card that allows medical professionals access to
your document. You are unlikely to carry your Directive on your person everywhere you go. There are several organizations that store it electronically for you, and they provide a credit-card size emergency card that instructs medical personnel to call or email to retrieve it, 24/7, from anywhere in the world. It also identifies the people you have named as your agents, and how to reach them. Carry this card in your wallet or pocket everywhere you go.

Monday, August 17, 2015

Can You Predict the Future? A Good Life Plan Needs Good Estate Planning

Can You Predict the Future? A Good Life Plan Needs Good Estate Planning

Most of us like to bring some order and predictability to our lives by planning ahead. We think about where we are now, and where we would like to be. We figure out how to get there, and how to avoid as many pitfalls along the way as we can. Moving through life, we accumulate things - our possessions, our estate – which are integrated into our lives. As an estate planning attorney, it is my job to help everyone plan for the care of their possessions as they move through life now, and after they die.

Here are a few of the issues that should make you think and do something about estate planning:

Do you have a live-in partner and you aren’t married or registered?

The 2013 U.S. Census Bureau Survey listed around 107,000 California same-sex couples living together. Of these, about 37% were spouses, and the rest were not. In California, community property rules mean that possessions (assets), and what happens to them, are clearly defined for spouses, but not for others. Although you and your partner may have a long-term relationship, your possessions can become a serious issue if you drift apart, become ill, or die. A plan for the care and keeping of your assets is essential to avoid the pitfalls that can upset your lives. If you have a car, bank account, savings or retirement funds, or a home, you have assets to plan for. What will happen to them if something happens to you or your partner?

Do you have children?

Many in the LGBT community have children from a previous or current relationship. If they are minors (under age 18 in California), they are usually under the legal control of one or both parents. But what happens if a parent becomes incapacitated or dies? That is where planning is essential to the child’s welfare. Care of children can’t be transferred to just anyone. A legal guardian will be required, and if there are no other plans in place, the state will appoint one and maintain jurisdiction until the children reach adulthood. It is always possible that the guardian will not be one that the parent would choose. Planning ahead can make the process predictable and greatly reduce the stress on the children.

Do you own a home?

If you own or are buying a house, it is an asset that is part of your estate. What will happen to that house if you become incapacitated or die? It all depends on how the property is titled on the deed. If you own it alone, you can create a Will that gives the house to a partner, a spouse, or another person if you die. The Will must be probated in court, and it may take a year or more to actually transfer the property to the beneficiary. As a better option, you can create a Trust, and transfer the property into the name of the Trust. Your Trust names who will manage the property if you become incapacitated, and who will inherit the property when you die. The Trust does not need to be probated in court.

What if you own the house jointly with a partner, and you aren’t married? There are several serious problems with this strategy. What happens if one of you becomes incapacitated and you need to sell the house? A joint tenant has no right to act alone on any house issues. What happens if one of you has a tax problem, or is in an accident, and a lien is placed on the house? What is the tax bite if your partner dies and you now own the whole house? There are much better ways of holding title to property, and a little planning will avoid lots of pitfalls.

Are you covered for illness or incapacity?

I am not a medical professional, so my concern with these issues is not about your health care plan, but with the plan for care of your possessions when something happens to you. And I say “when” very seriously. As our population ages, a majority of us will, at some point, require assisted living, long-term care or hospice. What happens to your estate when you can no longer manage it? Who will pay your bills, keep up your house or sell it, make sure your finances are in order? If you have a Will, it won’t help at all. A Will is effective only when you die. If you are a single person, or partners who are unmarried or registered, you need to plan very carefully for your own protection.

A Durable Power of Attorney will provide for a personal agent of your choosing to handle financial matters for you. An Advance Health Care Directive will give your instructions to your agent for handling medical and end-of-life issues with the medical professionals who care for you. A Trust will provide the instructions for handling all of your affairs when you are incapacitated, and after you die.

I have never been able to predict the future, so good estate planning is the very best I can do to help you keep your life plans on track.






Monday, August 3, 2015

The No-Party Clause and Other Bumps in the Road

The No-Party Clause and Other Bumps in the Road

Everyone has questions from time to time about how to handle knotty problems that threaten to make life miserable. I get phone calls or emails from many of these people who hope that I can provide answers, or refer them on to someone who can. Some are minor issues or sad ones – and some of them are very serious. They cover a vast range of troubles that could happen to any of us. Here are a few recent questions that came up:

Question: Two friends and I get along really well, so we signed a lease on a house together. My friends threw a big party while I was out of town a couple of weeks ago, and neighbors called the police to break it up. Now the landlord has sent a letter telling us all to move out because the lease says no noisy parties are allowed. I am furious. I don’t want to move. I wasn’t even here for the party, so it wasn’t my fault. How can I get the landlord to let me stay, even if the others have to leave?


Answer:  You probably can’t convince him to continue your lease. When the 3 of you leased the property together, you gave up your separate rights and became a single renter. The rights and responsibilities of each one of you are shared by all 3 of you. You may not have been personally involved in the party, but you are just as responsible for it as the other 2 are. The landlord has every right to evict all of you for breaking the terms of the lease.

Question: What should I do if I get a call from a collection agency and know I don’t owe them any money?


Answer: First, do not ignore the call. Immediately, request verification of the debt in writing. Under California and federal Fair Debt Collection Practices Act rules, you must usually do so within 30 days of receiving the first notification of the debt. When you receive the validation, determine whether it is correct, and that you truly do not owe that debt. Pull together whatever proof or substantiation you can and promptly send that back to the collection agency.

Second, if the collector refuses to acknowledge your response or withdraw the claim that you owe money, protect yourself by doing the following:

1.      Check your credit report to see if the debt has been reported to any of the
         3 credit reporting agencies. If it has, file a dispute of the claim with each
         of those agencies.
2.      If the collector threatens or harasses you, file a complaint with the
         California Attorney General’s office and the federal Consumer Financial
         Protection Bureau.
3.      If the collector files suit against you to make you pay the debt, do not
         ignore the notice of hearing. You have a very short period of time to
         respond. If you don’t file a protest, you will need to appear at the hearing,
         or it is very likely the court will rule that you owe the debt.

Finally, if you must go to court, consult an attorney to make sure you have as
much proof for your position as possible, and that you understand your legal
rights under the circumstances.

Question: What can I do to make the Homeowners Association respond to my requests for repairs to my condo and our common areas? They don’t answer my calls, and they don’t tell us when the board meets, so I can’t go to meetings to talk to them.

Answer:  California has strong HOA laws that clearly spell out how these organizations
and boards of directors must operate. Each homeowner must be provided with a
copy of the covenants, conditions and restrictions (CC&Rs), bylaws and other
information when the home is purchased; and the HOA must keep these up to date at least annually. Also, an annual budget and outside audit of HOA finances must be provided to each homeowner.

A management company who handles day-to-day HOA affairs is responsible
directly to the board of directors, who are themselves elected by the
homeowners. Notice of meetings and meeting minutes must be provided. You
have the right to inspect and copy association books and records.

Most requests to the management company and the board must be in writing.
This may be one reason your calls are being ignored. Write to the manager and
the board requesting copies of meeting minutes for the past year, and meeting
schedules for the remainder of this year. In a separate letter, identify the
problems you are having in your condo and the common areas, and how you expect them to be resolved. If there is no response, attend the next board meeting, and be prepared to present your concerns in a very brief and concise way. Board meetings must allow time for homeowner participation, but the time is usually limited to 3 or 4 minutes per person.

In the meantime, discuss the situation with as many of your other HOA members
as possible. If you are having trouble with the manager and the board, it is very
likely your neighbors are too. An action plan to get the HOA’s attention is often
successful when they see an uprising in their future.

If none of the above works, and repair and other problems affect daily living,
consult an attorney who is experienced with HOA issues to help decide if legal
action is needed.


Wednesday, June 10, 2015

All About Joint Tenancy - Are You and Your Partner at Risk?

Should your home, bank accounts or other property be held in joint tenancy with your partner or other family member? Many people comment to me that they don’t need an estate planning attorney because they own all their property as Joint Tenants with Rights of Survivorship. If they die, the property will automatically belong to the other joint tenant. No need for a Will or a Trust. No need for Probate. No need for an attorney’s services. 

Unfortunately, life is rarely that simple. There are numerous pitfalls in joint tenancy: 

         *   Joint property is exposed to the liabilities of either or both owners. If one

              owner gets a judgment against him or her, the entire property may be taken         

              to satisfy that judgment. If one is a doctor, lawyer or sole proprietor of a business

              in a highly litigious field, or if one is found at fault in an accident, or if one owner

              has a tax lien placed against the property, this may be the worst way to hold title.

          *  Joint owners lose individual control over the property. For example, with real

              property, one owner has no right to act alone in selling, making improvements,

              or refinancing the property.

          *  If one joint owner becomes mentally incapacitated, the property is in legal limbo.

              The owner can no longer convey legal title or sign ownership papers. This can

              prevent property such as a home from being sold or rented. It usually requires

              the healthy owner to go through a lengthy and expensive conservatorship

              process in Probate Court.

          *  When property passes to another owner through joint tenancy, that property

              is left outright, meaning there are no strings attached. The danger is that the

              surviving owner can then leave that asset to his new partner, or anyone else he

             chooses, and the first owner’s share of the estate never makes it to his own

             heirs. The last owner to die wins everything.

         *  When the first owner doesn’t do any estate planning, usually the second owner

             doesn’t either. Although probate may be avoided at the first one’s death, it will

             not be avoided upon the second owner’s death. In the event of simultaneous

             death, all assets held in joint tenancy must go through probate since both owners

             of record are no longer living.

         *  Even if the joint tenants do have Wills or Trusts, the surviving partner will receive

             the deceased joint tenant’s interest in the property, regardless of what that

             owner’s Will or Trust says. Wills and Trusts have no control over jointly owned

             property.

          *  Finally, transferring property into joint tenancy may have tax consequences. If

              you place another person on your bank account or a deed as a joint tenant, you

              have just given that person a gift. If the value is less than your annual gift

              exemption of $14,000.00, there may be no problem. If it exceeds that figure, you

              must file a gift tax return with the IRS. You may or may not owe taxes on the gift,

              depending upon your financial situation.

 

I hope you will give the joint tenancy risks careful consideration before you try to use it as a do-it-yourself estate planning tool. For very small estates such as those having only moderate sums in a bank account and no real property, joint tenancy can work to avoid probate and smooth the transition when a joint owner passes on. For most other estates, there are various planning tools that reduce or eliminate the risks of joint tenancy, and make far more sense.

Careful estate planning and correct property titling are especially important for same-sex couples. For partners who are not married or registered as domestic partners, it is essential to maintain as much individual control over property as possible. Couples can own homes together; have joint and individual bank and investment accounts; and own other property that they share equally, without the pitfalls of joint tenancy.

Many of my clients are same-sex couples who own various assets together. Often, we find that individual Revocable Living Trusts are the best way to maintain their property and allow each partner maximum flexibility and control over their shares. Each one creates the necessary documents to control how assets will be managed if incapacity or death should occur, and this allows each partner to pass his share on to whomever he names in the Trust. Each one has a plan that covers many of the risks in life, and gives partners greater peace of mind about the future.


Wednesday, May 20, 2015

Are You "Judgment Proof" After You Retire?

The bankruptcy rate for Americans over age 55 is soaring. This age group now accounts for over 20% of all bankruptcies filed. Some analysts estimate that for every older person who files a bankruptcy petition, there are two more seniors who should, because of their dire financial straits.

What’s going on?  Retirees used to be seen as financially stable, kicking back on their savings and pensions, mortgages all paid off – enjoying their golden years. But not any more. Here are some of the major reasons why so many of our older generation have hit financial hard times:

 

          *  People are living longer, making seniors a much larger percentage of the

              population than in generations past.

          *  Retirement funds are inadequate to cover the living expenses of a longer life, and

              income has gone down in recent years – hit by the recession and lack of cost of

              living increases in social security and other pensions.

           * Property taxes and the cost of gas and ordinary consumer goods keep going up.

           * Medical expenses grow rapidly as the population ages. Medicare and other

              health care insurance plans do not begin to cover all costs of medical care for

              older people.

           * Seniors often have to rely on credit cards to pay their routine bills, burying them

              in debt they will never pay off.  This group now has more credit card debt

              than younger generations – debt that was often unthinkable for seniors only

              10 or 20 years ago.

           * Late payments on credit cards and other unsecured debts result in penalties and

              a huge increase in interest rates to over 30% interest in most cases. This makes

              even modest debts spiral rapidly out of control.

But wait…aren’t retirees “judgment proof?” Why should seniors worry about their debts, when, in most cases, creditors can’t touch their pensions or their homes during their lifetimes? If social security or IRA income each month can’t be levied by a creditor, grandma or grandpa can stop stressing, right? And if a creditor puts a lien on your aging mother’s home, what does it matter to her?  She will continue to live there until she dies, and after that, the creditor will get the money from the sale of her house.

“Judgment proof” is not the best way to describe the financial situation of many older Americans. The term is commonly used to mean that creditors can’t collect money from assets that are protected – pension, IRA, or social security income – or the home you live in, while you continue to live there. But a creditor can still file a lawsuit against you, and a court might agree that you owe the money and issue a judgment against you. So technically, virtually no one is “judgment proof.”

A better term is “collection proof” – because, even if you have a judgment against you, the creditor can’t collect it from your exempt assets. So if you have debts you can’t pay after you retire, or even if there is a judgment against you, why should you care? Here are two very important reasons:

 

       *  Creditors are shameless and relentless. They never give up trying to get money

           out of you. They call, send mail, and use every means to get your attention. To

           an older person who may be in declining health, or barely able to make ends

           meet every month, the constant harassment by creditors takes a heavy      emotional and physical toll.

       *  Creditors will often get judgments against you. You must respond to the Notice

           or Summons you receive from the court. If you do not take action, the court may

           very well authorize a levy or a freeze on your bank account. The county sheriff

           in your county is responsible for carrying out the levy, by ordering your bank to

           freeze your account and/or pay the debt out of your account. Neither the sheriff

          nor the bank may know that all of the funds in your account came from pensions

          or other exempt income. Once a freeze is in place, it can take weeks or months

         to get it reversed. In the meantime, your money is out of your reach.

Creditors can ruin a retiree’s life in ways that are far worse than their effect on younger people. Seniors have few chances to go back to work to pay off debt. There is little or no prospect of their paying off their debts in their lifetime. Credit card debt, in particular, grows rapidly, as retirees pay higher interest on interest over the years. A lien on a senior’s home to pay off that inflated debt after death often means there is little or nothing left to pass on to their children or grandchildren.

For retirees caught in the clutches of creditors, bankruptcy is often a good solution.

It usually wipes out credit card, medical and other unsecured debts, and makes it possible for most people to again manage their everyday living expenses within their income. A huge relief and peace of mind make a fresh start possible for seniors.


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