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Pittsburgh Family Law And Estate Planning Legal Blog

How prenups can protect business interests

In previous decades, the stigma of asking for a prenuptial agreement prior to getting married meant that many Pennsylvania couples opted to forgo an agreement. However, prenuptial agreements are becoming more commonplace, especially as couples obtain real estate and financial assets prior to marriage. While most couples do not ever intend to get divorced, prenuptial agreements can help protect those who have businesses.

One of the ways in which a prenuptial agreement protects a person's business is that the prenup establishes the value of the business just prior to the marriage. While any additional value may be divided during a divorce, the initial value is considered separate property and will therefore be protected. Additionally, the prenuptial agreement allows the couple to establish what will happen to any appreciation or depreciation of the business after the date of marriage.

Naming a trust as a beneficiary of an IRA

A common way for Pennsylvania residents to save for retirement is with an individual retirement account (IRA). The potential problem with setting up an IRA is that the account holder could pass away before having the opportunity to take out the money at the appropriate time. One possible solution is designating a trust as the IRA beneficiary.

The process of naming a trust as an IRA beneficiary typically starts by choosing this option when an IRA is set up with a brokerage. As for the reasons to name a trust as an IRA beneficiary, it's an appealing option since it allows for more control over how the money will be paid out.

Can you stop your former spouse from moving with your children?

Your relationships with your children can help them recover from the stress of divorce. In most cases, children of divorce fare best when they can keep up healthy relationships with both parents. Those parents don’t have to live together, but it often helps if they live within a short distance of each other.

Studies have found that children whose divorced parents moved more than an hour apart from each other were more likely to suffer from emotional and physical distress than children whose parents lived closer together. In addition, children often grow more distant from their parents when they lose daily contact. So what can you do if your former spouse plans to move the children away from you?

Using a trust in Pennsylvania

There are many different reasons to include trusts in an estate plan. These legal documents can be utilized to protect funds from the creditors of recipients and from being split up during a divorce. A trust could also manage and regulate investments and spending so that beneficiaries with faulty judgment may not squander the assets. Furthermore, trusts can hold assets that will serve as financial support should a settlor become incapacitated, hold life insurance policies and manage funds that can't be easily divided.

An estate owner can structure a trust so that it can help them achieve their particular goals while also providing the mechanisms for the trustee to address those goals among certain economic and investment factors. During the structuring process, it's important to determine if the trust should be funded immediately, over a certain period of time or upon the death of the settlor.

Personal loans could pay divorce expenses

On average, an individual going through a divorce will spend about $15,000 in legal fees. A person who is ending a marriage in Pennsylvania or anywhere else may turn to a personal loan to cover that expense. This may be an ideal solution because lenders may allow a person to borrow up to $50,000 or more at one time. Furthermore, personal loans can come with lower interest rates than credit cards or other sources of funding.

Individuals will have fixed payments that can stretch out over several years. Therefore, it may be easier to pay for a divorce without having to go bankrupt or experience some other financial hardship. Knowing how long a repayment period will last can make it easier to plan for legal fees in a long-term budget. Generally speaking, this type of loan can be acquired without collateral and in a single borrower's name only.

Protecting heirs from financial responsibility

Many parents expect to give their children or other heirs an inheritance but may be concerned that all the wealth they earned will be squandered by an irresponsible heir. There are several reasons this could happen, including bad financial habits, unhealthy relationships, and addiction issues. For parents in Pennsylvania, there are ways to control the distribution of inheritance so the heirs can get the money they need without the ability to spend it all at once.

A spendthrift trust protects heirs from their own financial mistakes by assigning a trustee who can decide how the heir spends their money. This trust is also protected from creditors because it is not directly in the beneficiary's name, so even past debts, settlements, and lawsuits can't be collected on while in the trust. The trustee in this situation plays a very critical role.

Filing a military divorce

Divorce is a life-changing event with emotional, financial and legal repercussions. Military personnel often serve in demanding roles throughout the world. A divorce is a huge stressor. It can make a difficult situation even more challenging and emotionally draining.

If your marriage is past the point of no return, you must dissolve it. But you may be unsure of how to proceed. Fortunately for military service members, the military has legal assistance offices that offer guidance and advice for initiating a divorce. In addition, the American Bar Association offers resources for finding a military legal assistance office in Pennsylvania and other states.

Misconceptions about estate planning

No Pennsylvania financial plan is complete if it does not include an estate plan. Estate planning is something many adults tend to avoid because it brings on thoughts of death and leaving loved ones behind. There are a number of misconceptions surrounding estate planning that people lean on to avoid the subject.

For example, many will say they don't need a will because they don't have much in terms of cash or assets. Even those who do not have much to bequeath could use a will to distribute what they do have according to their wishes. Additionally, a will can cover more than who gets what when a person dies. The will might include provisions about who becomes the children's guardian, for example. It can also give instructions regarding burial or cremation.

Divorce can affect a credit report

Many spouses in Pennsylvania are wary of the financial impact of divorce. Separation could be particularly difficult for couples who have been married a long time or have a significant amount of investments. However, these issues can go far beyond the immediate division of assets at the end of a marriage. Divorce can have an effect on each spouse's credit score, especially if they do not take action to protect themselves when negotiating the dissolution of the relationship.

Of course, divorce itself does not necessarily impact creditworthiness; marital status is not taken into account in a credit score. However, a separation could lead to credit issues in indirect ways. While a divorce decree can bind both former spouses, it does not bind lenders. Some couples may agree that one party will be responsible for certain joint accounts but fail to change these accounts into individual accounts or transfer the balances to other, independent accounts. If an account remains joint, both spouses can be held liable by the creditor for the balance, regardless of agreements between them in the divorce decree. That means that both former spouses can also suffer a credit hit in case the responsible party stops paying or pays late.

How to do beneficiary designations right

It isn't uncommon for Pennsylvania residents to use beneficiary designations for 401(k) or 403(b) assets. Designations can also be used on a variety of other assets, including cars, houses or boats. It is important that these designations are made carefully to avoid negative or unintended estate planning consequences.

One common mistake is failing to make a beneficiary designation at all. This could result in the company that oversees the account deciding who gets the remaining assets. Another key mistake that people commonly make is not updating a beneficiary designation form. For instance, a former spouse may no longer be the intended beneficiary after a divorce. However, if that spouse is named on the form, he or she will typically receive it regardless of the estate owner's wishes.

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