Can I Leave My Minor Child To Someone In My Will?

Who will Take Care of My Children?

Who will take care of your minor child(ren) if both parents die?  I have been asked recently about what will happen to the children if they die prematurely.  Many people believe you can leave a child to someone in their will.  A child is not like your fine china; you can’t just give it anyone you choose.

However, you can appoint a guardian of your children in your will.  Virginia law allows every parent by will to appoint a guardian of his or her minor child and also appoint a guardian of any portion of the estate that was bequeathed to the child.  VA Code § 64.2-1701.  One point to consider when financial assets are involved is the appointed guardian of your child’s person may not be the best person to manage the financial affairs of the child.  In many situations, naming a separate person as trustee of your child’s financial assets is a more prudent decision (A complete discussion of the management of the financial assets left to your minor child is beyond the scope of this blog post).

A court will appoint the person named in the parent’s will unless the other parent is still alive and is fit to have custody or the appointment would not be in the best interests of the child.  A guardian may only be named in a valid will.  Therefore, you cannot name a guardian for your child’s person in a power or attorney, trust or other estate planning document.  No other document can be used to name a testamentary guardian for the minor child.

Things to Consider When Choosing a Guardian

  1. Does the person have the physical and financial ability to care for the child?
  2. Where does the person live?  Would the child have to move?
  3. Is the person going to follow your wishes of how to raise the child?
  4. Does your child currently have a relationship with that person?  How does your child interact with that person?
  5. What is the person’s relationship with the rest of your family?  Will they continue to see the child?

What happens if the Parents are Divorced or Separated? 

If the parents are separated or divorced and one parent dies, under Virginia law the surviving parent will normally receive full custody of the child.  Even if the deceased parent had primary custody of the child, the surviving parent will usually receive custody upon the death of the other parent.  However, if a court finds the surviving parent to be unfit, then a third party may be granted custody.

If you find yourself worrying about your ex’s ability to care for the child, you need to plan ahead.  You should speak to your family members and make sure they are willing and able to petition for custody in the event of your untimely death.  Additionally, if you fail to name a trustee or guardian of the property left to your child, then the surviving parent will often be appointed to manage and control the money left to your child.

Finally, if you are separated or divorced you need a will!  If you, die without a will, are remarried, and have children from a prior marriage, your untimely death could have a major financial impact on your surviving spouse.  Under Virginia law, your children from the prior marriage would take 2/3 of your estate and your surviving spouse would only receive 1/3. Without a will, you could unwilling set your spouse up for financial disaster.

Wills aren’t just for the elderly.  Everyone should have a will and you should review and update as circumstances change.  The attorneys at paul | perdue attorneys can help you with a will and estate planning needs in Chesterfield, Colonial Heights, Dinwiddie, Henrico, Hopewell, Petersburg, Prince George, Richmond or Sussex. Give us a call at (804) 668-5327 or email us at Contact@paulperduelaw.com to schedule a consultation.

**This material is for Information Purposes ONLY and should not be construed as legal advice and does NOT create a legal relationship with Paul Perdue Attorneys PLLC.

Legal Homophones: Tort vs. Torte

Blog Title

The E Makes it Sweet

Welcome to the first installment of our new weekly series on legal terminology.  How often have you read a document written by lawyers and thought – What are they trying to say? Why don’t they just use English!  Our hope is these vignettes will shine an entertaining light on what is often called legal jargon or just plain hogwash!  So the next time you are faced with deciphering a legal document filled with words rooted in Latin, you will be better prepared to understand and appropriately respond.

Our word this week is Tort.  It should not be confused with the delectable French pastry with a similar name.  A tort is anything but sweet.  The word tort comes from the Latin term torquere, which means “twisted or wrong.”[1] If you are served with a lawsuit for a tort, your first reaction may be chocolate-cake-1400632_640“twisted” and you immediately conclude this is “wrong”.  Once you regain your calm, your first call should be to your attorney.

A tort is a legal action where a person or business has suffered harm as a result of the unreasonable actions of another person or business.  The injured person then sues to recover damages, aka money.  The most common example of a tort is an automobile accident.

Torts like their homophone cousin come in many flavors.  There are negligent torts, intentional torts, economic torts, Federal Tort Claims, strict liability torts and many other flavors.  If you are injured as the result of someone else’s negligence, consult an attorney to determine your legal options under the tort related laws.

Used in a Sentence:

After Jessica, a young tort lawyer, won her first automobile accident jury trial, she went out to Martha’s bakery to celebrate with a raspberry torte. 

When you need help with a personal injury case in Chesterfield, Colonial Heights, Dinwiddie, Fort Lee, Hopewell, Petersburg, Prince George, or Sussex. Give us a call at (804) 668-5327 and schedule a consultation to discuss your troubles in more detail.

**This material is for Information Purposes ONLY and should not be construed as legal advice and does NOT create a legal relationship with Paul Perdue Attorneys PLLC.

[1] http://www.dictionary.com/browse/tort

Are Survivor Benefits in Military Divorce a Waste of Money

Survivor Benefits May Not Be The Best Way to Protect Yourself

In a “military divorce case”, the retirement pension is one of the most coveted assets.  One component of the retirement pension is survivor benefits.  Often it is known simply by its acronym SBP, Survivor Benefits Plan.  Many a divorce lawyer has raised his or her voice and adamantly demand that his or her client get SBP benefits.  You see, a servicemember’s right to receive a military retirement pension terminates upon his or her death.  The SBP affords servicemembers the opportunity to purchase an annuity that pays his or her beneficiaries, a spouse or child, a defined percentage of his or her pension benefit upon his or her death.  The SBP essentially insurance policy that guarantees the beneficiary a percentage of the servicemembers retirement pay for the remainder of the beneficiary’s life.  The maximum amount a beneficiary may receive under SBP is 55% of the servicemember’s monthly retirement pay.

SBP is not automatic for any former spouse in a divorce case.  It comes with a cost.  The monthly SBP premium is expensive.  The monthly premium can be as much as 6.5% of the of the servicemember’s pre-tax gross retirement pay.  Former spouses in a divorce and equitable distribution case should be aware that the premiums for the SBP annuity reduces the retirement benefit amount that he or she receives each month.  The cost of the premiums is not borne by the servicemember alone.  Rather both parties get less than they would without the SBP.  A former spouse in a divorce needs to weigh the cost of the SBP vs. life insurance or other methods of protection.

For some spouses, the risk of getting nothing in the event of the servicemember’s death is enough to justify the reduction in their disposable share of the retirement.  However, in some cases paying the high cost of SBP makes no sense.  For example, if a former spouse remarries before she is 55, she is no longer an eligible beneficiary of the survivor benefits per 10 U.S.C. § 1450(b)(2).  In fact, in this scenario the survivor benefits may actually go to the servicemember’s new spouse.  In this case, the former spouse could be paying for the new spouse to have survivor benefits.  All because your attorney demanded the SBP protections.

Many times, a life insurance policy may be a better option.  You need to discuss your future plans with your military divorce attorney.  If you plan to remarry, tell your attorney.  If you don’t, you may be wasting money on your attorney and an expensive annuity.  That’s an expensive wedding gift for your ex and his new spouse.

The attorneys at paul | perdue attorneys can help you with military divorce or military custody in Chesterfield, Colonial Heights, Dinwiddie, Henrico, Hopewell, Petersburg, Prince George, Richmond or Sussex. Give us a call at (804) 668-5327 or email us at Contact@paulperduelaw.com to schedule a consultation.

**This material is for Information Purposes ONLY and should not be construed as legal advice and does NOT create a legal relationship with Paul Perdue Attorneys PLLC.

New Planning Tool for Parents of Special Needs Children

There is a new tool to help children with special needs that is similar to the popular 529 College Savings Plans.  A challenge for many special needs parents is providing for their children but ensuring the child doesn’t lose their SSI and Medicaid benefits.  ABLE Accounts are a new tool to save for a special needs child’s future care without jeopardizing those benefits.  Generally, if a disabled person has more than $2,000 in savings or other assets, they lose Medicaid and SSI benefits.  One solution is a special needs trust but they are costly to set up and maintain.  ABLE accounts are designed to be cheaper, simpler option.

What is the ABLE Law?

ABLE, which stands for the Achieving a Better Life Experience Act, was the kitchen table idea of a group of parents in Northern Virginia.  The parents wanted a simpler cheaper way to save for their children with down syndrome’s future care.  As a result of their efforts, the ABLE Act was passed by Congress in 2014.  Under the federal law, people with disabilities can open special accounts, where they can save up to $100,000 without risking their SSI, Medicaid or other government programs.

The ABLE Act requires each state to enact legislation on how and when ABLE accounts will be available in that state.  Virginia enacted a law in March 2015 that authorized the Virginia College Savings Plan (Virginia 529) to create a savings plan for people with disabilities.  Virginia 529 estimates the accounts will be available at the earliest by the end of 2016.

What are the Key Features of an ABLE Account in Virginia?

  1. An eligible person is someone who is or becomes disabled before age 26 and receives Social Security Disability Income or files a disability certification under IRS rules.
  2. Earnings on contributions to ABLE accounts are exempt from federal income taxation.
  3. Earnings on contributions to ABLE accounts are exempt from Virginia State income taxation.
  4. Yearly contributions are capped at the annual gift-tax exclusion of $14,000.
  5. If the assets in the ABLE account reach $100,000 and the beneficiary is receiving SSI benefits then the SSI will be suspended until the assets drop below $100,000.  Once the assets in the ABLE drop below $100,000, the SSI benefits will resume.

What are the Disadvantages of an ABLE Account? 

The biggest disadvantage of ABLE accounts is repayment to Medicaid.  When the disabled individual dies, any assets remaining in the ABLE account are used to pay back Medicaid for the amounts expended by Medicaid for the care of the disabled individual after the creation of the ABLE account.  Typically, funds in a valid special needs trust do not have to be repaid to Medicaid following the death of the disabled individual.

ABLE accounts are a new tool and the government regulations of these accounts is still evolving.  They are miracle drug for the estate planning challenges of special needs children.  They do not replace the role of special needs trusts.  They are simply another tool for families to provide education, housing, training, assistive technology, or other expenses for their special needs child.

Read More in the New York Times: A Closer Look at 529 Able Accounts

If you need help with estate planning in Chesterfield, Colonial Heights, Dinwiddie, Hopewell, Petersburg, Prince George, or Sussex. Give us a call at (804) 668-5327 or email us at Contact@paulperduelaw.com to schedule a consultation.

**This material is for Information Purposes ONLY and should not be construed as legal advice and does NOT create a legal relationship with Paul Perdue Attorneys PLLC.

Big Changes to Military Retirement

For the first time since 1948, there are big changes to the military retirement system resulting in major changes for servicemembers.  The 2016 National Defense Authorization Act authorized sweeping changes including an enhanced Thrift Savings Plan and reductions to the military pension percentage amount.

Why Make a Change?

The current military retirement system is an all or nothing system.  A servicemember is only eligible to receive monthly pension payments if he or she achieves 20 years of active duty military service.  If the servicemember exits the military prior to the 20-year mark, he or she gets nothing.  The Congressional Research Service has estimated that as a result of the 20 year requirement only 17% of enlisted soldiers and 49% of officers serve long enough to receive retirement benefits.[1]  Despite only covering a small fraction of those who serve, the military retirement system is costly to taxpayers.  It is estimated the cost to taxpayers of the military pension is $111 billion per year.[2]

Who is Impacted by the New System

The new military retirement system will take effect on January 1, 2018.  Servicemembers will be divided into three groups.  The first group are those serving on December 31, 2017 with more than 12 years of service at that time.  These service members will keep the current retirement system.  The second group are those serving on December 31, 2017 with less than 12 years of service.  This second group may choose to stay under the current system or choose to go under the new system.  The third group are those who join the military on or after January 1, 2018.  This group will be enrolled in the new retirement system.

What Does the New System Look Like?

The new retirement plan will include a new Thrift Savings Plan (TSP), a reduced pension benefit, a different continuation bonus, and an option to receive a partial lump sum payment against the pension.  A full explanation of the new plan is beyond the scope of this blog post.  However, for more details about the new retirement system, check out this article: http://www.militarytimes.com/story/military/benefits/retirement/2016/02/07/new-military-retirement-law-creates-big-decisions-many-troops/79347998/  However, I will highlight the changed to TSP.  Once the servicemember completes 60 days of service, the government will begin contributing 1% of the servicemembers base pay each month to the TSP account.  The government will match dollar for dollar the servicemembers contributions up to 3% of base pay.  Additionally, the government will pay $.50 for each dollar the servicemember contributes over 3% of base pay up to 5% of base pay.  The TSP becomes the servicemembers property at two years of service.  The new TSP puts the military benefits closer in line to many private employers and the federal civilian workforce.

What Does This Mean for Divorce?

The changes to the retirement system mean that servicemembers and former spouses need to be aware that military retirement is no longer just a pension.  The TSP is now a significant asset to be divided in a divorce.  The parties and their attorneys need to be aware of how their choice of benefits will affect property distribution in divorce.

If you need help with a military divorce or custody case in Chesterfield, Colonial Heights, Dinwiddie, Hopewell, Petersburg, Prince George, or Sussex. Give us a call at (804) 668-5327 or email us at Contact@paulperduelaw.com to schedule a consultation.

**This material is for Information Purposes ONLY and should not be construed as legal advice and does NOT create a legal relationship with Paul Perdue Attorneys PLLC.

[1] DoD Office of the Actuary, Valuation of the Military Retirement System, found at http://actuary.defense.gov/Portals/15/Documents/MRF_ValRpt2_2012.pdf

[2] Karmarck, Kristy, Congressional Research Service, Military Retirement: Background and Recent Developments, found at https://fas.org/sgp/crs/misc/RL34751, April 6, 2016