Children

May 21

CHANGE IN THE LAW: The Before & After of “Legitimate Child,” “Presumed Parentage,” and Adoption

SB697 Bill Signing; Photo by: Patrick Siebert & Joe Andrucyk, 5/13/2019

http://govpics.maryland.gov/pages/Download.aspx?EventItem=7036&ImageItem=717545&Month=05&Day=13&Year=2019&Event=Bill+Signing&Photographer=Patrick+Siebert%2c+Joe+Andrucyk&Path=ImageHandler.ashx%3fEventID%3d7036&ImageID=717545&Thumbs=False

By: Valerie E. Anias, Esq.

On March 6, 2019, I testified before the Maryland Senate on Senate Bill 697. Senate Bill 697 sought to redefine Parentage and to create a process for Second Parent Adoption. On May 13, 2019, I appeared standing behind Governor Hogan to watch Senate Bill 697 be signed. This day is a tremendous win for so many families in Maryland.

The Before and After of a “Legitimate Child” and “Presumed Parentage”

Before: Maryland defined a “legitimate” child as one that was born as a result of a marriage between a man and woman, a child legally adopted, or a child conceived through artificial insemination with the presumed consent of the Husband. In practice, this meant that a child born between a married man and woman was presumed the legitimate child of both, regardless of the biological makeup. For example, if a woman in a heterosexual marriage used donor material, the husband was always the presumed parent and automatically received the title as a legal parent. However, lesbian couples in an identical situation – one gestational parent and one non-gestational parent – were not granted the same legal presumption. As a result, lesbian couples in an identical situation involving artificial reproduction were forced to petition a court to grant the adoption of their child by the non-gestational parent.

After: Effective June 1, 2019, a child born between a mother and her spouse is presumed to be the child of the spouse. Removing the identification of “husband” removed the implication that a legitimate child could only be born between a married man and woman. In just a few days, a child born from a mother is presumed to be the legitimate child of her spouse, regardless of sex, by virtue of being married. This enables both spouses to be considered the legal parent without having to formally adopt the child born as a result of their marriage. It should be noted that same-sex couples should still formally adopt their child to ensure safety as the legitimacy of the child would only be presumed in Maryland.

The Before and After of a “Second Parent Adoption”

Before: In some states, a second-parent adoption is different from a traditional adoption proceeding of two non-biological parents. In Maryland, however, there was no special rule or consideration for second-parent adoptions by same-sex parents or step-parents. The statute, Maryland Rule 9-103, which requires a doctor’s letter, consent by the biological parent, proof of income, and various forms of “proof” that the adoptive parent is an appropriate candidate to adopt the child all apply. The non-gestational spouse/step-parent was forced to request the Court to approve, evaluate, and then determine their parentage of a child they have intentionally brought into this world in the same way a heterosexual married couple could have or raised as their own.

After: Effective June 1, 2019, the process for a step-parent or same-sex parent to adopt is much more simple and less invasive. It provides a separate process for parents using a surrogate or for a step-parent to adopt their spouse’s child without having to navigate the waters of a traditional adoption. It allows parents to proceed as the intended parents of the adoptee.

This law allows families to establish themselves as families without belittling their status. It ensures children’s safety and security, by removing complex procedures and technicalities to simplify the process of recognizing their parents. Formal recognition of a parent’s “legal parentage” protects all aspects of a parent – child relationship such as ensuring that their child will be able to access that parent’s health insurance, Social Security, and other benefits as the parent’s beneficiary; whether the child will inherit after their parent’s death; or whether the parent’s relationship with their child will be legally recognized in states other than Maryland.

Put simply, this change recognizes families as families. Love wins.

Apr 16

Is Maryland a Community Property State?

By: Valerie E. Anias.

No. Maryland is not a Community Property state. This is a question I am often asked by new clients. If client’s don’t ask, they often assume that Maryland is a Community Property state and are disappointed when they learn that’s not the case. Community Property means that any property that is owned by spouses is marital property. For divorcing couples in Community Property states, any property that either spouse owned prior to their marriage or property acquired after the separation would not be considered marital. Additionally, all Community Property is split evenly, 50/50, between the spouses. In Maryland, this is not true.

Maryland is an Equitable Distribution state. In an Equitable Distribution state, all property (with very few and narrow exceptions) acquired during the marriage is marital property, regardless of who paid for it. Additionally, property that is non-marital can easily become marital depending on how it is treated. In other words, any property may be considered marital property. Yes, that includes the house you purchased 5 years before you got married. Yes, that includes an inheritance you received during the marriage and put into your joint account. Yes, that includes the new car you bought after you separated. Yes, yes, yes. Finally, in an Equitable Distribution state, property needs to be divided fairly and fairly does not mean equally.

For example, Jamie and Taylor Smith bought a home after they were married and upon their divorce it has approximately $100,000.00 in equity. In addition, Jamie bought a new car after separating from Taylor. In a Community Property state, each party would receive $50,000.00 of the home but Jamie’s car would not be marital because it was purchased after their separation and therefore, Jamie would keep the car. In Maryland, both the house and the car would be marital because it was acquired during the marriage. How that property is divided would be dependent upon the circumstances. Perhaps Taylor earns $30,000.00 per year and Jamie earns $250,000.00 per year. The Court may be inclined to give Taylor $75,000.00 of the equity in the home and the car and leave Jamie with $25,000.00 of the equity of the property. Whatever the division, the Court is only concerned with having an equitable, or fair, division not an equal division.

Understanding what is and is not marital property is important. It is even more important to understand how to keep non-marital property from becoming marital property. One easy way to do this is to enter into a Prenuptial or Postnuptial Agreement. Any agreement should be drafted by a qualified attorney to ensure you are receiving the protections necessary to effectuate your goals.

Mar 26

Naming a Trust as Your IRA Beneficiary

By Jessica L. Estes

Most people with individual retirement accounts (“IRAs”) name their spouse and children as the primary and contingent beneficiaries, respectively, of their IRA. Or, if they are not married or do not have any children, their siblings and nieces or nephews. For the reasons outlined below, this may not be the best decision. Though, to understand why it may not be the best decision, it is important to understand the basics of IRAs and required minimum distributions (“RMD”). Generally, an owner’s funds in an IRA will be protected from his or her creditors, but a RMD will not be protected. A RMD is the distribution that must be taken starting at age 70 ½, which is based on one’s life expectancy. Once the distribution is made, that income is not protected unless state law provides otherwise. When the owner of the IRA dies, his or her beneficiary receives an inherited IRA.

In 2014, the U.S. Supreme Court’s decision in Clark v. Rameker sent shock waves through the legal and financial planning industries. The Court was asked to decide whether funds held in an inherited IRA were “retirement funds” within the meaning of the bankruptcy statute and thus, exempted from an individual’s bankruptcy estate. The Court answered this question with a resounding “no” and specifically held that funds in an inherited IRA are not “retirement funds,” rendering those funds available for payment to creditors. The Court reasoned that “retirement funds” are monies set aside for a day when one stops working; whereas, an inherited IRA consists of funds that may be used for immediate consumption. Prior to this decision, an inherited IRA was considered “retirement funds” and protected from the reach of one’s creditors. After this decision, though, that is not necessarily the case.

If one’s spouse inherits the IRA, they can: (1) create a new IRA in their name; (2) roll the inherited IRA into an existing IRA already in the spouse’s name; or (3) they can leave the inherited IRA in the deceased spouse’s name if the deceased spouse was younger than the surviving spouse so the payments can be stretched out for a longer period. If the spouse chooses option 1 or 2, the funds in the account will be protected; however, if the spouse chooses option 3, likely the funds would not be protected.

Moreover, if a child inherits the IRA, they could stretch out the RMD’s based on their life expectancy rather than their parent’s life expectancy, or the child could take the money all at once. Either way, though, the funds would not be protected from the child’s creditors, which may include a bankruptcy court, general creditors, lawsuits and judgments entered against them. Additionally, the Supreme Court decision opens the door for Medicaid to recover against an inherited IRA since the federal law allows recovery against beneficiary- designated accounts.

Another reason to name a trust as the beneficiary of your IRA is to protect government benefits for a spouse who may require or is currently receiving long-term care Medicaid benefits, or a disabled child receiving benefits. If those individuals were to inherit even a small IRA, it could disqualify them from continuing to receive benefits. Depending on the amount of the IRA, that may or may not matter, but one should be aware of the consequences of such action.

Similarly, if a designated beneficiary (1) is a spendthrift, (2) has a drug, alcohol or gambling addiction, or (3) has creditors, or any number of other issues, naming a trust could be beneficial to preserve the funds so it is not depleted quickly.

The trust must be drafted carefully so as not to trigger a five-year payout. If the Internal Revenue Service (“IRS”) considers the trust as the owner or beneficiary of the IRA, the trust must liquidate the IRA and distribute it within 5 years of the decedent’s death. However, the IRS will not consider a trust the owner or beneficiary of the IRA if four requirements are met: (1) the trust is irrevocable as of the decedent’s death; (2) the trust is valid under State law; (3) the trust identifies “human” beneficiaries; and (4) the trustee provides a copy of the trust to the plan administrator or custodian within 9 months of the date of death. If there is the possibility that a non-human can become a beneficiary (e.g. ultimate beneficiary is a church or charity), then the 5-year payout rule applies. As long as the above requirements are met, the trust will be considered a “see through” entity and any distributions paid to the beneficiary of the trust, will be taxed at that beneficiary’s income tax rate.

Also, the trust can be drafted in a way that maximizes the payout to the beneficiaries. Likewise, it is important to decide how the RMD’s payable to the trust will be handled. Giving the trustee the authority to decide whether to make distribution to the beneficiary or to continue to hold the RMD’s in trust provides more flexibility and creditor protection for the beneficiary. Depending on your situation, a trust might be the better choice for your IRA beneficiary designation.

Mar 05

Prenuptial and Postnuptial Agreements – Why You Should Have One

By: Valerie E. Anias, Esq.

There is a misconceived notion that asking for or discussing a prenuptial or postnuptial agreement implies distrust or concern over your relationship and its future. This isn’t true! There are a significant number of benefits gained as a result of a prenuptial agreement, or postnuptial agreement if you’re already married.

There are two ways to dissolve a marriage: divorce and death. Prenuptial or postnuptial agreements help in making the dissolution as easy as possible.

The reality is this: marriage is both a romantic and business relationship. With very few exceptions nearly everything is or becomes marital. As such, nearly everything can become subject of costly litigation in the event of divorce or death. A well drafted and all-inclusive agreement will limit many of these issues. For example, the agreement will identify what is and is not marital property, each parties’ rights in the event of death or divorce, predetermine rights and obligations for spousal support, inheritance, and more. In addition, the agreement will have a complete financial disclosure including each spouses’ assets, liabilities, and income.

A properly drafted agreement will provide a full financial disclosure to both prospective or current spouses. It will list all assets, income, real property, personal property, etc. For example, what if you have your great-grandmother’s engagement ring? You’d want to be sure that said ring would remain with you, your children, and/or your family. If you were to pass, the value of that ring may ultimately be considered part of your estate and have to be divided. That could mean sold.

When contemplating whether you think a prenuptial or postnuptial agreement is needed for you, you should consider whether you want to be on the hook for your partner’s debt in the event of divorce or marriage? Whether you want your spouse from a second marriage to inherit more than your children from their first marriage? Whether you want your private business to be impacted in the event of divorce or death?

Obtaining a prenuptial or postnuptial agreement is simply a combination of planning and protection. Planning for the future of your spouse, children, and yourself while simultaneously protecting your spouse, children, and yourself.

Feb 19

Parenting Plans & Separation Agreements

By: Valerie E. Anias, Esq.

On October 1, 2018, Maryland Law expanded divorce by Mutual Consent to permit couples with minor children to divorce without waiting the formerly required one-year so long as they settled all marital issues and issues concerning the children including child support, physical custody and legal custody.

Now, more than ever, Courts are going to want to see detailed and thorough separation agreements which completely capture the settlement arrangement between parties related to the details of their marriage and children. Parties can create an all encompassing Voluntary Property Settlement and Separation Agreement as well as a Parenting Plan in order to ensure the entirety of their agreement is completely captured.

A Separation Agreement resolves all marital issues. You and your spouse will want ot discuss and settle various issues concerning marital property, child custody, child access schedule, and child support. Examples of marital property are joint bank accounts, cars, real property, debt, retirement, and alimony.

When determining custody and access, Parenting Plans encourage parents to focus on the needs of their children, how best to co-parent, and how to anticipate and/or address the various changes in their lives at the time of its creation and in the future.

Frequently parties obtain their divorce, receive their Judgment of Absolute Divorce, and some form of an access schedule, holiday schedule, and child support. What happens when this changes? What about claiming the children on your taxes? What about switching schools? Sports? Doctors? The Judgment of Absolute Divorce is frequently silent on many of these issues which results in continuous litigation. A well-drafted Parenting Plan can resolve many, if not all, of these issues. More importantly, it allows parents to come together as parents – not as spouses. They may no longer be spouses but they will always be parents.

Attorneys and mediators can help you and your family create a Separation Agreement and/or Parenting Plan that best suits your family dynamic and situation. Additionally, attorneys and mediators often know what questions to ask, problems to prepare for, things to consider that many parents in the moment don’t think about. Most importantly, settling the disputes between the spouses when it comes to them as parents also make the divorce process less painful for children. Their parents may not be married but their family will have consistency and a plan in place.

Call the attorneys at ERA Law Group, LLC today at (410) 919-1790 and ask how we can help you plan for your family.

Jan 22

How to Make Co-Parenting Successful

By: Valerie E. Anias

Figuring out how to co-parent after a break up, separation, or divorce is difficult. We especially see breakdowns in communication during the holidays. Now that the holidays are behind us, ERA Law Group, LLC want to help parents by identifying various resources available to help them Co-Parent.

Some parents find difficulty in communicating with one another. At times the communication is simple and other times, it is rather difficult. Nonetheless, both must parent their children. Removing face-to-face conversation is sometimes the best place to start when trying to co-parent effectively. The below programs and apps provide various resources for the separated and divorced parents.

Our Family Wizard

Our Family Wizard is an online program which provides a platform for communication. The parents can “email” back and forth, add items to a joint calendar, and, most importantly, if their dispute needs to be taken to Court, the correspondence can be tracked by the Court. This also serves as a means to encourage parents to speak with each other in a respectful manner and keep it about the children. There is an annual cost of approximately $100.00 per parent. This is a web-based program though there is an app for iOS and Android.

2Houses

Similar to Our Family Wizard, this program offers a mutual calendar, financial tab, and photo album tab. It does not allow for direct communication but there is a journal function which allows parents to make notes. The financial tab is particularly helpful as it outlines each parents expenses and each parent can upload what expenses they have paid on behalf of the child. There is no cost to this program. This is a web-based program though there is an app for iOS.

Kidganizer

Like the former two programs, this is also a means for both parents to keep information related to their children in one central location. It does not permit the parents a platform for direct communication such as Our Family Wizard, but there is an alert system to alert each parent regarding important events like doctor appointments or parent-teacher conferences. This is an iOS only app program and costs $1.99.

Custody Junction

Custody Junction provides a Scheduling Center which allows parents to schedule their visitation/events/vacations, etc. up to 2 years in advance. It also has a Tracking Center which allows parents to track when events were created, edited, amended, what the expenses were, who was present at each event, etc. It gets rid of the “he said, she said” regarding who, what, where, and when. Similar to 2Houses, it also has a Reporting Center which provides for accumulated expenses as well as reporting about child support payments, denied or forfeited parenting time, etc. This program is only web-based and costs $47.00 per parent for a 1 year subscription.

Appclose

AppClose is a combination of the above 4 programs. It has a joint calendar, a messenger option like texting, an expense forum that acts like Venmo by requesting reimbursement from the other parent as well as the ability to track expenses, the ability to create a parenting schedule, set important reminders, and keep track of family information such as immunizations, date of births, etc. Much like Facebook, it also has a NewsFeed function which displays all communications, events, etc. at a glance. This is a free app only program available for iOS and Android.

SKEDi

This program is a family calendar of sorts. It syncs your calendars so that each parent and/or child knows everyone’s schedule. It also has the capability of being shared with caregivers and babysitters if necessary. This is an iOS only app program and costs $9.99.

Co-parenting is key. The victim in parental miscommunication is the child. If you and your co-parent are suffering from severe communication breakdowns, contact our office at (410) 919-1790 and schedule your free 30-minute consultation.

Children

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