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Financial Planners Play Major Role in Divorce

For years, a common suggestion for Minnesota couples seeking a divorce was to talk with an attorney before the separation. Now, a new trend is leading couples to secure their finances with help from more than just an attorney.

For many couples seeking a divorce, advice from a divorce attorney has been supplemented with guidance from financial planners. For many financial planners, divorce planning is becoming a significant part of their business. The ideal situation is for a spouse to build a team, namely an attorney and a financial planner, that can help keep a stressful situation from also leading to financial ruin.

How to avoid common estate plan mistakes

The increase in the estate tax exemption to $11.18 million can be a good thing for Minnesota residents and others. However, there are ways for an individual to jeopardize his or her plan for what happens to assets after passing away. For instance, passing away intestate could mean that heirs have to spend time and money proving that they are owed a portion of an inheritance.

It could also call in question whether a special needs family member is entitled to continue receiving government benefits. In some cases, an individual who tries to create an estate plan on his or her own could be making critical mistakes that may render the document invalid. In the event that the document itself is valid, executing it in an invalid manner could render it meaningless in the eyes of the law.

Taxes in bankruptcy

Couples and individuals in Minnesota who are struggling with debt may decide to look into bankruptcy as a form of debt relief. While bankruptcy can be a good option for those who need to better manage their financial obligations, the process is not capable of eliminating every type of debt.

Whether someone opts for a Chapter 7 fresh-start bankruptcy or a Chapter 13 repayment plan, there are some types of debts that cannot be discharged in bankruptcy, including child support, alimony or judgments resulting from accidents caused by driving under the influence of drugs or alcohol. In addition, there are other debts that are not easily discharged, such as student loans and taxes.

How a business bankruptcy impacts your personal credit score

Even huge companies are not immune to financial trouble. Earlier this year, Toys 'R' Us filed for bankruptcy and announced it needed to close approximately 180 stores across the nation. 

Entrepreneurs considering bankruptcy need to weigh the pros and cons of the process with the value of their companies. It is possible for a business of any size to file for bankruptcy without going under completely. You can expect your company to certainly take a hit with its credit rating, but you may wonder how a corporate bankruptcy impacts your personal credit score.

Financial planning for a divorce

For Minnesota couples, the decision to divorce can require a lot of financial planning. This may include obtaining copies of credit reports to clear up any errors before the divorce is underway. Soon-to-be exes should also gather copies of other financial documents and keep them somewhere safe such as with a trusted family member or in a safety deposit box.

If possible, a spouse should set up an individual bank account and establish a line of credit. The latter could present challenges for those who did not work outside the home during the marriage. However, the Credit Card Accountability Responsibility and Disclosure Act of 2009 allows people to apply for credit based on household income.

Parts of estate plan to review

Minnesota residents should take time to review their estate plans as there are many things that can render all or parts of them ineffective. If the documents have not been reviewed since they were created or it has been some years since they were assessed by an attorney, it is highly likely that they have to be updated.

A typical estate plan should include financial and health care powers of attorney, an advanced medical directive and a will. All of the documents should not go without being reviewed by an attorney at least every few years. It is also wise to have the attorney look the documents to see if they require modifications after a significant life event has occurred, like a marriage, a divorce or the birth of a child.

How to plan for divorce before getting married

Minnesota couples who are getting married might want to consider creating a premarital agreement. As one financial expert points out, while this might seem like a cynical approach, it is not so different from wearing a seat belt. Neither action means a person really expects the worst to happen, but it can be important to be prepared.

Couples who are already married can create a similar document known as a postnuptial agreement. Both documents allow the couple to identify the assets and debts they want to keep separate in the marriage and to make a plan for how to divide shared property if there is a divorce.

Cram down question raised by Ohio court decision

If a debtor in Minnesota files for Chapter 13 bankruptcy, it may allow for a cram down of a vacation or investment property. What this means is that the market value of the home becomes a secured debt. The difference between the market value and what is left on a mortgage becomes an unsecured debt. In most cases, this is not true for the first lien on a primary residence.

The first lien is generally secured in full assuming the debtor still lived there when filing for bankruptcy. However, an Ohio court ruling may have changed the way that this is enforced. In a case involving SunTrust, the judge ruled that the lender had an interest in more than just the property. This is because there was also a pledge for escrow funds. The ruling was a cause for worry among attorneys representing creditors because escrow provisions are common in Ohio mortgages.

Be careful what you say and where you say it

Although the phrase originated back in 1940s Britain, the sage advice, “be careful what you say and where you say it,” is still relevant today. A flippant comment can have tough consequences. A Fifty Lakes resident is likely regretting his choice of words in a local liquor establishment.

 

Four steps to estate planning

Anyone who has had a loved one pass away can attest to the fact that experiencing a loss is a tough situation to endure. Not only can the grief be difficult, but there is also the matter of dealing with the deceased's possessions, which can get messy without a will to clarify their last wishes. Consequently, it is imperative to tackle estate planning in a methodical and diligent way.

Fortunately, there are several things that can be done to ensure that the inheritance process goes as smoothly as possible. The sooner an individual begins planning for the distribution of their properties, the better off everybody will be down the road. Some attorneys go so far as to claim that 18 years of age isn't too early to start estate planning. At the end of the day, what matters is that an estate plan is in place before the property owner loses their ability to make decisions autonomously.

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