A Few Wrinkles On Gifts To Charity

As dull and dry as the tax law can be, there is always a little spice from Congress if you look hard enough. Sometimes it comes in the form of an income tax break for those receiving dividends. Sometimes it is as simple as reducing the tax rates themselves. This year there has been some work done on the law to make giving to charity easier and more tax wise. If you have read any of my past articles, you will know that I tend to relate what is evolving in the tax law to what is happening in the White House. You might recall a couple of years ago our president spoke of asking the churches, charities and individuals to carry more of the financial load needed to help those less fortunate. Now, two years later, we are seeing tax legislation to encourage just that. Funny how that happens, but those of us who are students of history see this pattern frequently.

In 2003, the House and the Senate each passed acts dealing with charitable giving. The two governing bodies then met to work out their differences on the respective acts, and to submit the final product to the President, perhaps by the time you read this. Charities have been financially strapped due to the events of the past two or three years. People look at September 11, 2001 as a watershed date, like my generation viewed November 22, 1963. Now, like then, there were numerous conditions existent and forces at work that were going to propel us in the directions that we took, but the bombing of the World Trade Center, like the assassination of President Kennedy, put a punctuation point on things.

When the nation awoke from its multi-month grief, we were at war abroad and in societal shambles at home. Charitable giving was a very low priority for us as a group, so we simply did not give. Slowly, things have been changing, some might argue for the better, and we are disposed to give again. But like so many things in our time, we want instant gratification when we give. It was not enough to get a simple tax write-off. Now we need more. To meet that need, Congress has given those of us with an IRA a golden opportunity to give it to charity in a unique and very beneficial way called the Charitable Remainder Trust (CRT”). Many workers finish their careers with a large nestegg, like a pension plan or a stock plan of some sort. That plan can be rolled over to an IRA upon retirement, and now there is a way to use it to diversify your holdings, sell some or all of the appreciated stock and avoid capital gains, provide a healthy stream of income for you and your spouse, and benefit one or more charities when you die.

If you worked at one place for a long time and bought your company’s stock while you were there, your stock appreciated in value, If you wanted to diversify your holdings, which is always a smart idea, you would have to sell some of that stock, causing you to incur capital gains tax of 15% - 20% of the profit. Paying that tax means your portfolio shrinks and you will have less to invest, but if you utilize a CRT, that tax is avoided. Then the proceeds from the sale of that stock can be invested in a variety of things, which allows you to achieve diversification. It also lets more of your money work for you, producing a stronger and higher return and giving you more income. For example, if you have $200,000 of your company’s stock, but your company is paying a tiny dividend, like 1%, you are only earning $2,000 per year from your holding. If you were to sell all of that stock and reinvest the money at 6%, you would be receiving $12,000 per year, which is a good thing. At the same time, you do not have to worry about your company’s stock decreasing in value because you have diversified.

Now that the CRT has solved a couple of big problems for you, what about laying some more issues on the table, like you want to provide an income stream for your wife after you die, or your brother, or even your child or children. With a CRT, you can do that by designating them as successor beneficiaries. After they have all passed on, many years from now, the remaining money goes to the charity of your choice. And all of the money goes to the charity without being taxed, If this sounds too good to be true, it is not. By giving up the tax revenue on these trusts, the government gets what it wanted in return, more people donating to charity.

There are several other ways that you can accomplish similar goals with your money. Consult with an estate-planning attorney for advice, and seek input from your financial advisor and tax advisor, too. One way many of my clients have been able to simplify their planning process is to meet with two or three of their financial professionals at one time. You get synergy from them, and once you reach your decision, they can get clear guidance from you as to what you want and who is assigned to do what. It is very efficient and a true time saver for them and you.

TOP OF PAGE

Give Yourself A Fiscal Physical

As we begin to pull together our records for the preparation of our income tax return, it is easy to allow yourself to take a “financial physical” at the same time. That exercise gives you the chance to revisit all of the planning issues that we have discussed in this space over the past couple of years, including your wills (and trusts, if applicable), your life insurance, your retirement plan, your homeowners’ and auto insurance policies, and everything else that you have in place of are contemplating.

Every few years it makes sense to pull out the documents that your attorney prepared for you. You may be like many of my clients who had a will prepared when the children were small, and now the children have children who are out of school. A twenty or thirty-year- old will is better than no will at all, but it may need to be revised. Your estate plan may be able to be simplified because you no longer need to appoint a guardian for minor children and your executor designation can be changed to put a responsible child into that position instead of your long-deceased father-in-law.

There have been numerous changes in the tax law over the years. For example, if you have not looked at your will in 10 years there have been no less than four sweeping changes to the federal estate tax law in that time, so you may want to revisit your tax avoidance planning with your attorney. Also, as the market has expanded and contracted over the past 3-4 years, your portfolio may have pushed you into or out of a position of taxability, so your wills may be able to be simplified.

If you have read any of my previous articles, you will have noted that a will only covers things that you own when you die. A will does not cover life insurance policies or retirement plans, which are driven by their beneficiary designations. Why would you want to change those? You may have gotten married (or divorced) since you filled out your forms. You may have children or grandchildren to whom you would like to direct some of your money, rather than to a spouse who has plenty of money of his or her own.

The cost of insuring your car or your home is a recurring expense, and it is very easy to grow complacent with your Current coverage, but a review with your own agent, or even with a new agent, can help you shed some light on the cost of your insurance. Perhaps a change to your deductible will reduce your premium, or if your children have left the home, you might want to remove them from your coverage. You may have started a home- based business with a computer or other specialized equipment, and you should make sure you have appropriate coverage to handle a loss. Or perhaps that piece of jewelry you got for Christmas needs to be added to a special rider in case of theft or loss.

These reviews of your paperwork can be beneficial. Although I feel as if I keep up on most of this information, I have never failed to learn something new. So far all we have looked at are the forms. What about the contents? Your retirement plan probably allows you to have some input into what your investments should be. You will benefit greatly from a face-to-face with the broker who handles your account. That broker knows what is hot and what is not, and can guide you to improving your financial circumstances by helping you shift out of losers and into winners. It is time-consuming and confusing to try to make your own investment decisions, so if you do not have a financial planner or advisor, now may be the time to meet one. Many work on a fee basis, while most work on commission.

Before you simply grab someone from a newspaper or radio advertisement, you may want to speak with your accountant or your attorney to get a referral. Some of us are members of groups of financial professionals and can make multiple services available to you at onetime. We have checked and satisfied ourselves that the professionals we are working with are reputable. I belong to an organization called Signature Advisory Group, and we bring together members with multiple disciplines who can sit at one table with you and help you formulate one solid plan. With time being at a premium, such a service is in heavy demand because people do not have time to go see three or four different professionals.

So this year’s resolution to finally getting a grip on your finances is an attainable goal if you give yourself a fiscal physical. Good luck and Happy New Year.

TOP OF PAGE

Disputes Over Real Estate

Several years ago I attended a seminar at which one speaker declared that more people engage an attorney for real estate services than for any other reason. I believe that statistic. In fact, I built my practice on it, making real estate a significant part of my practice. It allows me to meet a lot of people who are buying or selling their home, and it allows me to tell them about the other areas of law in which I work.

Now am going to make up a statistic that sounds pretty correct: more people engage an attorney to sue someone over a real estate-related matter than any other type of litigation. Am I correct? You will have to look it up. But the focus of this month’s article is disputes over real estate, how they arise and how they can be prevented.

There are several types of real estate disputes. First, when a home is being sold or bought, there can be arguments over the terms of the Agreement of Sale, Second, after a transaction closes, a buyer can claim that the property is not the way it was represented. Third, a buyer who borrows money may stop paying on the mortgage, which can lead to the lender filing a foreclosure action. Fourth, a landlord can get after a tenant who doesn’t pay rent, or who misuses a rental property. Fifth, property owners and municipalities can dispute zoning matters, health concerns, and other problems.

And finally, neighbors can get into it over a boundary line. Along those same lines (don’t you love puns), neighbors can get into it over barking dogs, loud cars or parties, trespassing on each other’s land, trees growing over the line, using property for commercial purposes in a residential area, to name just a few. Neighbor disputes are a very fertile ground for litigation.

When sellers decide to sell, they need to realize they are selling a dwelling, not the home of their dreams. Sellers must mentally separate themselves from the property, they need to look at it objectively. They need to listen to their real estate agent and do the little maintenance things that they have been putting off. But sellers also have to disclose everything about their home. There is a form that the real estate agent helps to fill out in which you have to tell everything about the house for the entire time you lived there. It lists specific questions about the foundation, soils, structure, electrical, roof, plumbing and several more components of the home. An honest, fair and complete disclosure is your first line of defense against being sued later by a buyer who claims that you didn’t tell him about something.

Because this past winter was one of the longest, wettest and snowiest in recent years, there has been an awful lot of ground water. Therefore, a lot of people have dampness or even water in their basements who may never have had that before. One suggestion for you victims out there is to forget about suing the sellers of your home if any of the following apply: there was a disclosure of dampness in the basement, more than two years have elapsed since you bought your home, the seller has died, the seller has mover out of state, the seller has bought another home, and if the cost of repairs is less than $3,000. All of the people who will hear your case grew up in Western Pennsylvania and know the score when it comes to damp basements. As sure as springtime brings out orange barrels on the highways, there will be dampness in basements. That is not to say that on occasion there might be a serious basement or foundation failure case out there, but they are the rare exception.

I am already out of space, and we haven’t even looked at landlord-tenant cases or mortgage foreclosure cases. My advice to tenants and borrowers on those is to pay your bills, and if you cannot do so, expect trouble. There are agencies out there that can help, and trying to speak to the landlord or the lender in a normal voice and with a realistic plan for payment that you can honor can help, but once either side gets an attorney involved, the attitude of the case shifts quickly. The landlord or lender is paying the attorney by the hour to obtain the money, the property, or both. The occupant of the dwelling doesn’t want to have to move out and lose their apartment or home, but that is the consequence of not paying. Remember, it was not the landlord or lender who got you into your financial fix, and they have no legal duty to help you out beyond the terms of the contract that you signed.

Next month I will use the whole article to discuss neighborhood disputes. Meanwhile, honesty and fair dealings are the way to avoid problems with real estate.

TOP OF PAGE

The Investment Side Of Real Estate

When the late nite talk shows are over, and you still have the energy to watch television, you often find opportunities being thrown at you by the no money down” real estate course hucksters. They have fashioned pitches that make the purchase and ownership of rental property sound so easy and so lucrative that you would be an idiot not to buy in. More importantly, however, you would be an idiot not to buy their program to learn how to do it. According to these guys, the ownership of real estate is the secret to wealth. Then they trot out several shills who will tell you that they bought the course, followed the program, and they were making $10,000 per month in no time.
Is real estate a good investment? The answer is that it is a far better investment than the get-rich-quick program that the television guys are trying to sell you. So how can you get in on this? Let’s say that you decide that owning rental property is something that you want to do,. First, ask yourself these questions:

Do you have the money to invest in real estate? Unless you have located a desperate seller who is willing to allow you to buy his property with no money down, no closing costs and no bank mortgage, you will need to have between 10-20% of the purchase price to put down on the property. In most cases, you will need at least another 3-5% of the purchase price for closing costs and related expenses. And contrary to the suggestions in the late night advertisements, these desperate sellers are extremely rare. In addition to the Costs to purchase the property, do you have the money needed to fix the place in order to make it rentable? And last, do you have enough money Set aside to make a couple of mortgage payments while you are fixing it up and renting it Out?

Then ask, do you have the temperament to be a landlord? As soon as you announce yourself to a prospective tenant as the owner, you are at odds. Tenants typically want to rent a palace for the price of a trailer. Can you negotiate with someone about rents, security deposits, maintenance, repairs, insurance and rules? Is it in your nature to tell a prospective tenant who is waving a check in your face that she cannot bring her little kitty or puppy? Guess what? Some puppies and kittens can grow up to become apartment wreckers.

Then, do you have the skills to be a landlord? Almost every rental property comes with some fix-up obligations, from as simple as putting a fresh coat of paint on the walls to as complex as plumbing, roofing, or electrical work. Can you do these things? Or are you going to have to hire professionals and pay them to get the property in shape to rent it? If you have to hire help, your profit margin will be seriously eroded.

In the television packages, they tell you that you can get owner financing. You are very lucky if you do because the people who sell property usually want or need their cash out of the transaction for something else. For the most part, however, you will be dealing with a bank or a mortgage broker to get your mortgage. There are going to be several fees associated with your purchase, such as lender fees, transfer fees and title fees. These can amount to 3-5% of the purchase price, as we stated above, and these need to be paid in full at the time of the closing.

Now that you have answered all of these questions correctly and you own a rental property, what happens to the money from the rents. You should open a new bank account to keep the rent money in, and use that account to pay all of your bills, including the mortgage payments, taxes, insurance, maintenance and repairs. Then you will have a record in one account that you can use at the end of the year to pull your income tax information from. Your tax preparer will want to see these records, and you may even want to purchase a landlord’s software program to keep this data in order. If you do not start out organized, it will take you much too long to pull all this information together at tax time.

You should also keep a separate file folder on each apartment. In the folder you should keep your tenant’s name, address, telephone number (home, work and cell), e-mail address, and the names of his references. In this way you might be better able to track him down if he leaves one night. Strangely enough, a person will leave an apartment, but will probably keep the e-mail address or the cell phone number. You will need this to catch up with him if he skips Out on you.

I have assumed all along that you had the tenant sign a lease. If you need to collect back rents from a tenant, or if you need to evict him for non-payment or for another reason, there are very Strict rules by which that is done. I do not intend to go over them in any detail here, but keep in mind that it can take two to six months to get a tenant evicted, and you must follow the procedures to the letter. Many tenants know these rules better than most attorneys, too, so watch yourself if you get into a Spat with a tenant.

The return on a real estate investment can be fairly good, if you are careful and know what you are doing. If you try to cut corners or run up against one of these professional tenants, you may be in for a surprise or two. There is a reason why some people get into and Out of real estate ownership quickly, while others buy and rent numerous units. Which one you are will be dictated by whether you enjoy it. If you don’t, you will know very quickly

TOP OF PAGE

HIPAA: Who Knows What?

If you are not familiar with the Health Insurance Portability and Accountability Act (“HIPAA”), you are among the lucky few who are very healthy. The rest of us are encountering the Act almost daily. It is a federal law that has been around since 1996, but the full extent of its power is only now being felt and understood. Hospitals, healthcare providers and others are bound by the terms of the Act, and everyone is anxious about the interpretation of the law. No one wants to get themselves or their employers into a tight spot over divulging too much information.

The goal of the law was to establish national standards to preserve the privacy of health care treatment and basic health history information handled electronically. This includes health insurance plans and healthcare providers, like your doctor’s office or your local hospital. The concern leading up to the enactment of this law was that the computerization of health information would allow anyone to access other folks’ health records, which would undermine everyone’s right to privacy.

Few things in contemporary society are held more precious than our privacy, especially when it comes to our health condition or health care. For instance, if you bump into your friend at the store and he asks you, “How are you?” he is just being friendly and you know that you will not tell him any more than you want him to know. But what if he could go home, press a few keys on his computer, and obtain your entire medical history? Now that would be scary, and that is something that HIPAA was designed to prevent.

Here is an example of HIPAA working against you. Your daughter goes off to college. One night her roommate calls you and says that the EMT’s took your daughter to the nearby hospital because she was in so much pain. The roommate had come back to their room at 10:00 PM, found your daughter curled up on the floor, and called 911. You immediately call the hospital to ask about her condition, and you are told that they cannot divulge any information to you because of potential violations of HIPAA. You are distraught, and you drive several hours to her college town’s hospital, and upon your arrival you are once again told that because you have nothing in writing from your daughter, the hospital will not discuss her condition with you.

The solution to this mess is a written document that is properly signed, witnessed and notarized. But what document should you use? Should you use a Healthcare Power of Attorney (Living Will) or a Durable General Power of Attorney? If you use the Living Will, it has been interpreted that the patient must be deemed to be incapacitated in order that this medical power of attorney be given any effect. And how can you prove that the patient is “incapacitated” if you are not permitted access to the medical records.

The better practice is to have your attorney include HIPAA language in your Durable General Power of Attorney. That document can be crafted to spring into use at anytime, thus enabling you to gain access to the information that you need on demand. How much more complicated it would be if the power of attorney did not give you the authority to get those records?

This situation is going to continue to confound the legal profession, the healthcare people, and the patients for years to come. For example, when you move a person into a nursing or rehabilitation facility, someone has to get the patient’s medical records. When you present your Power of Attorney to the clerk at the window, how does the clerk determine that the document is valid, or, for that matter, that you are who you say you are? This is a problem that will be arising at a very stressful time for you, and you will not want to have to jump through flaming hoops to obtain these records. The situation will calm down after awhile, as the hospitals, doctors, lawyers and patients begin to make sense of it. Meanwhile, you might want to sit down with your friendly neighborhood lawyer and have the proper language inserted into your documents.

TOP OF PAGE

Last month we took a look at several of the areas of discord involving real estate. This month, as promised, we will visit some of the cases involving neighbors. I listed loud cars or parties, trespassing, tree limbs growing over property lines, and people using residential property for commercial uses, to name a few. One of my favorites is the boundary case, which cause people to get really angry and to run the gamut of planting trees or shrubs over the line, or putting a fence over a line, or driving across a portion of the neighbor’s land in a shared-driveway situation.

One of the things that we attorneys are supposed to do is get opposing parties to explore settlement before everyone charges off to court. The first thing we usually ask for is the survey. It may be hard to believe, but the science of surveying is not always exact. For example, the stump of the white oak tree that marked the corner of the old farm back in 1930 may have rotted away or been dynamited to make way for the housing that has since been built. We have seen such a case where the surveyors for the competing landowners went to what each thought was the stating point, and they were 15 feet apart. Obviously, when the starting points are not the same, there is a problem.

I received a telephone call at home years ago from a lady early one morning. She told me that she was planning to come to my office at 830 that morning to close on the sale of her house to my client, the buyer. She went on to say that her neighbor had refused to remove the fence that he had built partially on her property. She had told the neighbor that he had to remove the fence by today. I asked what she wanted from me, and she handed the telephone to the police officer who was standing next to her, who then asked me what the remedy was. I told him that if the survey posts showed that the fence was indeed over the line and on her property, her closing could not take place and that she would get sued by the buyer for breach of contract. The officer thanked me and hung up the telephone.

About 10 minutes later the telephone rang again and this time it was the neighbor. He identified himself as a past client of mine and told me that his neighbors son was out in the yard with a chain saw cutting off fence posts, and what could he do? I asked him if there was a police officer there, and he said there was. I asked him if his fence was on the neighbor’s property and he said it was. I asked him if he had been notified to remove it by today and he said he had been. I asked him why he had not removed it and he said he hadn’t gotten around to it. I then told him to stand back and allow the man with the chain saw to complete the job, then to ask the officer if he could go over and move the fence posts onto his property so he could put them up later, which he did. Problem solved This case could have gotten very ugly, as you can well imagine.

And back to the overhanging branch issue. It amazes me that neighbors refuse to speak with one another in a reasonable manner about such simple things. One of my neighbor’s tree limbs hung over my property line for years and a winter ice storm caused the branch to crack and hang perilously close to my shed’s roof. While I would have loved for my shed to get knocked over and have to get rid of it and all of the contents, the issue was what to do about the limb. It was as easy as knocking on my neighbors door one evening and volunteering to either help him remove it or remove it for him. That was all it took. We attacked the problem the next Saturday morning, and in less than an hour there was a small pile of firewood.

Do you have someone in your neighborhood who is always working on cars? After work, under the lights, on Sunday mornings? Using air guns and power tools that cut through the quiet suburbs like a midnight cat fight? And do the cars seem to came and go every couple of days? Your neighbor may be operating a business in your neighborhood without a permit, and your recourse would be to your township’s zoning officer. If you happen to see your township zoning officer over there getting his car repaired, though, you may have to go a little further and invite your friendly neighborhood attorney to write a nice letter to the neighbor reminding him what is and is not permitted in a residential neighborhood. These are delicate issues because once the attorney writes his letter, there is an immediate chill between the neighbors, and the attorney doesn’t want to make a bad situation worse by riling up two adjacent property owners.

The same type of resolution can be achieved regarding children, motorbikes and quadrunners, and the whole spectrum of nuisance vehicles that our youngsters can’t seem to live without. Folks have to try to talk these things through and ask each other to be considerate. In this day and age, most of us are focused on what we want and what we need. That means that as we look beyond ourselves to ask our neighbors to help us get what we perceive to be our right, we may be causing that neighbor to feel as if his rights are being restricted. If a teenager wants to illegally ride his dirt bike up and down the street a few times to dry it off after washing it, what is the harm? Well, the harm is the ear-shattering racket that permeates through the otherwise quiet neighborhood. There are going to be more and more of us in the future, and we all want different things under the heading of the pursuit of happiness. What a challenge?

TOP OF PAGE

Politics As Usual

In my formative adult years, I aspired to political office, often looking at the United States Senate as a career goal. Circumstances prevented my ascent (or descent, as the case may be) to that august body politic, but my fascination about the system has always been there. On election nights you can find me glued to the television checking on major national results, minor local results and everything in between, By the time you read this column, however, the election will have passed and we will know the results, unless there is a hanging chad somewhere that needs to find its way to a courtroom.

I really enjoy seeing local residents stand up for something and run for supervisor of the township or member of the school board. Their interest in serving their community usually is inspired by an agenda, which is often precipitated by a perceived wrong with the system, or by a perceived slight by an incumbent that results in someone getting involved in order to make a change. There must be a powerful motivation to get folks in today’s busy society to give up watching all those under- 10 soccer games in order to attend meeting after meeting as they become candidates, and then get elected to the office that they sought. One of my favorite movies, The Candidate, ends with Robert Redford uttering the famous line, “What now?” after he finds himself winning an improbable victory against an unbeatable incumbent.

In the campaign leading up to this year’s presidential election, we heard a great deal of discussion and debate about tort reform, frivolous law suits, and capping recoveries in lawsuits. The subject was particularly intriguing this time around because one of the vice-presidential candidates had amassed a multi-million-dollar fortune by suing big companies on behalf of the so-called little guy. And yet there was talk that he and his standard bearer had a plan to reform the system. The other guy had been in office for four years already, but somehow he had allowed this issue to sit on a back burner somewhere while he and his crew dealt with what they perceived to be more important issues. Only when it became politically expedient did it become a hot-button issue.

I do some of my best thinking on my commutes to and from the office. I live hardly a mile from work, so I don’t have to think too hard each day, unless I get behind a garbage truck or a school bus. But the other day the subject of frivolous lawsuits came to mind, and many questions surfaced:

Don’t we have a system in place to weed out the truly frivolous suits from the system?
If a judge decides the preliminary things that allow a suit to move forward, then it is not
frivolous, is it?
Isn’t a judge elected by the people?
Isn’t the issue of whether lawsuits are frivolous truly in the hands of the people?
Therefore, what is the fuss all about?

Then, because the garbage truck had Mt. Royal Blvd. backed up, I turned my deep-thinking ray gun onto the subject of capping jury verdicts, and more questions came to mind:

If the government decides to tell juries how much they are allowed to award victorious plaintiffs in personal injury or medical malpractice cases, is the government saying that the jurors lack the proper judgment to serve on the jury in the first place?
Is the government saying that only the government knows how much a case is worth, even though they have not heard a word of testimony or seen a single piece of evidence?
How would you like to be told that the loss of your limb will be compensated according to the government’s “loss of limb” chart?

When I really think about the bashing of the trial attorneys, it comforts me to know that when the case comes down to the decision part, it no longer belongs to the attorneys. It belongs to the judges who are elected by the people, and to the jury, which is made up of the people. So why would a politician rant against attorneys filing frivolous lawsuits and receiving high awards when the very people the politician is trying to convince to vote for him are the ones who are making those decisions and granting those awards?

You see, it is the questions that haunt you, not the answers.

TOP OF PAGE

Risk Tolerance: How Much Can You Stomach?

The theme for this months article is finance, don't know anything about finance. How do I know that I don't know anything? Because I am still getting up every morning and going to work while the guys my age who know finance are all retired and living on tropical islands. I recently read about the governor of Virginia, who looks like a kid beat up once. He has $180 million squirreled away somewhere, having “earned” all that money in his career in finance. If I had $180 million, I would be governor of something, too. All I know about finance is that I used to come up short on my paper route money, but I had a nice baseball card collection.

I thought I would examine risk and our tolerance for t. I know a little about risk. For instance, asking a girl on a date was a risk. Even riskier was the prospect that she would accept. Then I had to actually take her somewhere. Talk about anxiety. I got a date with a girl from Sewickley once, and I took her to the airport. We rode escalators, drank milkshakes, fantasized about traveling to exotic places, and watched airplanes take off and land. I had a great time. I was so surprised when I called her the next week and her dad kept telling me she wasn’t home. Her loss.

Twenty years ago I took my little family on the vacation of a lifetime to Maui. Near our hotel was a n outcropping of black volcanic rock that jutted about 75 yards out into the Pacific. At sunset the first evening a young Polynesian lad carrying a torch jogged around the hotel’s beach lighting tiki lights, then he went out to the end of this outcropping, lit a couple of lights out at the tip, tossed the torch into the ocean and dived in after it. Very dramatic. He swam back to shore and gathered up some tips from the tourists.

The next morning I told my 12-year old son that we were going out to the end of the rock and jump in the water, just like Tiki Boy. So oft we went. We climbed up the rock as we went further and further out, the rock got higher and higher above the surface of the water. By the time we got to the tip of the rock, we were about 40 feet above the water. My son was smart enough to walk halfway back and jump into the water. He swam out to the end, where he looked up to find me looking down.

From the shoreline the night before, it had looked so beautiful and graceful then the boy had swan-dived into the dark water. But by the light of day, and from directly about the water, I could see all the way to the bottom, and the water looked really shallow from there. There were rocks the size of cars down there, and they looked as if they were right under the surface. I asked my son to swim down to see how deep the rocks were, and he went under for a few seconds. He came back up and told me he couldn’t see the point, rocks because they were so deep. Not true from my vantage point, but I was not about to fail in my quest. You see, there are times when killing yourself is important, and impressing your son with your courage is one of them. So I jumped.

As I was hurtling through the air, with my eyes open and my heart racing, I forced myself not to make a sound so as to let my silence mask my terror. The water rushed up to me, and as I broke the surface, I realized that I was never going to see a human being again. I was going to be “sleeping with the fishes.” My feet were going to strike the rocks and drive my legs out my ears. And was never going to draw breath again. All of that turned out to be false, but in those few seconds, those were my thoughts.

I broke the surface, gasped for air, and turned around to see my son treading water and looking at me. ‘That was pretty stupid,” he said. “You almost hit me, and you could have hurt me. And you screamed the whole way down. Everybody on the beach is looking at us.” Not a word about courage of style. So much for that. I paddled around awhile before going in to shore, so the mortification factor would fall.

Risk tolerance is a funny thing. You may look at an investment and say that it will make money for you, despite facts that should be telling you otherwise. You may not see the rocks beneath the surface. Or you may choose not to look for them. You may think that you are courageous enough to stomach the risk, but others will hear you screaming. And your actions may injure or embarrass others in your quest for success. Consider risk as a crucial element of any investment decision. Remember your mother saying, If everyone else were jumping off a cliff, would you follow?”

TOP OF PAGE

House Rules

Does your house operate under any special rules? No fighting on the steps! Does that mean we can fight on the porch roof? No running with scissors! Okay, how about running with a butcher knife? In our house we have the "running water" rule. If one of us is near running water, anything the other one says doesn't count. Running water occurs often in our house, showers, dishwasher, washing machine, toilets, sinks and garden hoses. The rule works like this: "I told you yesterday to take out the garbage!"

"Oh, you must have said that while I was brushing my teeth. I am excused by the Running Water Rule."

In the true spirit of cooperation between two empty nesters, the garbage goes out, albeit a day late and a little stinky.

Pennsylvania has some quirky rules, too. In fact the rules are called statutes, or laws. One of those laws was the common law marriage law, which allowed couples to be treated as married if they chose to declare themselves to be husband and wife. The law came into being early in our state's history because it was difficult for our ancestors to get themselves in front of a judge or a minister. You see, back in the old days we had a pretty lousy system of roads, and they were often filled with potholes (imagine that). So the legislature decided to create a law that couples could just declare themselves to be married and the state would recognize the marriage. They had to do things that married people do, like own their property in joint name, use the same name, and file their taxes jointly, among others. They were allowed to fight, too (but not on the steps). And if they fought a lot, they had to haul themselves down to the judge to get a legal, court-approved divorce. It is interesting that we live in a state where you don't have to formally marry, but you can’t informally divorce.

Now, though, Pennsylvania has decided to outlaw common law marriages. Our governor, whose primary qualification for the job is that he never starred in an action movie with his shirt off, signed a law that became effective in January of this year declaring that our state would no longer recognize common law marriages. While that is a nice idea, and it should boost revenues for fire halls and justices of the peace, what does it do to all those couples who have been living together for years without the benefit of a formal ceremony? Are they suddenly unmarried? Well, the new law doesn't answer that riddle. In fact, the new law doesn't say anything about existing common law marriages, so we can assume that they will still be recognized. But can we be sure? And when a new law leaves something unexplained like that, you would have to expect that there will be lawyers streaming in to "help” answer the inevitable questions that come up.

What happens when a man dies in an auto accident and his "wife" of 20 years files a death claim with the life insurance company? The life insurance company will look at the beneficiary form, see "my wife" listed as the primary beneficiary, and start asking for evidence of the marriage, like a copy of the license or a certificate of some kind. She won't have it, and so the insurance company's attorney will advise them no t to pay. What should she do? Hire a lawyer, of course. What a shame! And how will this tale come out? It will take the "wife" to show these bits and pieces of evidence, such as their application for a car loan that said they were married, and their voters' registration cards that show that they used the same name, and several other things to prove the existence of a marriage.

Is there a solution for those folks who have been operating for years as if they were married? There are several that come to mind. The most obvious one is to get married. Another is to sign some type of affidavit in which the couple declares themselves to be married. Why don't couples do that? If they are going to accept the rewards of being married shouldn't they accept the risks, too? I have seen mortgage lenders ask for and receive these affidavits of marriage in-the past, and they make perfect sense.

And what about the children of unmarried couples? What is their status? And do they think their folks are married? It wouldn't be all that difficult for the parents to scoot down to the local District Justice's Office after work some afternoon and tie the knot. That would solve everything, and it would provide an excellent opportunity for a party. Heck, you could even invite the kids

TOP OF PAGE

412.486.6624

DISCLAIMER: This web site provides general information only and is not intended to provide legal advice.
The use of this web site to communicate with Abernethy, Auld & Young, PC,
or any attorney associated with it does not establish an attorney-client relationship.

Copyright© 1999-2009 Abernethy, Auld & Young, PC, Attorneys at Law. All Rights Reserved
Designed and Hosted by OptimusLaw®
OPTIMUSLAW.COM