Purchasing or Selling A Philadelphia Taxicab Medallion

January 13, 2025 by Leave a Comment

The Philadelphia Parking Authority (PPA) requires taxicabs to have a valid certificate and medallion to operate in Philadelphia.  A vehicle must have a valid certificate issued by the PPA and the medallion assigned to that certificate to operate as a taxicab in Philadelphia.

Therefore, if you want to operate a taxicab in Philadelphia but do not own a medallion, you must purchase one to assign it to the vehicle you want to operate as a taxicab.  Purchasing a medallion is called medallion transfer, where the seller transfers his medallion right to the buyer. The PPA requires both the buyer and seller to be represented by an attorney. One attorney can represent both with the consent of both parties.

The medallion transfer is a two-step process. The first step is sign-in, and the second step is closing. During the sign-in, your attorney will prepare the SA-1 (medallion transfer application), agreement of sale, buyer and seller’s meeting minutes, and other related documents which need to be signed by both parties in front of a PPA officer at the PPA.  As a buyer, you need to pay a flat fee of two thousand dollars ($2,000) to the PPA for each transaction. You can purchase multiple medallions in one transaction for a two-thousand-dollar ($2,000) flat fee if you purchase all the medallions from the same seller. The two-thousand-dollar ($2,000) does not include attorney fees.

After the sign-in, the PPA officer will review and submit the application to the PPA board for approval. The board can take up to a month and a half to approve the application. Once approved, your attorney will be notified by email and proceed with the second step, closing.

The closing for the medallion transfer requires the buyer to pay the seller the full purchase price by check at the PPA and sign the settlement sheet.  A PPA officer will make a copy of the check and transfer the medallion to the buyer.

If you need help purchasing or selling a taxicab medallion, call Shintia Z. Riva at the Law Offices of Spadea & Associates, LLC at 610-521-0604.

Filed Under: Corporate Governance

How a Pennsylvania Family Court Determines Custody

December 29, 2024 by Leave a Comment

How a Pennsylvania Family Court Determines Custody

No issue is more important when parents separate than the custody and future of their children. Answering this question is also one of the most difficult and unwelcome decisions that a judge must make. The process is complex, the results uncertain, and often expensive. Multiple people, who are strangers to you, your spouse, and your children, can be involved, people such as court-appointed custody masters, psychiatrists, psychologists, social workers, and ultimately judges. All of them are looking out for the “best interests of the child.” None of them really know what that means.

To guide them all, Pennsylvania law requires that they answer a staggering sixteen invasive and uncomfortable questions to help the Court determine the following:

  • Which parent is more likely to help foster contact and the relationship between the child and the other parent;
  • Which parent is more likely to have a loving and stable relationship with the child; and
  • Which party is more likely to take care of the child’s daily physical, emotional, and educational needs.
  • Which parent takes care of the child’s basic needs;
  • The availability of extended family;
  • The accessibility of child-care; and
  • The distance between the parents’ homes.

The Courts will even assess your own mental, emotional, and physical health.  If your child is old enough and mature enough, the Courts will take your child’s preferences into account. However, your child’s preferences are not supposed to be the controlling factor.

Custody masters and judges typically use these factors like a score card, ticking off boxes in favor of one parent or another. Then, they add up the score and make their decision. They do not simply give each factor the same weight and declare a winner, however. Moreover, the Courts may not make custody decisions based on gender.  They do, as a practical matter, though, still prefer mothers of young children over fathers. It is hard for father’s to overcome this preferential treatment of mothers. Some factors are more important than others. Some facts lean more heavily in favor of one parent or the other. Even with the factors, fundamentally no judge or custody master looks at the same facts in the same way. That is what makes it so difficult for parents and their attorneys to predict how a judge will decide a custody request.

Even if different judges may assess the factors the same way, at the end of the process they still must decide how to actually divide the custodial time. That decision will determine who gets weekdays, who gets weekends, who gets holidays and vacations, which school will they attend, and even possibly who drops the children off and picks them up. While there are some basic schedules used, different judges will establish different schedules.

For parents, who must leave their children’s home on short notice and do not have a second home for themselves and their children, securing custody of their children can be very hard financially. Courts will limit the out-of-home parent’s time, including overnights with their children, if that parent does not have enough bedrooms and beds for their children. But, setting up a second home on short notice is expensive and time-consuming, especially when, as is so often the case, displaced parents generally do not have much money for their own housing after paying child or spousal support.

The amount of your custody time will also affect the amount of child support payments. To make matters more challenging, keeping up a good relationship with your child is particularly important just after separating for securing a good, long-term future with your child. So, displaced parents should try to make a suitable home for themselves and their children as soon as possible.

All of these considerations make the fight to protect your time and relationship with your children the most difficult and important aspect family separation.

If you need help establishing your right to custodial time with your children or have questions about child custody law in Pennsylvania, please contact Shintia Riva At the Law Offices of Spadea & Associates, LLC for free 20-minute consultation.

Filed Under: Divorce, Family Law

What Assets are Not Subject to Pennsylvania Inheritance Tax?

December 26, 2024 by Leave a Comment

Pennsylvania inheritance tax is due within 9 months of a person’s date of death on the value of any assets owned by the decedent and passed on to his or her beneficiaries. Here are 23 assets that are not subject to Pennsylvania inheritance tax.  

life insurance policy
  • Life Insurance. Life insurance is exempt from Pennsylvania inheritance tax, whether it is paid directly to a designated beneficiary or to the decedent’s estate. You may hear that if the life insurance is payable to the estate, then it is subject to Pennsylvania inheritance tax, but this is not accurate. Although it is often a good idea to not name the estate as beneficiary of life insurance for other reasons, such as protection of the life insurance proceeds from creditor claims, all proceeds from life insurance on the decedent’s life are exempt from inheritance tax. Note that refunds of unearned life insurance premiums for the current policy period and post-death dividends are also treated as exempt life insurance proceeds.   
  • Property Owned Jointly between Spouses. Assets owned jointly between spouses, such as joint bank accounts and real estate owned jointly with right of survivorship, are not subject to Pennsylvania inheritance tax. Additionally, there is no need to even report property owned jointly between spouses on the Pennsylvania inheritance tax return. Jointly owned assets are normally reportable for non-spouses on Schedule F of the tax return, but the Pennsylvania Department of Revenue’s instructions to Schedule F make clear that jointly owned assets need not be reported in the case of a married couple. If all property of the decedent was owned jointly between spouses, there is no duty to even file a Pennsylvania inheritance tax return.
  • Real Estate Owned as Tenants by the Entireties. Married couples in Pennsylvania often own real estate as “tenants by the entireties.” It is not uncommon to see married couples own their primary residence in this manner for estate planning reasons and for the protection from creditors titling real estate in this way can provide. It is a form of ownership where each member of the couple is deemed to own 100% of the real estate and is exempt from Pennsylvania inheritance tax.
  • Inheritance from Predeceased Spouse. Assets passing to a surviving spouse that are not jointly owned must be reported on the PA inheritance tax return. They are technically taxable, but are taxed at a zero rate, so no tax is due. Even though no tax is due, an inheritance tax return should be filed reporting the assets passing to the surviving spouse, “taxed” at zero percent.
  • Assets Passing from Deceased Child to Parent. If a child aged 21 or under predeceases a parent, no inheritance tax is due on assets passing to the parent from the child. This exception applies to assets passing to a natural parent, adoptive parent, or stepparent. Though taxable, the tax rate is zero percent.
  • Assets Passing from Parent to Child 21 or Younger. Like the exception above, if a parent dies and leaves assets to a child who is 21 or younger, the tax rate is zero. This exception came into effect on January 1, 2020. The term parent includes a natural parent, adoptive parent, and stepparent.
  • Property Passing from Certain Deceased Members of the Military. Effective September 6, 2022, assets passing from members of the military who died because of an injury or illness received while on active duty in the armed forces, reserve component, or the National Guard, are exempt from Pennsylvania inheritance tax.
  • Certain Farmland Property. Since June 30, 2012, certain farmland and agricultural property has been exempt from Pennsylvania inheritance tax if it passes to qualifying family members. Special rules exist, so if this exemption might apply in your case, review Pennsylvania Department of Revenue Inheritance Tax Information Notice 2021-01 for details and meet with an estate attorney to be sure the inheritance tax return is prepared properly, and that the criteria for the exemption are met.
  • Charitable Gifts. Assets given to charitable organizations are exempt from Pennsylvania inheritance tax. The gift to the charity must be set forth in the will, trust, or beneficiary designation to qualify for the charitable exemption. Assets “donated” by an executor to a charity or by the estate beneficiaries in memory of the decedent do not qualify for this exemption.
  • Assets Passing to the Government. If there is no will or beneficiaries who would  inherit under Pennsylvania law in the absence of a will, then it is possible for estate assets to be distributable to the Commonwealth of Pennsylvania as a “Statutory Heir” and would be exempt from Pennsylvania inheritance tax. Although rare, gifts to the United States of America, the Commonwealth of Pennsylvania, and political subdivisions of the Commonwealth of Pennsylvania are exempt.
  • Tangible Personal Property of No Value. Many items of tangible personal property are special, and valuable to the family, or may be of utility to someone, but are of no financial value. A best practice is for the personal representative of the estate (executor or administrator) to have a licensed appraiser walk through the house, taking pictures, and provide an appraisal of the tangible personal property. In many cases much of the property will be of no monetary value, and no tax will be due. Even if the property is appraised at no value, it should be reported on Schedule E of the Pennsylvania inheritance tax return setting forth $0.00 as the value.
  • Property in Another State. Tangible personal property and unsold real estate located outside of Pennsylvania titled to the individual name of the decedent is not subject to Pennsylvania inheritance tax. However, if out-of-state real estate was under an agreement of sale prior to date of death, then the proceeds received after death may be subject to inheritance tax.
  • Junk Car. Junk or worthless cars should be appraised and set forth on the inheritance tax return even if of no value. If of no value, there would be no tax due.
  • Most Lifetime Transfers. Gifts and transfers made more than one year before death are exempt from Pennsylvania inheritance tax.
  • Lifetime Gifts up to $3,000 Annually, Per Person. Lifetime gifts made within one year of death are subject to Pennsylvania inheritance tax, but there is an exemption you can claim of up to $3,000 per person per calendar year for those transfers that occurred within one year of death.
  • Advancements. Sometimes parents give a child money during their lifetime, specifying that it is an “advance” towards their future inheritance. For example, if one child of four is facing financial hardship such as going through a divorce or period of unemployment, the parent may help the child but want the estate to be adjusted in the future, so all children are treated equally. An “advancement” is not a gift and serves to the share distributed to the beneficiary from the estate. Unless the advancement occurred within one year of death, it is not subject to Pennsylvania inheritance tax.
  • Death Benefits from Social Security. Lump sum death benefits from the Social Security Administration, whether paid to the decedent’s estate or to a family member of the decedent are exempt.
  • A qualified family-owned business interest. Certain family business interests are exempt from Pennsylvania inheritance tax. The business must continue to be owned by the same family, or by a trust whose sole beneficiaries are the same family, for at least seven years after the decedent’s passing, and is reported on a timely-filed inheritance tax return.
  • Worthless Debts, Including those of Estate Beneficiaries. Obligations owed to the decedent which are worthless immediately before the decedent’s passing are exempt from inheritance tax even though collectible from the debtor’s distributive share of the estate. See 72 P.S. 9111(o) for the statutory authority permitting this exemption.
  • Pennsylvania State Employee’s Retirement System. Payments from a deceased Pennsylvania state employee from the Pennsylvania State Employees’ Retirement System are exempt from state and local tax, notably to include Pennsylvania inheritance tax with limited exceptions.
  • Individual Retirement Accounts and 401K of Decedent Under Age 59 ½. IRAs and 401K retirement accounts of a non-disabled person who died before attaining age 59 ½ are not subject to Pennsylvania inheritance tax. If the person died before attaining age 59 ½ but was disabled, then the IRA and 401K are subject to Pennsylvania inheritance tax. A Roth IRA is subject to inheritance tax regardless of the age when the owner dies, and regardless of whether the owner was disabled. A special rule applies for the owner of a 401K who dies before attaining age 59 ½, in that if the owner of the 401K possessed the legal right to terminate the 401K plan during his or her lifetime, then it would be subject to Pennsylvania inheritance tax regardless of age, and regardless of disability status.
  • Family Exemption. Certain individuals residing with a person at the time of death “as a member of the same household” are entitled to claim what is known as a “family exemption.” At the time of this writing the family exemption is $3,500 and is not subject to inheritance tax. The family exemption can be claimed by a surviving spouse, child, or parent, in that order. The family exemption cannot be claimed against joint or non-probate property.
  • 529 Education Investment Plans. The College and Career and Savings Program Account, administered by the Pennsylvania Department of Treasury, is exempt from Pennsylvania inheritance tax, and is the only 529 Education Investment Plan that is exempt from PA inheritance tax.

If you have any questions about Pennsylvania Probate or preparing a Pennsylvania REV-1500 Inheritance Tax Return call Gregory J. Spadea at the Law Offices of Spadea & Associates, LLC, at 610-521-0604. 

Filed Under: Estate Planning, Federal Tax, Tax Exemptions

Financial Infidelity Can Destroy a Marriage

December 23, 2024 by Leave a Comment

HOW FINANCIAL INFIDELITY CAN DESTROY YOUR MARRIAGE AND HOW TO PROTECT YOURSELF

Financial infidelity has destroyed many marriages. It can come in many forms. Sometimes, your spouse may be too embarrassed to tell you about a job loss, a failing business, or an unexpected disability. Perhaps, your spouse ran up credit cards without your knowledge for personal luxuries, like clothes and jewelry, or to support an adulterous relationship.

Past due bill

It could be drug or gambling debts. Worse yet, maybe, he or she stole your identity to open credit card accounts under your name. Even more shocking, your spouse may be hiding a mortgage foreclosure or even a pending sheriff’s sale. If you suspect that your spouse has committed financial infidelity, you need to know your rights and your obligations to the creditor and your spouse for personal and joint, marital debt. They depend first depend on whether they are your debts, your spouse’s debts, or your marital debts. They will also depend on whether you are divorcing or being pursued by creditors.

Your Obligation for Individual Debts

When it comes to creditors, only you and not your spouse are legally responsible for your own individual debts, such as your credit cards. You are not responsible for your spouse’s individual debts. You and your spouse are, however, legally obligated to pay your joint debts, such as a mortgage on your home. So, joint creditors can attack your individually owned property, including bank accounts, to pay for joint debts.

Pennsylvania law distinguishes between individual debt and joint marital debt because, your marriage is a separate legal entity that stands apart from you as an individual. In other words, a marriage results in three distinct separate legal units: you, your spouse, and your marriage. Pennsylvania law makes this distinction specifically to protect you and your family from the ravages of your partner’s financial infidelity!

Legally therefore, your joint assets are protected from your spouse’s creditors.  They cannot force a sale of any asset that you own together as spouses. Of course, joint creditors can go after your joint assets, like your home. While these obligations to creditors remain valid when financial infidelity leads to divorce, a divorce can change who is responsible for those debts between you and your spouse.

Your Obligation for Marital Debts

In divorce, your financial obligations fundamentally depend on whether the debts were incurred before your marriage, during marriage, or after separation and divorce.

Pennsylvania’s divorce laws do not hold you responsible for debts that your spouse had before you married or that he or she incurred after you separated and later divorced. Likewise, your spouse is not responsible for your pre-marital debts, your post-separation, or post-divorce debts. In contrast, a divorce may make you responsible for debts that your spouse signed for individually during the marriage and before your separation. Your total debt at the end of a divorce, regardless of whether the debt is yours, your spouse’s, or joint, ultimately depends upon the Court’s decree for equitable distribution or on how you and your spouse divide them in a property settlement agreement.

As noted in our blog, “What is a Marital Asset?,” [insert link to blog here], there are many factors, both well-established and novel, that will determine how responsibility for your marital debts will be divided. Financial infidelity, innocent or not, will be a major factor in shifting the responsibility for debts in your name back to your spouse. There are other reasons for shifting responsibility, though. One example is a student loan that was used for documented household expenses and not for tuition payments. When this occurs, the other spouse may have to pay the debtor spouse or the lender directly even though the debtor spouse will remain primarily responsible to the lender for paying it back.

Protecting Yourself When You Suspect Financial Infidelity

When you suspect financial infidelity, you need to act quickly to protect yourself from your spouse’s debts.  Here are some steps you should take to protect yourself.

  • Stop your spouse from using your credit cards by ending your spouse’s authorized use of them. Simply call the credit card company and tell them that your spouse is no longer authorized to use your credit and, most importantly, have them issue you a new card with a new account number. This easy move will prevent your spouse from using your on-line accounts, like Amazon, too.  Do not share this new card with your spouse.
  • Open a separate bank account if you do not have one already. Then, have your employer deposit your wages or salary directly into that account. Now you, not your spouse, will control what you do with your money.
  • Review statements for your bank, mortgage, loans, and credit card accounts. Challenge suspicious transactions by reporting them to the fraud departments.
  • Get your credit report. Review it for loans accounts that you do not recognize. Make sure the balances are correct. While it is illegal for you or your attorney to try to get a copy of your spouse’s credit report without consent, you can ask your spouse for permission. Your spouse’s credit report will show how much and to whom your spouse is indebted. You can ask your spouse for the report as a routine precaution against fraudulent creditors.
  • Search online for lawsuits and judgments against you and your spouse.
  • Change passwords for financial accounts and your computer and cell phone lock screens to keep your spouse from accessing them.

The impacts of financial infidelity on your credit and your future economic security can be devastating and long-lasting. An experienced attorney can help you to overcome them.  If you suspect that your spouse has committed financial infidelity or have any questions about your responsibility for marital debt and repairing the damage done, please contact Shintia Riva, Esquire at the Law offices of Spadea & Associates, LLC for free consultation at 610-521-0604.

Filed Under: Divorce, Family Law

Understanding Child Custody in Pennsylvania

March 13, 2024 by Leave a Comment

UNDERSTANDING CHILD CUSTODY IN PENNSYLVANIA

No issue is more important when parents separate than the custody and future of their children. Answering this question is also one of the most difficult and unwelcome decisions that a judge must make. The process is complex, the results uncertain, and often expensive. Multiple people, who are strangers to you, your spouse, and your children, can be involved, people such as court-appointed custody masters, psychiatrists, psychologists, social workers, and ultimately judges. All of them are looking out for the “best interests of the child.” None of them really know what that means.

To guide them all, Pennsylvania law requires that they answer a staggering number of invasive and uncomfortable questions – 16 in all! The Courts must answer difficult questions like:

  • Which parent is more likely to help foster contact the relationship between the child and the other parent;
  • Which parent is more likely to have a loving and stable relationship with the child; and
  • Which party is more likely to take care of the child’s daily physical, emotional, and educational needs.

They must also answer simpler questions like:

  • Which parent takes care of the child’s basic needs;
  • The availability of extended family;
  • The accessibility of child-care; and
  • The distance between the parents’ homes.

The Courts will even assess your own mental, emotional, and physical health.  If your child is old enough and mature enough, the Courts will take your child’s preferences into account. However, your child’s preferences are not supposed to be the controlling factor.

Custody masters and judges typically use these factors like a score card, ticking off boxes in favor of one parent or another. Then, they add up the score and make their decision. They do not simply give each factor the same weight and declare a winner, however. Moreover, the Courts may not make custody decisions based on gender.  They do, as a practical matter, though still prefer mothers of young children over fathers, which is hard for fathers to overcome. Some factors are more important than others. Some facts lean more heavily in favor of one parent or the other. Even with the factors, fundamentally no judge or custody master looks at the same facts in the same way. That is what makes it so difficult for a parent and their attorney to predict how a judge will decide a custody request.

Even if different judges may assess the factors the same way, at the end of the process they still must decide how to actually divide the custodial time. That decision will determine who gets weekdays, who gets weekends, who gets holidays and vacations, which school will they attend, and even possibly who drops the children off and picks them up. While there are some basic schedules used, different judges will establish different schedules.

For parents, who must leave their children’s home on short notice and do not have a second home for themselves and their children, securing custody of their children can be very hard financially. Courts will limit the out-of-home parent’s time, including overnights with their children, if that parent does not have enough bedrooms and beds for their children. But, setting up a second home on short notice is expensive and time-consuming, especially when, as is so often the case, displaced parents generally do not have much money for their own housing after paying child or spousal support. The amount of your custody time will also affect the amount of child support payments. To make matters more challenging, keeping up a good relationship with your child is particularly important just after separating for securing a good, long-term future with your child. So, displaced parents should try to make a suitable home for themselves and their children as soon as possible.

All of these considerations make the fight to protect your time and relationship with your children the most difficult and important aspect family separation.

If you need help establishing your right to custodial time with your children or have questions about child custody law in Pennsylvania, please contact Gregory J. Spadea at the Law Offices of Spadea & Associates, LLC at 610-521-0604 for free 20-minute consultation.

Filed Under: Divorce, Family Law

Why Common-Law Marriage in Pennsylvania is Not so Common After All

February 19, 2024 by Leave a Comment

Common-law marriage remains a hot topic in Pennsylvania, particularly for long-time, same-sex couples.  In the frontier days of Pennsylvania, when ministers, pastors, and judges were hard to find and even more difficult to meet, common-law marriages were a regular feature of life. Such marriages did not require a marriage license and a formal ceremony before a pastor who had legal authority to marry. Pennsylvania courts have long struggled when deciding if you are married by common-law when you don’t have a marriage license and there was no officiant or ceremony. The court’s determination could mean the difference between inheriting property from your spouse’s estate or losing all of the property that you built up over your years together. Today, the issue of whether or not you are in a common-law marriage also affects newly established rights, like Social Security spousal benefits and even death benefits under Workers Compensation laws.

When deciding whether you and your partner have a common-law marriage, Pennsylvania’s courts are required to answer many questions. Did you say the magic words, ”I take you as my spouse” or simply say, “I will marry you”? Did someone witness you saying those words? Did you live as spouses, and if so, for how long? Do you own a house together? Do you introduce your partner as your spouse? Do you go by your spouse’s last name? Have you filed tax returns together as spouses? Have you applied for credit cards together? Even, did you get mail addressed to you as Mr. and/or Mrs.? The most important question, though, is always whether the judge simply believes you. Courts were so distrustful of claims of common-law marriage, especially when one spouse was dead, that they imposed the highest burden of proof in civil cases, known as “clear and convincing” evidence. Sometimes, the courts made the correct decisions. Sometimes, they did not. Generally speaking, virtually no court saw or heard or believed the same evidence in the same way with the same result. There simply was no certainty.

To bring predictability to the legal status of marriage in Pennsylvania, its legislature passed a law that simply invalidates any common-law marriage that occurred after January 1, 2005. In other words, if you were not part of a common-law marriage on or before January 1, 2005, you are not married to your spouse under Pennsylvania law.  Common law marriages begun before that date could not be invalidated without violating the partners’ due process rights. Knowing your rights in common-law marriages is still important today, especially for same sex spouses.

Older same sex couples should be the most concerned because until 2014 Pennsylvania did not recognize the right to same sex marriage at all. Many of those marriages could still be valid in Pennsylvania. Each person in those marriages may have previously unknown rights to divorce, divide marital property, get or pay alimony, receive child support, share custody of children, and even inherit property that were not apparent before 2014.

Even if Pennsylvanians no longer can have valid common-law marriages after 2014, Pennsylvania courts must also still recognize out-of-state common-law marriages even today. However, Pennsylvania judges do not like deciding whether an out-of-state common law marriage is valid. It puts the Pennsylvania courts in the unwelcome situation of making decisions about a person’s rights under another state’s laws. Those legal rights judgments are particularly difficult for Pennsylvania judges to make because some states still do not recognize the right to same-sex marriage and many have different standards for common-law marriages. The few that still do recognize common-law marriages are considering legislation to invalidate them.

In the end, if you were in a common-law marriage in Pennsylvania on or before January 1, 2005, or are now in a common-law marriage that began in another state that recognizes common-law marriages, you may still be entitled to all of the rights of a spouse. Even if a court in your home state never decided whether you are in a common-law marriage, you may still be entitled to ask a Pennsylvania court to decide whether your out-of-state common-law marriage is valid under your home state’s laws and your marital rights protected.

If you think that you are a spouse in a valid, common-law marriage or have any questions about common-law marriage, please contact Gregory J. Spadea,, Esquire, at the Law offices of Spadea & Associates, LLC for free 20-minute consultation at 610-521-0604.

Filed Under: Family Law

What is Considered a Marital Asset in Pennsylvania

February 19, 2024 by Leave a Comment

Knowing what is and what is not “marital property” is vital to a satisfactory outcome when filing for divorce in Pennsylvania.  Pennsylvania’s statutes define “marital property.”  While the statute excludes specifically certain types of property, most divorces concern two kinds of marital property:

  •  property that you acquired during your marriage as an individual or jointly with your spouse; and
  •  the increase in the value of property that you had when you got married and continued to own during your marriage.

An example of the first kind of property is a car that you bought in your own name after you got married.  Even if you titled the car only in your name or you used your own money from your individual bank account to pay for it, the car is marital property.  An example of the second kind of property is a car that you owned when you got married.  In that case, only the increase in the value of the car during your marriage above the value of car before you got married is considered marital property.

Marital property means more than just a physical object, like your house or your car.  It can also mean things like your right to money damages because of a car or work accident or a broken contract.  If the accident occurred when you were married but before the date of your final separation, the right to that money is marital property.  It does not matter whether you were paid a settlement on that claim after your divorce.  The settlement money is still marital property.

Not every piece of property that you acquired after you were married is considered marital.  Any kind of property that you acquire after your “final separation” using your own funds is not marital.  So, if you bought that car after you separated from your spouse with money that you earned after you separated, then the car is yours.  Your spouse has no claim to it.  On the other hand, if you bought that car after you separated and you used joint funds, then the car is marital property.

Marital property is more than just what you own.  It also is what you owe to creditors, like banks and credit card companies.  Debts like those are considered marital debts, even if your spouse ran up charges on his or her personal credit card during your marriage and before final separation without your knowledge or consent.  While, you may not be liable to the bank for those kind of debts, those debts are considered marital obligations.  Responsibility for those debts will be divided between you and your spouse.  The key in all of these situations clearly is figuring out the date of final separation.

Since Pennsylvania does not recognize the idea of “legal separation,” the date of your final separation may be as late as the date when you or your spouse filed for divorce.  It may also be as early as the date when you stopped living under the same roof.  However, when you and your spouse continue to live under the same roof, the courts will have to decide the date of your final separation.  In those situations, there are several facts that Pennsylvania courts will consider when figuring out the date of your final separation.  Whether and when you and your spouse stopped presenting yourselves as a married couple is significant.  The date when you separated your finances, if you held joint bank accounts during your marriage, is also relevant.  The date when you stopped sharing a bedroom or having sexual relations matters too.  Even something as simple as whether you and your spouse grocery shop, cook, or eat together can be important.

Practically speaking, the date of your final separation will determine when you and your spouse stopped acquiring marital property and stopped getting into marital debt.  For spouses, who own or control most of the marital assets or who incurred the least amount of individual debt, advocating for the earliest date of final separation is important.  Conversely, for spouses, who do not own or control most of the marital assets or who incurred most of the marital debt, advocating for a later date of final separation is critical. 

If you are not sure about your marital property or obligations or you have any questions about marital property, please contact Gregory J. Spadea, Esquire, at 610- 521-0604 at the Law Offices of Spadea & Associates LLC for a free 20-minute consultation.

Filed Under: Divorce, Family Law

Understanding How to Terminate and Modify Alimony in Pennsylvania

February 19, 2024 by Leave a Comment

An award of alimony is not necessarily a permanent obligation or a guarantee of future income.  Instead, under Pennsylvania’s statues, it can be ended or modified whenever:

  • A substantial and continuing change in circumstance occurs; or
  • The recipient marries or “cohabits” with a member of the opposite sex; or
  • The recipient or the payor dies.

The death of the spouse paying alimony or the spouse receiving alimony are obvious end points for alimony.  So is re-marriage.  Changed circumstances and “cohabitation,” however, are not so easy to prove or disprove.

To end or modify an award of alimony when circumstances change or cohabitation occurs, the courts look at each specific situation.  One of the most common circumstances for a termination or change in the amount of alimony is a change in the employment or earning capacity of the paying or the receiving spouse.  For example, if the receiving spouse alimony has an accident or is diagnosed with a medical condition that severely limits their ability to support themselves, courts will consider whether the amount of alimony should be increased to keep the receiving spouse supported at the same standard of living.  On the other hand, if the paying spouse gets a significantly better job and the original award of alimony and marital property was not enough to provide the receiving spouse with the standard of living they had during the marriage, the courts may increase the amount of alimony.  Similarly, if the paying spouse suffers a significant and permanent loss of employment or a disabling medical condition occurs, then the court may decrease the amount of alimony.  There are many other changes in circumstances that could cause the termination, reduction, or increase in the amount of alimony.  The main factor for a court is whether change in circumstances is substantial and continuing. 

Pennsylvania law does address one specific kind of change in circumstances: “cohabitation” with a member of the opposite sex, who is not a family relative.  A family relative is someone, who is within the degrees of “consanguinity” of the recipient ex-spouse.  Consanguinity simply means the same blood.  For Pennsylvania, relatives from parents, to children, siblings, first cousins, their children, grandchildren, nieces, nephews, aunts, and uncles are all considered within your consanguinity.  If the receiving spouse lives with one of these family members during or after the divorce, the obligation to pay alimony and the ability to receive alimony will continue. 

However, when they move in with someone, who is not a relative and they live together as spouses would, then the obligation to pay alimony and the ability to receive alimony ends.  Cohabitation is defined as “financial, social, and sexual interdependence.”  Proving or disproving a claim that an ex-spouse is cohabiting is the challenge. 

Courts look at the total circumstances to decide whether someone is cohabiting.  Some of the significant facts showing this interdependence are: whether the ex-spouse and the paramour share the same home and bedroom; whether they contribute together to the household expenses, such as rent or mortgage payments, utilities, groceries, car payments, or insurance; and, whether they have joint bank or credit card accounts.  Other facts include how they present themselves to the world – as partners or merely housemates.  There is no limit to the relevant facts of cohabitation, except the investigative power of the parties and their attorneys.

In the end, it does not matter if the spouse co-habits before, during, or after the divorce proceedings.  Alimony will terminate whenever cohabitation occurs, even if it starts and ends during the divorce proceedings.

Your agreement to pay or receive alimony will override Pennsylvania’s statues.  In other words, you and your spouse can agree that neither death, re-marriage, change of circumstances, or cohabitation will end or change the payment of alimony.  You can also agree that particular changes, such as a significant raise, could reduce the amount of alimony on some percentage basis.  The key to any award or agreement for alimony is planning for your future.  If you are the paying spouse, then terminating or reducing alimony by agreement is in your best interests.  If you are the receiving spouse, making sure that alimony will continue to be paid regardless of events in the life of the paying spouse is vitally important.  Receiving spouses can could protect their future alimony payments by requiring the paying spouse to maintain life or disability insurance for their benefit.  A good attorney will help you to find a solution that fits your divorce or advocate for you if you cannot resolve the claim for alimony by agreement.

If you think that your circumstances justify a change in alimony or you have any questions about alimony, please contact Gregory J. Spadea, Esquire, at the Law Offices of Spadea & Associates for a free 20-minute consultation at 610-521-0604.

Filed Under: Alimony, Divorce, Family Law

Am I Paying Too Much Real Estate Tax on my Delaware County Residencial Property

June 29, 2023 by Leave a Comment

Determining If Your Assessed Value Is Too High                                                                                  

First, look up your property’s current real estate tax assessment on the Delaware County Property Public Access website located at http://delcorealestate.co.delaware.pa.us/pt/forms/htmlframe.aspx?mode=content/home.htm

then enter your Parcel ID Number or address to get your assessed value.  You can also find the assessed value on your county or township property tax bill.

residential tax assessment delaware county pa

The common level ratio changes every 12 months, and currently is 1.63 effective July 1, 2024. 

Once you have both the Assessed value and Common level ratio, you multiply the Assessed value by the Common level ratio to get the County Fair Value.  Then, you compare the Fair Market Value to the County Fair Value you just computed. If the County Fair Value is higher than the Fair Market Value you should hire the Law Offices of Spadea & Associates, LLC by July 31, 2024 to file an annual Real Estate Tax Assessment Appeal.

Calculating the Fair Market Value

If you purchased the property after August 1, 2023 and have a ALTA settlement sheet (that is less than 12 months old) you can use the sales price from the ALTA as the Fair Market Value, and do not need an appraisal.  However, if you bought the property at a short sale or foreclosure, or bought it before August 1, 2023 (more than a year ago), you must have an Appraisal to appeal the property tax assessment.    

Fees Involved                                                                                                                               

The Cost of an Appraisal is about $425.  The filing fee is $50 and is made payable to “Delaware County Treasurer”.  The Law Offices of Spadea & Associates, LLC will help you file the application and attend the hearing on your behalf in late September.  You pay us nothing if we are unable to reduce your assessment.  There are two types of assessment appeals, one is the annual appeal and the other is the interim assessment appeal. 

Annual Appeals                                                                                                                             

The annual appeal allows property owners to appeal their assessment once a year.  Annual appeals must be filed by August 1 of each year.  Remember, in the case of an annual appeal, the Board decision does not take effect until tax bills are issued the following tax year.  The Law Offices of Spadea & Associates, LLC will represent you at the hearing which is typically in late September and present evidence such as a recent appraisal with pictures.  The Board will determine the current fair market value for the property based on the appraisal and settlement sheet presented at the hearing.  The Board generally renders a decision within 10 weeks of the hearing date and notifies the property owner in writing.  If you do not agree with the Board’s findings you have the right to file an appeal within 30 days to the Court of Common Pleas. 

Interim Assessment Appeals     

The interim assessment represents the value difference (increase) attributable to any assessable improvement to the land and the resulting increase in land value, if any. Assessable improvements include, but are not limited to; new construction of a primary structure or the addition to any such structure and the construction of any ancillary, contributory improvements such as swimming pools, sheds, garages, etc.

If a property is subject to an interim assessment, a property owner will receive an “Interim Real Estate Assessment Notice.” This Notice will inform the property owner of the old assessment and new assessment. The bottom portion of the Notice contains an APPEAL REQUEST FORM. In order to perfect an appeal of an Interim Assessment, the property owner must return the bottom portion of the Interim Notice to the Assessment Office to request receipt of an Appeal Application within forty (40) days of the date of notification of the assessment change.  The appeal date will be noted on the Interim Real Estate Assessment Appeal Notice at the top right and bottom right or this notice.

To file either an interim or annual appeal, contact Gregory J. Spadea at the Law Offices of Spadea & Associates, LLC in Folsom, Pennsylvania at 610-521-0604.

Filed Under: Real Estate

2023 Consolidated Appropriations Act Better Known As  Secure Act 2.0 Overhauls Retirement Plan Tax Rules

January 12, 2023 by Leave a Comment

The new legislation, passed by Congress and signed into law by President Biden on December 29, 2022, may have an immediate impact on your retirement savings and income strategy. Note that the effective dates vary with some are effective immediately in 2023, while others will begin over the next few years. The effective dates are highlighted with each provision outlined below. Here are some of the most important changes:

Raising the starting age for RMDs.  Effective Jan. 1, 2023, the threshold age that determines when individuals must begin taking required minimum distributions (RMDs) from traditional IRAs and workplace retirement plans increases from 72 to 73. As a result, individuals now can choose to delay taking their first RMD until April 1 of the year following the year in which they reach age 73. From that point on, RMDs must be received each year by December 31.

On Jan. 1, 2033, the threshold age for RMDs will rise to 75. In addition, the penalty for failing to take RMDs on a timely basis is cut in half effective in 2023, from 50% of the undistributed amount to 25%.  Keep in mind if individuals take advantage of delayed RMDs, the amount of withdrawals required in later years will be larger, which will result in a potentially higher tax liability in those years. If your qualified plan assets are greater than $350,000 if single or $700,000 if you are married you may want to consider converting those qualified assets to a Roth IRA depending on your tax bracket from the ages of 65 and 75.

An increase in catch-up contributions. Catch-up contributions allow people age 50 and older to set aside additional dollars beyond the standard maximum contributions to workplace retirement plans (such as 401(k)s) and IRAs. Two important changes were included in the SECURE 2.0 Act. The first bumps the maximum additional amount that can be contributed to a workplace plan if you’re age 50 and older from $6,500 per year to $7,500 per year, effective in 2023. In addition, if you’re ages 60 to 63, you’ll be able to add $10,000 more per year above the standard limit beginning in 2025.

The second provision requires all catch-up contributions to be on an after-tax basis, except for individuals who earn $145,000 or less. And beginning in 2024, catch-up contributions to IRAs, currently limited to $1,000 per year, will be adjusted for inflation in increments of $100.  As a result, some individuals may be able to avoid moving into a higher tax bracket by deferring a larger chunk of their salary and taking advantage of expanded catch-up contributions.

Auto enrollment in 401(k) plans. Employers currently have an option to initiate “automatic enrollment” of employees into a workplace retirement plan. When this occurs, employees automatically participate in the plan unless they choose not to. Under SECURE 2.0 Act, effective in 2025, the process reverses, and automatic enrollment is required of most major employers.

The amount automatically deferred each year will range from 3% to 10% of an individual’s income. Employees who don’t wish to participate in the plan can choose to opt out. Businesses with 10 or fewer workers and companies in business for less than three years are among those excluded from the mandate.

An additional change affecting workplace plans is that, beginning in 2025, part-time employees will qualify to participate in a plan once they’ve worked at least 500 hours for two consecutive years. Under existing law, part-time workers must meet the 500-hour threshold for three consecutive years.

Retirement plan contributions for those with student loan debts. This provision takes effect beginning in 2024 will allow employers to make contributions to workplace savings plans on behalf of employees who are still repaying student loans. It isn’t unusual for younger workers carrying student debt to forego retirement plan contributions in order to continue to pay off college loans. Under the new law, employers would be allowed to make contributions on behalf of employees faced with this dilemma, even if those employees do not make retirement plan contributions. Employer retirement plan contributions can match the amounts of student loan debt repaid by the individual worker in a given year. This is an opportunity for employers to offer an incentive to attract and retain employees who has college loans.

Rollovers of 529 Plan balances to Roth IRAs. Under prior law which is still in effect in 2023, leftover balances in 529 education savings plans can be taken as a non-qualified distribution, but the earnings portion of the distribution is subject to income tax and a 10% penalty. Beginning in 2024, based on provisions in the new law, you’re allowed to roll up to $35,000 of leftover funds into a Roth IRA.  The $35,000 threshold is a lifetime limit subject to a few restrictions. The 529 account must have been in place for at least 15 years and funds must move directly into a Roth IRA for the same individual who was the beneficiary of the 529 plan. Any 529 plan contributions made in the previous five years, and any earnings attributed to those contributions, are not eligible to be rolled into a Roth IRA. The amount moved into a Roth IRA a given year must be within annual IRA contribution limits.

Changes to Roth employer plans. Under current law, there are no provisions that accommodate employer matching contributions to employees’ after-tax Roth 401(k) plan contributions. Effective in 2023, individuals can choose to have employer matching contributions directed to their Roth workplace accounts. These contributions will be considered taxable income in the year of the contribution.

Under current law, Roth 401(k)s are subject to RMDs. A provision in the SECURE 2.0 Act eliminates RMD requirements for workplace-based Roth plans beginning in 2024. This change results in Roth 401(k)s having similar treatment related to RMDs as Roth IRAs.  In addition, effective in 2023, employers will be allowed to create Roth accounts, open to after-tax contributions, for SIMPLE and SEP retirement plans. Under previous law, these plans only allowed for pre-tax contributions.

Establishment of a Saver’s Match.  The current “Saver’s Credit” program allows those meeting lower income thresholds to claim a tax credit for contributions made to workplace savings plan or IRA. Effective in 2027, the credit is being replaced by a “Saver’s Match.” The match will equal up to 50% of the first $2,000 contributed by an individual to a retirement account each year (or up to $1,000). This will be a federal matching contribution deposited into the saver’s traditional retirement account.

Penalty-free early withdrawals.  The current tax code imposes a 10% penalty for distributions taken from a retirement account prior to reaching age 59-1/2. SECURE Act 2.0 expands the circumstances where penalty-free withdrawals could occur.

Exceptions to the 10% penalty include:

  • Effective immediately, the penalty for early withdrawals is waived for those certified by a physician as having a terminal illness or condition that can reasonably result in death in 84 months or less. To avoid a penalty, distributions must be repaid within three years.
  • Effective Jan. 1, 2024, “hardship” withdrawals are available for individuals who have been subject to domestic abuse equal to the lesser of $10,000 or 50% of the vested balance of the retirement account. The withdrawal must occur within one year after the individual became a victim of abuse. And all or a portion must be repaid within three years.
  • Effective in 2026, withdrawals of up to $2,500 per year can be made to pay premiums on certain types of long-term care contracts.

New rules for qualified charitable distributions (QCDs). Under current law, individuals age 70-1/2 and older can direct up to $100,000 in distributions per year from a traditional IRA to qualified 501(c)(3) charitable organizations. Effective in 2024, a new provision will allow the maximum contribution amount to increase based on the inflation rate.

In addition, beginning in 2023, individuals have a one-time opportunity to use a qualified charitable distribution (QCD) to fund a Charitable Remainder Unit Trust (CRUT), Charitable Remainder Annuity Trust (CRAT) or a Charitable Gift Annuity (CGA). Up to $50,000 (indexed for inflation) can be directed using this one-time distribution option. If a distribution is directed to a CRUT or CRAT, it must be the only form of funding for that trust.  QCDs are often an overlooked planning opportunity for individuals to manage gifts and reduce taxes.

New limits for Qualified Longevity Annuity Contracts (QLACs). Effective immediately, the “25% of account balance” limitation for QLACs is eliminated. In addition, the maximum amount that can be used to purchase such products was raised from $145,000 in 2022 to $200,000 effective in 2023.

If you have any questions regarding the Secure Act or need estate or tax planning, feel free to call Gregory Spadea at 610-521-0604.  The Law Offices of Spadea Offices of Spadea & Associates provides year round estate and tax planning and tax return preparation.

Filed Under: Federal Tax

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