Picking The Personal Representative In Michigan

 

Pick Personal Representative

What is a Personal Representative?

The personal representative in Michigan, also known as an executor, is the person qualified by the probate court to administer the estate of a decedent. The personal representative hires the probate lawyer, signs all probate court documents, gathers assets, pays final bills, files final tax returns, and distributes any inheritance or property to the heirs and devisees. Think of the personal representative as the CEO of a business.

Who gets to be the Personal Representative?

Michigan’s probate code has a batting order for picking the Personal Representative. From first to last it starts with:

  • The person named in the decedent’s Will as the executor
  • The decedent’s surviving spouse if also receiving property in the Will
  • Any person who is to inherit property
  • The decedent’s surviving spouse
  • Any other heir
  • Someone nominated by a creditor of the decedent
  • A public administrator appointed by the court if there is no one else to do it

Do you have to serve as a Personal Representative?

Nope. You can decline and the person with the next highest priority will serve.

What if I don’t have priority?

You can serve as Personal Representative only if every single person with greater or equal priority agrees in writing. Please note, probate is driven by court approved court forms. I am not suggesting they can write a letter. It has to be on the right form and filed properly with the court.

Have more questions? Call us at 313-291-0240.

Chris McAvoy is a  Michigan attorney who helps people with bankruptcy, family law, and estate planning. To find out more or set up an appointment, click here for contact info. Our attorneys help people in Taylor, Allen Park, Southgate, Lincoln Park, Riverview, Taylor,  Trenton, Flat Rock, Wyandotte, Brownstown, Belleville, Dearborn, Dearborn Heights, Westland, Garden City,  Canton and the Downriver, Michigan area.

 

 

Bankruptcy Discharges Back Taxes.

 

 Monopoly Income Tax Ver1

Discharging Taxes In Bankruptcy.

Contrary to popular opinion of my clients (and even some lawyers), income taxes can be discharged in bankruptcy and your refund can be protected. It’s true. Whether the money is owed to the Internal Revenue Service or the Michigan Department of Treasury, income taxes can be discharged in a Chapter 7 and Chapter 13 bankruptcy. If you meet all  the following  conditions,  you can discharge your back taxes in full.

3 Years Old:   The tax debt has to be at least three years old. More than three years have to pass between the date of filing and the date the tax return was due. Typically, the due date is April 15th of each year. However, if you filed for an extension for the tax year in question, the three years won’t start running until the due date of the extension. The date you actually filed the tax return doesn’t matter when calculating the three years. The due date controls, not the filing date.

2 Year Filing Requirement: The tax return must have been filed within the last two years. If you failed to file the return, even if the tax debt is more than three years old, you cannot discharge it. If the IRS files a tax return for the taxpayer, that doesn’t count. The tax filer must file the return themselves.

Assessed in the last 240 days: The taxes must have been assessed or determined by the IRS more than 240 days before the bankruptcy filing. For example, if your 2007 tax return is audited in 2010, you must wait until 240 days have passed from the latest date that the tax was finally determined. Tax assessments after the date of bankruptcy filing cannot be discharged as they are post-filing debts. Keep in mind that taxes based on fraudulent tax returns, trust fund taxes, or sales taxes are never dischargeable.

Not a tax lien. Once a tax debt becomes a lien on any of your real or personal property, it is a secured debt and cannot be discharged. The IRS will file the notice in either the county the land is or where the debtor lives depending on what property is being attached

Timing is everything. A mistimed filing that does not take into account all of these conditions will fail to discharge your tax debt. Sometimes, if possible given your circumstances, you may want to delay filing if it will insure wiping out old tax debt. Your bankruptcy lawyer should be familiar with these rules and help you maximize your debt relief.

Have more questions? Give us a call at 313-291-0240.

Chris McAvoy is a  Michigan attorney who helps people with bankruptcy, family law, and estate planning. To find out more or set up an appointment, click here for contact info. Our attorneys help people in Taylor, Allen Park, Southgate, Lincoln Park, Riverview, Taylor,  Trenton, Flat Rock, Wyandotte, Brownstown, Belleville, Dearborn, Dearborn Heights, Westland, Garden City,  Canton and the Downriver, Michigan area.

 

Which Parent Gets To Claim The Child On Their Taxes?

Child Tax Deductions

Custodial Parent Gets the Tax Exemption for the Child

Even though your divorce or custody case is in Michigan, IRS regulations control which parent gets to take the children on their taxes as a dependency exemptions after a divorce.  The general rule is that the custodial parent takes the children as exemptions. The custodial parent is the parent with whom the child lives a majority of the year. The other parent is the non-custodial parent.

When Can the Non-Custodial Parent?

Absent an agreement between the parents, the non-custodial parent can claim a child as a tax exemption on their return only if:     

1. The parents:          

     a. Are divorced or legally separated under a decree of divorce or separate maintenance,          

     b. Are separated under a written separation agreement, or          

     c. Lived apart at all times during the last 6 months of the year, whether or not they are or were married.     

2. The child received over half of his or her support for the year from the parents.     

3. The child is in the custody of one or both parents for more than half of the year.     

4. Either of the following statements are true:          

      a. The custodial parent signs a written declaration, discussed later, that he or she will not claim the child as a dependent for the year, and the noncustodial parent attaches this written declaration to his or her return. (If the decree or agreement went into effect after 1984 and before 2009, see Post-1984 and pre-2009 divorce decree or separation agreement , later.          

      b. If the decree or agreement went into effect after 2008, see Post-2008 divorce decree or separation agreement , later.)A pre-1985 decree of divorce or separate maintenance or written separation agreement that applies to 2013 states that the noncustodial parent can claim the child as a dependent, the decree or agreement was not changed after 1984 to say the noncustodial parent cannot claim the child as a dependent, and the noncustodial parent provides at least $600 for the child’s support during the year.

Equally Shared Parenting Time

If the parents equally share the parenting time during the year, the parent with the greater Adjusted Gross Income (AGI) gets the exemption.

Need to talk? Call 313-291-0240 to set up an appointment.

Chris McAvoy is a Michigan attorney who helps people with bankruptcy, family law, and estate planning. To find out more or set up an appointment, click here for contact info. Our attorneys help people in Taylor, Allen Park, Southgate, Lincoln Park, Riverview, Taylor,  Trenton, Flat Rock, Wyandotte, Brownstown, Belleville, Dearborn, Dearborn Heights, Westland, Garden City, Canton and the Downriver, Michigan area.

Keeping Your Tax Refunds In A Chapter 7 Michigan Bankruptcy

Keeping your Tax Refunds in a Chapter 7 Michigan Bankruptcy.

If you want to keep your refund from being seized by the Chapter 7 bankruptcy Trustee, you must read this. My clients in the Downriver area count on their tax refunds to catch up on bills, buy clothes for the kids, or even pay their property taxes. Here are 5 things you must know to keep your money.

1. Federal tax refunds cannot be garnished from the IRS but federal refunds can be garnished from your bank account once deposited. If you want to keep your federal tax refunds from a judgment creditor that is garnishing you, then avoid direct deposit and get a check sent to you. 

2. State refunds in Michigan can be garnished by a judgment creditor from the Department of Treasury. A judgment creditor doesn’t have to wait for it to get into your bank account. Only thing you can do to stop this type of garnishment is to file for bankruptcy protection. If you file after it is garnished and sent to the judgment creditor, you may be able to recover it as a preferential payment.

3. Disclose, disclose, disclose.  A tax refund or credit is an asset even if you haven’t received it yet. You must disclose what you think or know you will be getting on Schedule B of the bankruptcy petition and then exempt the refund on Schedule C. Failure to list a tax refund as an asset will likely result in losing your tax refund to the Trustee and your creditors.

4. If you are in a Chapter 13, you may be able to keep some or all of your Federal tax refund. As discussed in a prior post,  you must turn over  your Federal tax refunds to the Chapter 13 Trustee for distribution to your creditors. Your bankruptcy judge may allow you to keep it if you can show you need it. Maybe you need it for a necessary repair to the house, a repair to a car, or a new washing machine if your old one broke.

5. Prepare your tax returns. This sounds really basic but it’s critical. Bankruptcy requires all your tax returns to be filed by the Section 341 Meeting of the Creditors. Failure to do so can result in a dismissal of your case. Also, if you don’t know what you are getting back, you will not be able to protect it. Your Chapter 7 Trustee may keep your case open until the tax returns are done so he can see how much money he can seize.

Chris McAvoy is a Michigan attorney who helps people with bankruptcy, family law, and estate planning. To find out more or set up an appointment, click here for contact info. Our attorneys help people in Taylor, Allen Park, Southgate, Lincoln Park, Riverview, Taylor,  Trenton, Flat Rock, Wyandotte, Brownstown, Belleville, Dearborn, Dearborn Heights, Westland, Garden City, Canton and the Downriver, Michigan area.

Which Comes First: Bankruptcy or Divorce?

Chicken or egg?

Which Comes First: Bankruptcy or Divorce?

It’s all about timing. When considering a bankruptcy and a divorce, should you file the bankruptcy before, during, or after the divorce? Filing bankruptcy before a divorce can make both less expensive and maybe even less complicated.

Divorce and the Automatic Stay

If the bankruptcy petition is filed during the divorce, the divorce action is stopped in its tracks by the automatic stay. All property of the debtors becomes property of the bankruptcy estate and cannot be divided up in any property settlement until either the bankruptcy is over or permission is received from the bankruptcy judge. This automatic stay does not apply to child support, spousal support, or custody and parenting time but only to property division. While it may be necessary to file during a divorce, just understand it will slow down the process.

Costs of Bankruptcy and Divorce

Bankruptcy filing fees are the same whether you file jointly or individually. Also, most attorneys charge the same fees for either a single person or a married couple. Once the debt is gone, arguments about apportionment of debts between spouses is unnecessary which should lower your divorce costs.

Chapter 7 vs. Chapter 13

A Chapter 7 takes anywhere from three to four months to complete. It is an efficient, cost effective way to eliminate debt so it is a quick way to dump your debt without unreasonably prolonging your divorce.

If a Chapter 13 is necessary, consider holding off until after the divorce is over if possible as a Chapter 13 payment plan can be up to 60 months long. Most people don’t want to stay in a bad marriage until the plan is over.

Eligibility for Chapter 7

The income of both spouses is used to determine eligibility for a Chapter 7 bankruptcy. Sometimes, a person’s income would be too much to be eligible for a Chapter 7 if filing by themselves but if that would change if using all of the dependents in the home Other times, a couple has to file a Chapter 13 because they earn too much to do a Chapter 7. In that case, it may be necessary to file after a divorce. For example, if the eligibility for a two person household is $55,000 and both spouses make $35,000 each, they are not eligible to file a Chapter 7. However, since a single filer can earn up to $44,000, they filers would be individually eligible after their divorce.

Have more questions? Give us a call at 313-291-0240.

Chris McAvoy is a  Michigan attorney who helps people with bankruptcy, family law, and estate planning. To find out more or set up an appointment, click here for contact info. Our attorneys help people in Taylor, Allen Park, Southgate, Lincoln Park, Riverview, Taylor,  Trenton, Flat Rock, Wyandotte, Brownstown, Belleville, Dearborn, Dearborn Heights, Westland, Garden City,  Canton and the Downriver, Michigan area.