INCREASE IN AID TO ARIZONA HOMEOWNERS AS A RESULT OF THE GOVERNMENT’S SETTLEMENT WITH THE FIVE LARGEST U.S. BANKS

The nation’s five largest mortgage servicers are exceeding the requirements of an agreement to provide aid to struggling homeowners, providing billions of dollars more in mandated loan-related relief to borrowers.

The relief comes from the national mortgage foreclosure settlement forged last year among the U.S. Justice Department, 49 states and the nation’s five largest banks: Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial.

The settlement was intended to compensate borrowers harmed by the mortgage industry’s robo-signing scandal, in which many people allegedly were foreclosed on improperly through bad paperwork and other abuses.

Automatic Revocation of Probate and Non-Probate Transfers Caused by Divorce

Arizona is one of a few states that has adopted a statute that automatically invalidates a newly divorced spouse as the beneficiary under his or her former spouse’s will or insurance policy. The statute is A.R.S. 14-2804 and it also operates to invalidate the provisions of a Joint Tenancy Deed with Right of Survivorship converting it, instead, to a Tenancy in Common between the former spouses. The general rule is that if your spouse could remove you as a beneficiary or joint tenant, A.R.S. 14-2804 presumes that your spouse wishes this to be done and accomplishes it automatically–without notice to you.

This, on its face, sounds good. After all, who would want to continue a former spouse as the beneficiary on a life insurance policy or as a beneficiary under their will? In actual practice, however, this is not uncommon. Life insurance is often continued to provide for a former spouse and children of the marriage. A former spouse can be named as a beneficiary under estate planning documents for the same purpose.

Many people assume, as is the practice in many states, that their beneficiary choices will continue until deliberately changed by them and that a Joint Tenancy Deed will insure that their surviving joint tenant inherits the entire property.

But this is not always true in Arizona. Discovery of the problem usually comes after a death when it is too late to fix it. An unintended and disastrous estate planning result can happen. A totally unsuitable person can end up owning or in control of substantial assets intended for another. 

CHANGING PERCEPTIONS ABOUT BANKRUPTCY

Perceptions about bankruptcy have been changing. In the past, bankruptcy was seen as a mark of failure, something shameful not to be discussed. Now, bankruptcy is more often recognized as what it was always intended to be–a powerful planning option to re-organize, rehabilitate and empower. Bankruptcy clears away obstacles. It enables payment of college tuition. It facilitates planning for retirement. It makes life full of possibilities again. It gives hope.

But not all obstacles can be overcome. Some debts cannot be discharged in bankruptcy. Some of these are most taxes, most student loans, criminal fines and restitution payments, court ordered child support, debts that arise as a result of fraud or misrepresentation and also debts that you forgot to list on your bankruptcy petition. See our previous article discussing these kinds of debts and their ability to be discharged.

Even here, however, there can be exceptions. Taxes can sometimes be discharged if they are old. Student loans can be discharged where there is extreme hardship. The damage of a Federal Tax lien can be minimized by motion in an appropriate case. A second mortgage can be elimated in a Chapter 13 bankruptcy.

Ancillary Probate: When it is necessary and how to avoid it

If you were to survey the general public about a topic like probate you may find that many people don’t quite know what it means. Interestingly, you’ll probably also find that it is almost universally considered something to avoid. This reputation is warranted for a process that often unnecessarily saps its participants of time and money.

Well, it is time to add another component to probate which makes it undesirable. Ancillary probate. An ancillary probate is exactly what it sounds like. It is a supplemental probate proceeding under the umbrella of a bigger probate estate. It is most commonly used when a probate estate needs to be reopened or when a decedent owns property in more than one state. The latter situation provides us with another opportunity to advise people to take the necessary steps to avoid this type of hassle.

Imagine this far-fetched scenario. An individual moves from another part of the country to Arizona to retire. Upon moving here, this individual lives a modest life with a typical estate plan including a will. When this person dies, his heirs begin the expensive process of probating the estate.

U.S. Supreme Court rules that children conceived through in vitro fertilization after their father’s death are not eligible to receive Social Security benefits.

On May 21, 2012, the U.S. Supreme Court ruled in Astrue v. Capato (No. 11-159) that Robert Capato’s twin girls conceived after he died using his frozen sperm are not entitled to Social Security survivor benefits. 

Eighteen months after her husband, Robert Capato, died of cancer, Karen Capato gave birth to twins conceived through in vitro fertilization, using her husband’s frozen sperm. Karen applied for social security benefits for the twins, but the Social Security Administration (“SSA”) denied her application.

The Social Security Administration interpreted the Social Security Act to allow children conceived after their father’s death to qualify for Social Security survivors benefits only if they could inherit from their father under state intestacy law. Robert was domiciled in Florida when he died. Under Florida law, a child born after the father’s death may only inherit through intestate succession if the child was conceived during the decedent’s lifetime.