Earlier this month, the California Housing Financing Agency (“CalHFA”) began taking applications for their Unemployment Mortgage Assistance Program (“UMA”), a federally funded program which offers unemployed homeowners up to $18,000 over six months to pay their mortgage.

The UMA is one of four programs which are soon to be available under CalHFA’s Keep Your Home California program. The “Keep Your Home California program” is financed by the U.S. Treasury Department under the “Hardest Hit Fund”.

HARDEST HIT FUND

President Obama established the Hardest Hit Fund in February 2010 to provide targeted aid to families in states hit hard by the economic and housing market downturn. Hardest Hit Funds are coming out of the $50 billion set aside for foreclosure prevention under the Troubled Assets Relief Program

States were chosen for the Hardest Hit Fund either because they are struggling with unemployment rates at or above the national average or steep home price declines greater than 20 percent since the housing market downturn. California was one of the first states chosen and has been granted almost $2 billion in funds.
CalHFA has allocated $875 million of its hardest hit funds for unemployment assistance, $790 million for principal reduction, $129 million for mortgage reinstatement and $32 million for transition assistance.

KEEP YOUR HOME CALIFORNIA PROGRAM

The Keep Your Home California program contains four programs to assist California homeowners. Three of these programs are designed to help qualifying homeowners remain in their homes and avoid foreclosure:

• Unemployment Mortgage Assistance Program

• Mortgage Reinstatement Assistance Program

• Principal Reduction Program

The fourth program, the Transition Assistance Program, provides financial assistance for homeowners who can no longer afford their home and need help transitioning to other housing. The Transition Assistance Program may only be used in conjunction with a short sale or deed-in-lieu of foreclosure transaction.

A homeowner can receive up to $50,000 in combined benefits through these programs.

At this time, the only program available is the Unemployment Mortgage Assistance Program. CalHFA hopes to launch the other programs in mid to late February.

UNEMPLOYMENT MORTGAGE ASSISTANCE PROGRAM

UMA is intended to assist homeowners who have experienced involuntary job loss and are in imminent danger of foreclosure due to short-term financial problems.

UMA will provide temporary financial assistance in the form of mortgage payment subsidies up to $3,000 or 100% of the existing total monthly mortgage, whichever is less for up to six (6) months.

There are many requirements and restrictions for the plan, so many people may not qualify. Here are just a few of the requirements:

• You must be eligible to receive unemployment benefits, but you cannot be within 90 days of exhausting them.
• Your income must be 120% or less of the HCD Area Median Income. In Los Angeles County, your income must be $90,720 or less. In Orange County, your income must be $125,580 or less.
• You must own and occupy the California home and it must be your primary residence. You cannot own any other real estate
• Your loan must have originated on or before January 1, 2009 and the balance cannot be more than $729,750.
• You must be delinquent or at risk of becoming delinquent, but you cannot be in foreclosure or more than three (3) payments delinquent.
• You will not qualify if you refinanced your mortgage for more than the outstanding balance (except to pay for mortgage-related fees). If you refinanced just to get a lower rate, you will not be disqualified.
• If you have a stand-alone second mortgage, such as a home equity loan or line of credit, you will not qualify.
• You are eligible for consideration if you previously filed for bankruptcy, but not if you are in “active” bankruptcy

This assistance will be provided to eligible homeowners as a conditional lien. You are not required to make payments; however, if you sell your home or fail to maintain your loan in good standing for three (3) years from receiving the assistance, the lien becomes a loan and you may be required to pay it back from the proceeds of the sale of your home.

Eligibility is determined by CalHFA on a first-come/first-approved basis until program funds and funding reserves have been exhausted.

This is a public service announcement. We do not provide counseling or modification services, and you should beware of anyone who asks for a fee for such services.

Homeowners are requested to contact the CalHFA directly at 888-954-KEEP (5337) to see if they qualify.

You can determine your general eligibility by visiting the Eligibility Calculator at http://www.keepyourhomecalifornia.org/qualify.aspx.

References:

Keep Your Home California Income http://www.keepyourhomecalifornia.org/

Keep Your Home California Income Limits Retrieved from http://www.keepyourhomecalifornia.org/files/income.pdf</a>

Pender, K. (2011, January 9) CalHFA mortgage aid program for jobless begins Retrieved from http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/01/09/BU4N1H5FOR.DTL&ao=all

U.S. Treasury: Hardest Hit Fund Retrieved from http://www.treasury.gov/initiatives/financial-stability/housing-programs/hhf/Pages/default.aspx

Carey, P. (2011, January 12) State plan to help homeowners facing foreclosure kicks off Retrieved from http://www.mercurynews.com/business/ci_17078425?nclick_check=1

After a year of uncertainty over the future of the estate tax, we may soon get some clarity, though it may only last for two years.

On Monday, December 7, 2010, President Obama announced a compromise with Republicans on an extension of the Bush Tax Cuts. The compromise is said to include a two-year extension of the Bush-era tax cuts for all taxpayers, a 13-month extension of unemployment benefits, a 2% payroll tax cut, and a significantly watered down version of the estate tax.

The reported compromise will bring back the estate tax in 2011-2012 at a maximum rate of 35% with a $5 million exemption per person. These numbers are a significant reduction from the 55% maximum tax rate and $1 million exemption that would have gone into effect if Congress failed to act before January 1, 2011.

For those that have not been following the topic, the estate tax was repealed in 2010 as part of the Economic Growth and Tax Relief Reconciliation Act of 2001, commonly referred to as the “Bush Tax cuts.” The Bush Tax cuts were part of a sweeping tax cut which gradually reduced income tax and the estate tax from 2001 through 2010. The Bush Tax cuts were set to expire on January 1, 2011.

Under the Bush Tax cuts, the estate tax rate was gradually reduced from 55% in 2001 to 45% in 2009.

In addition to lowering the tax rate, the number of estates subject to the tax was drastically reduced. Under the Bush Tax cuts, the amount that of an estate that is exempt from taxation was raised from $675,000 in 2001, to $3.5 million in 2009. The estate tax was fully eliminated in 2010.

By raising the exemption amount from $675,000 to $3.5 million, the number of taxable estates dropped from more than 50,000 in 2000 to fewer than 7,000 in 2009. In other terms, 2% of the estates were taxable in 2000, but in 2009, that number dropped to 0.025%. In 2001, 20 of 1000 estates were taxable. In 2009, only 3 of those 1000 were taxable.

The estate tax provision of Obama compromise is similar to an oft-criticized proposal brought by Senators Jon Kyl and Blanche Lincoln, which proposed the lowered estate tax rate (35%) and the higher exemption ($5 million).

Opponents criticize the estate tax as double taxation and an unfair levy that destroys family businesses. Proponents of the tax, such as Warren Buffet and Bill Gates, view the tax as essential to preserving meritocracy in the United States, while providing billions of dollars to the government. . bloomberg. Nov.28. The estate tax change is estimated to cost the government $68 billion in revenue over the next two years. The hill.com

If the terms of Monday’s compromise are approved by Congress, the estate tax changes will go into effect in 2011 and expire in 2012. The compromise is likely to be approved because of the looming deadline on all tax cuts. But members of the Democratic party vow to fight the estate tax provision and claim that it is a “bridge too far.” So there still may be changes coming.

The increased exemption amount would likely mean that more than 99.75 percent of the estates in the United States would not be subject to an estate tax. Some estate planners are already disappointed by the change because the compromise may have prevented a situation where many estates would have been subject to the tax.

However, even with fewer estates subject to the tax, there is still a significant need for estate planning. Estate planning can be used to avoid costly probate, disinherit relatives, refuse artificial respiration, name guardians for young children, provide for special needs children, and a host of other benefits.

Politics aside, the changes do provide clarity and should make estate planning easier for 99.75 percent of the population, which is probably a good thing for most, though it may be even better for that top 0.025%.

Image: CC licensed from Vincepal/Flickr]

References:

Needham, V. (2010, December 6) Obama announces accord on taxes. Retrieved fromhttp://thehill.com/blogs/on-the-money/domestic-taxes/132273-obama-announces-accord-on-taxes-

Wingfield, B. (2010, December 7) How The Tax Compromise Might Affect Estate Planning.  Retrieved from http://blogs.forbes.com/brianwingfield/2010/12/07/how-the-tax-compromise-might-affect-estate-planning/

We all love our pets. In the U.S., 71.4 million households have at least one bird, fish, reptile, cat, dog or bunny. But what happens to our pets after we’re gone?

Many of us estate plan because we want to protect of our children, to save on estate taxes, or to facilitate the transfer of assets to our beneficiaries, but sadly, we often forget about our pets.

Our pets are often considered a part of the family and we should include them in our estate plans. There are several options available for pet estate planning. You can read more about all of the pet planning options here. This will focus on, the Pet Trust, which is the tool that is usually best suited for most pet owners.

In short, a Pet Trust, is like other revocable trusts, but it is specially authorized by the California legislature and provides unique protections for your pet.

Legal History of Pet Estate Planning

In California, an outright gift to an animal is void. In 1968, a California court found that the testatrix’s dog, Roxy Russell, could not be a beneficiary of a will because Probate Code §7 (currently Prob C §6102), limited disposition of property to “any person.” Estate of Russell (1968) 69 C2d 200, 70 CR 561. The court held that the word “person” did not include a dog, and therefore the dog was not an eligible beneficiary. The court directed the distribution of Roxy’s share (half of the estate) to the decedent’s heirs at law. After the Russell case, it seemed that there was no way to ensure the proper care of a client’s companion animals upon death.

In 1991, the California made a step towards allowing pet owners a way to plan for their pets by enacting Prob C §15212, which permitted trusts for the care of “a designated domestic or pet animal” to be performed by the trustee. Prob. C§15212 was a step forward because it legally recognized pet trusts, but it lacked enforcement mechanism typical of other private trusts. Prob. Code §15212 did not allow a current beneficiary to take action against a trustee who failed to administer the trust.

Finally, in 2008, legislation signed by Governor Schwarzenegger addressed the shortcomings of the Prob. Code §15212. Effective January 1, 2009, former Prob C §15212 was repealed and replaced by a new version of Prob C §15212. Under the new §15212, certain requirements were set forth, but if these requirements were met, the terms of the Pet Trust could be enforced. Under the revised code, any beneficiary, any person designated by the trust instrument or court to enforce the trust, or any nonprofit charitable corporation that has as its principal activity the care of animals may, on reasonable request, inspect the animal, the premises where it is kept, and the books and records of the trust. Prob C §15212(f).

Advantages of a Pet Trust

For many pet owners, a trust generally provides the best option for the care of a beloved pet. The trust can provide a flexible method for managing financial assets for the benefit of a pet or pets until the pets pass away. After the pets pass, any remaining financial assets in the trust can be distributed according to the pet owners wishes, such as to other family members, animal protection agencies, charities, etc.

Another advantage of a trust is that the trust provisions can include very specific instructions for the care of the companion animals, which are unenforceable if you include them in a will. A will may also be problematic because probate takes time and assets might not reach the person you hope will take care of your pet until months or years later.

Pet owners have several options when considering the future of their pets. A Pet Trust may not be for every one, but if you feel that a Pet Trust is the right option for you and your beloved pet, we can draft California Pet Trust which meets your specific needs for you for $195.00, or include one as part of a comprehensive estate plan.

Contact us to see if a Pet Trust is right for you and your pet.

Image: CC licensed from John Talbot/Flickr]

The additional fee, if applicable, is in addition to the base processing fee ($320), the existing Fraud Prevention and Detection Fee ($500), and any applicable American Competitiveness and Workforce Improvement Act of 1998 (ACWIA) fee ($750/$1,500) needed to file a petition for a Nonimmigrant Worker (Form I-129), as well as any premium processing fees, (if applicable).

The I-129 forms are currently being revised by USCIS to comply with Public Law 111-230. To facilitate implementation of Public Law 111-230, USCIS recommends that all H-1B, L-1A and L-1B petitioners, as part of the filing packet, include the new fee or a statement of other evidence outlining why this new fee does not apply.

The law is effective as of Aug.13, 2010  and will remain in effect through Sept. 30, 2014.

USCIS Implements H-1B and L-1 Fee Increase

For those in California, the typical legal document used today is the Advanced Health Care Directive (“AHCD”).  Starting in July 2000, the California Health Care Decisions Law took effect and authorized the use of the Advanced Health Care Directive, which consolidated previous advance directives and made it easier for individuals to make their preferences known through written and oral communications.  The AHCD replaced the Natural Death Act and is now recognized as the legal format for a living will in the state of California.

What is the Advance Health Care Directive (AHCD)?

The AHCD allows you to do either or both of the following two things to prepare yourself in the event that you become incapacitated:

1) Appoint a health care agent, who will have the legal authority to make health care decisions for you if you are no longer able to speak for yourself.

2) State your instructions for future health care decisions, in the event that you cannot speak for yourself.

The AHCD can also be used to appoint a conservator or guardian, make autopsy and funeral arrangements and/or make decisions regarding organ and tissue donation.

What is required to complete an AHCD?

An AHCD is valid if:

1. It is completed by a competent person over age 18
2. Includes the person’s name, signature and date
3. Is acknowledged by a notary public or signed by two witnesses

Whom should I choose as a health care agent?

When choosing your health care agent, choose a person whom you trust, for example, a family member, spouse, parent or close friend.  Make sure that the person you choose is willing to assume the responsibility and fully understands your health care wishes.

What kinds of decisions can my health care agent make?

You can choose the power that you give your agent.  Some of the powers you can give include:

• The right to choose the health care providers and institutions;
• The right to discharge the health care provider
• The right to refuse or consent to treatment;
• The right to access medical records; and
• The right to withdraw or withhold life-sustaining treatment.
• The right to permit or restrict organ donations,
• The right to authorize an autopsy.
• The right to direct the disposition of your remains.

What should I do with my completed AHCD form?

You should keep the original copy where your family or friends will be able to find it if it is needed.  You should also give a copy to your primary physician, your agent and any other health care facility that is providing you care.   You should also put a card or notation in your wallet or purse that states that you have an AHCD.  Some people also take a copy of their AHCD when they travel.

May I change or revoke my AHCD?

Yes. You can change or revoke your AHCD at any time.  To avoid possible confusion, you should notify your physician, your previous agent and anyone who has a copy of your AHCD of any changes or revocations.  Your AHCD remains valid forever unless you revoke it, execute a new AHCD, or specify a date on which you would like your AHCD to expire.

Are previous advance directives still valid?

If a completed advance directive was previously valid, it remains so unless you rescind it.   Any previous advance directive such as a Durable Power of Attorney for Health Care or a Natural Death Act that was valid in California as of July 1, 2000 is still valid.

However, if you executed a Durable Power of Attorney for Health Care (DPAHC) before 1992, it may have expired.  If you have executed a DPAHC before 2000, when the California Health Care Decisions Law consolidated previous directives into the AHCD, you should check to see that the forms have not expired and still reflect your wishes.

What will happen if you lose the capacity to make a decision, but you do not have an AHCD?

If you lack the capacity to make decisions, the health care team will usually turn to your family or close friends.  If there is no dispute between your loved ones about what should happen, this is not a problem.  But if a dispute arises, like in the Terri Schaivo case, it could become a major problem.

For more information about Advanced Health Care Directives, contact our offices.

References

California Health Care Decisions Law

But estate planning can be extremely helpful to your loved ones.  Estate planning can not only make the transfer of assets simpler, but it can ensure that everything you have worked long and hard to obtain ends up in the right places after you die.

This article will not cover the intricacies of things like, trusts, estate taxes, probate, or life insurance, but it will provide some essential information about estate planning that you should consider:

1. Have an estate plan: Estate plans ensure that your goals are met, for your family and financially, after your death.

2. Elements of an Estate Plan: An estate plan generally contains several elements: a will, assignment of power of attorney, and an Advanced health care directive/living will or health care proxy (medical power of attorney). For some people, a trust might also make sense.

3. Take Inventory of Your Assets: Typical assets include your bank accounts, real estate, retirement accounts, life insurance policies, and business interests.

4. Review beneficiaries: As your family situation changes over the course of your lifetime, you may need to change the names of beneficiaries not only in your will but in life insurance policies and other documents that list beneficiaries.

5. Discuss your estate plans with your loved ones/heirs: If your loved ones/heirs know about your intentions, there will likely be a lot less confusion later.

6. Stay Organized: When someone passes away, it can be traumatic for loved ones. Even with complete estate planning documents, if your loved ones cannot find them, it can make things very complicated for them. Help them by staying organized and keeping things like keys to safety deposit boxes, financial statements and other necessary information altogether. It is essential to create a list of where all-important information can be located and give the list to someone you trust.

Image: Simon Howden / FreeDigitalPhotos.net

We often discuss the merits of filing for bankruptcy, but we do want you to remember that bankruptcy should be your last resort.  Bankruptcy is not the cure all for everything and everyone.  Filing for bankruptcy will stop the foreclosure process, but it will not immediately wipe out the mortgage and allow you to keep your home without any further payments.  If anyone is telling you otherwise, be careful.

But if you are still working and able to make your mortgage payments, bankruptcy can wipe away your unsecured debt, like credit card bills, giving you a little more breathing room to make those mortgage payments.

Read more at CNN.com, http://bit.ly/axC5oj

Free Bankruptcy Seminar

Having trouble paying your bills?  Worried about losing your home or your car? Tired of constant notices from creditors?

If so, you’re not alone.  Many people face a financial crisis some time in their lives. The crisis can be caused by personal or family illness, the loss of a job, or overspending. No matter what the reason, the situation can be overcome.

Some of the options available to you include: budgeting, credit counseling, debt negotiation, debt consolidation, or bankruptcy.

On July 23, 2010, the Law Offices of Jason Murai will be hosting a FREE seminar which will cover all of these options.

Anyone with financial trouble or anyone that knows someone in financial trouble can benefit from the FREE information and is welcome to attend.  In particular we will be answering questions and discussing bankruptcy, foreclosures and debt relief.

If you cannot attend the seminar, feel free to our office to schedule a personalized free consultation to discuss your financial situation.

Some of the Questions that will be addressed at the Seminar include:

• Who may file bankruptcy?
• What assets can I keep if I file bankruptcy?
• What debts can I discharge (eliminate) in bankruptcy?
• What will my creditors receive if I file bankruptcy?
• Will bankruptcy allow me to keep my house?
• Will bankruptcy allow me to catch up on my house payments?
• What may I transfer or sell prior to filing bankruptcy?
• If I intend to file bankruptcy, what debts should I continue to pay?
• Will I have to go to court?
• How long will it take to complete a bankruptcy case?
• How much does a bankruptcy cost?

Image: Daniel St.Pierre / FreeDigitalPhotos.net