Category Archives: Estate Planning

Your Estate Plan Should Reduce Your Legislative Risk, Not Increase It

By Senior Associate Attorney, Dan Vu

Too often estate planners do not consider their client's legislative risk. In other words, they plan without consideration to the very high probability that the current rules will change. In Washington and Columbus, every new bill passed by the legislature is touted as the new permanent law of the land, but in reality it is only “permanent” until the next time they decide to change it. So if your plan does not provide the flexibility for the changing rules, you can actually be in a worse position than you would without any plan.

Let's review an example that just recently occurred in Ohio. Governor Kasich was able to defeat the odds stacked against him when he was able to repeal the Ohio Estate Tax, effective January 1, 2013. Few thought this would actually occur, since Ohio, like most states, is facing budget constraints. For many Ohioans, this law made their current estate plan obsolete. Tradition revocable trust planning contained provisions that were meant to shelter the estate from the Ohio Estate Tax. These types of trusts were called A/B Trusts. But now that the Ohio Estate Tax has been repealed these these older trusts are not only not helpful but they can even now be hurtful. For example, an A/B Trust would now have a less favorable capital gains treatment than having no trust at all!

Screen Shot 2014-04-08 at 12.37.12 PMHowever, just as it is not a good idea to keep an obsolete trust, it is also not a good idea to pretend that the repeal of the Ohio Estate Tax is permanent. A trust should be flexible. We have for many years used “Spousal Options Trusts.” These trusts allow our clients to utilize the traditional benefits of an A/B trust if an estate tax is in effect at the time of death. If there is no Ohio Estate Tax at death, the same trust can instead opt into obtaining favorable capital gains treatment and ignore the estate tax provisions.

All of our trusts have similar types of built-in flexibility. For example, our Heritage Trust is a trust that allows you to leave to your children a protected IRA “stretched” over their individual lifetime. But since we know that the IRA rules may change, it has built-in provision that allows for tax changes to be made even after you and your spouse have long passed away.

So, of course, not planning at all is not the answer. You just need a plan that builds in flexibility so that as the laws change you can always avail yourself to the advantages that the new laws provide and protect yourself from the disadvantages that new laws might impose.

How can you tell if your plan has built-in flexibility? Consider meeting with an experienced elder law attorney for a review.

 

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.
The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

Do I Need an Estate Plan if I’m Single with No Children?

By Jill Besl

Screen Shot 2014-03-21 at 8.35.27 AMMost people don't give it a second thought: “Who will take care of me in my old age?”, “Who will see to my needs?”, “Who will see to it my end-of-life wishes are fulfilled?” Your children of course! Obviously that's not the reason we have children in the first place, but knowing you'll have a support system in your sunset years is a comforting thought. But for the growing number of people who have made the decision to remain single and/or childless, those same questions may incur a certain level of anxiety.

Common concerns of those without kids are similar to those with kids: not wasting resources at the end of life, dying a natural death and not being a burden on anyone. But who will carry out those wishes should you become incapacitated or die if you don't have kids? Many will turn to nieces, nephews, cousins or even close friends. However many questions still remain: How will they know (or remember) my wishes? How can they pay for my end-of-life expenses? How can I be assured I will be permitted to die a natural death and not be kept alive on life support indefinitely?

Proper estate planning can provide peace-of-mind that these questions and others are answered and wishes fulfilled. Those who are single and/or childless are in need of Estate Planning as much as, if not more so than those with immediate family to care for them. At Cooper, Adel and Associates, we can help you achieve that peace-of-mind. Call us today at 1-800-798-5297 to schedule your free, no-obligation consultation.   

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.
The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

If I’m Divorced, can my ex-spouse get my things when I die?

By Chris Meyer

Screen Shot 2014-03-18 at 12.19.16 PMOne question we are often asked here at Cooper, Adel & Associates is “will my ex-spouse receive anything of mine after I die?” The answer to this question is not necessarily – but it can happen. Although ex-spouses do not receive anything titled in your name (unless the divorce court decrees that they should), you can make an unintended and unfortunate mistake if the beneficiaries are not updated on all of your assets.

Make sure your IRAs, deeded property, titled property, mutual funds, etc. have a named beneficiary who is the person you want your asset to go to when you are gone. If your ex is the beneficiary of an asset when you die, that asset will go to your ex.

Also, make sure that all of your legal documents – trusts, wills, powers of attorney – are updated to reflect your wishes after a divorce. If you are incapacitated or at your death, you want to be the one who set the course – not your ex.

If you have any further questions or would like to schedule a complimentary consultation with either Thom Cooper or Mitchell Adel, please feel free to give or office a call at 800-798-5297. Also, be sure to Like us on Facebook for up to date blogs in regards to may different aspects of Trusts and estate planning.

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.
The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

Should I deed my property to my kids?

The Most Common Do-It-Yourself Estate Planning Mistake

By Attorney Ted Brown

Screen Shot 2014-03-11 at 12.17.42 PMAnswer: No. Not unless you (and your children) understand the risks and drawbacks.

In an effort to protect their real estate from nursing home or from estate taxes, many people consider deeding their real estate to their children. This is a very risky strategy for a variety of reasons.

Taxes – By transferring real estate to a child while you are still alive can create a future tax time-bomb for that child.

A gift of property during the owner's lifetime results in what is known as a carry-over in basis. Basis is the IRS term for the value of the property when you received it, being either the price you paid for it or the value it was worth when you inherited it. Basis is important when the property is sold. The sale price, minus your basis, equals your capital gain which is taxable at roughly 29% between Federal and State taxes.

For example, if you buy a piece of land for $100,000 and you sell it for $225,000, you have a capital gain of $125,000.

So if you have a piece of property that was worth $150,000 when you bought it and now it is worth $400,000, you have a lot of taxable appreciation. If you deed that property to a child, you pass on that taxable appreciation. Moreover, if the child holds onto the property for another 20 years and the value increases to $750,000 then they will owe tax on a $600,000 gain when they sell. This could result in $174,000 being lost to taxes.

Liability - if the property is owned by someone else, it is subject to the liabilities of that person.

Suppose you gift property to a child. Your child now owns that property. It is considered to be their personal asset, even if you continue to live there. If that child were to get a divorce, then that property is up for grabs along with all of their other assets.

What may be even worse is if that child gets sued, even for something that is no fault of their own, the entire property could be lost to pay their liabilities or judgement creditors, potentially leaving you without a place to live.

It is very important to understand the many potential consequences of gifting any assets, particularly real estate, before embarking on such a plan. You should seek the assistance of Elder Law Attorney to discuss the best strategies for protecting assets before taking on the challenge yourself.  

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.
The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

What Are The First Steps To Take When A Loved One Dies?

By Steve Wright

When a loved one passes away, it is an emotional time that you should spend with family and friends. Unfortunately, here are a few tasks that will require your attention soon after the death if you are the estate representative.

An important first step you must take as the estate representative is to locate any legal estate documents that the deceased may have had created, particularly any trusts and/or wills. These documents will play a fundamental role in disseminating the estate. Also, you will need at least one certified death certificate. It's a good idea to have at least three. Most financial institutions will require documentation that you are the estate representative and a copy of the certified death certificate in order to release information to you.

Next, you will want to begin compiling the assets and liabilities the decedent left behind. A good starting point is to check their mail.

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The mail will usually contain updated bank statements and statements from other financial institutions such as mutual funds, stocks and bonds. These statements will start you on the right path of determining what assets there are and what to you will need to do with them. In addition to gathering financial statements for each account that the decedent had, you will also want to seek information on other assets such as real estate, insurance, and titled vehicles.

Another good step to take is to contact each institution that the decedent received any type of income from, such as Social Security, STRS, or the Department of Veterans Affairs. This is important so that you can avoid future repayment requests and it will also inform you of any funds or other benefits that may be due the estate.

Finally, contact the decedent's estate planning attorney if they had one. Often, the law office who prepared the estate plan can provide you, as the estate representative, with invaluable guidance during this process.  

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.
The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

Don’t Short-change Beneficiary Decisions

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Strategies and circumstances to consider for your retirement planning 

By Attorney Mitch Adel – Senior Partner

When it comes to your long-term financial planning, among the most important and impactful decisions you will make involves selecting beneficiaries. Taking care of family and close friends when you are gone is the first priority for most of us—but, yet, we frequently treat beneficiary decisions casually and neglect to review them as often as we should.

You should name beneficiaries on all of your assets that have an account number, a deed or a title. You can name beneficiaries for each individual asset or, if it makes sense, you can fund your assets to a trust so you have only one place where your beneficiaries are named. A trust can also simplify the process of changing beneficiaries. Assigning and keeping your beneficiaries current with changes in your life is not always a simple or straightforward process. In addition, there are a number of financial and technical considerations that can have a big impact on who you decide to name as a beneficiary, particularly if you have one or more retirement accounts.

Think: Has your life changed since you first created your accounts and investments? Are you remarried or divorced? Did one of your beneficiaries marry a person with children? Chances are you need to update some of your beneficiary designations. The last thing you want is for your assets to be left to your estate (and up to the discretion of a probate court judge) or to get eaten up by significant taxes.

Here are a few simple reminders to help you make strategic and thoughtful primary and secondary beneficiary decisions:

Understand your options
While a spouse or significant other is the most common beneficiary choice, there are a number of circumstances where it might make sense to assign a different beneficiary. You do have other options, including non-spouse family members or trusts, however, alternative choices may require some additional planning.

When you select someone other than your spouse as a beneficiary, there can be additional legal and procedural considerations to take into account. Your spouse must sign off if you decide to leave your IRA to someone else, such as a child or grandchild. The problem is, unless you make special arrangements in advance, a beneficiary can cash in your IRA at your death. The result is the amount they withdraw is added to their taxable income in that year. As you might imagine, that could make for a bad tax year. On the other hand, if they keep their inherited IRA, they are building a future pension for themselves.

For the “pensionless” generation (think Detroit), this can be a big benefit. Also, depending on their age or their habits, you might want to set up a special trust to protect your IRAs or other inheritance you leave them from divorce, creditors or predators. While beneficiary decisions are personal, an experienced elder law attorney teamed up with a trusted and experienced wealth management professional can help you sort through these considerations and plan your beneficiary selection accordingly.

Make a clear, conscious choice
First, think honestly and carefully about what you want. Decide who you want to benefit and how. Next, ensure that the language in each trust, insurance policy, annuity or retirement vehicle is updated regularly to reflect your current wishes. Some employer plans have default language that may undercut your decision and bypass those you want to receive the benefit of your hard work. Did you specify a contingent or secondary beneficiary if your first choice is deceased? If you fail to do so, and your plan beneficiary selection defaults to your estate it could burden your family with the delays and added cost of probate.

Check yourself
Don’t just “set it and forget it” when it comes to choosing your beneficiaries. Personal and financial circumstances change.Families evolve and priorities change. Needless to say, financial policies and regulations change over time. It is a good idea to make a habit of reviewing your plan annually—and most certainly when a major life event such as the birth or death of a family member or a change in marital status occurs—to ensure your beneficiary choices are right. Remember, you may have made these decisions decades ago when you first filled out your paperwork—do they still hold true?

Communicate clearly
This may seem obvious, but it is an all-too-often-overlooked mistake that has led to many instances of financial and family stress. Your wishes must be clearly stated so that your representative after your death knows exactly what is required and can easily communicate them to all involved.

Also, make sure your representatives know where you keep your important papers and account information. If they can’t find it, it is as if it did not exist. It is heartbreaking to think about all of your conscientious consideration and planning going to waste because of something as simple as a misfiled or mislaid form.

Choosing the right beneficiaries is not rocket science, but it takes focus and persistence. Bringing in an attorney who is an estate planning specialist into the mix can help to ensure that your wishes are reflected throughout the process. 

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you. No attorney-client relationship is created by this site.

The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.  

The Very Pubic Probate of Actor James Gandolfini

By Senior Associate Attorney Dan Vu

Screen Shot 2013-09-30 at 11.02.41 AMLike many fans of the talented actor James Gandolfini, I was saddened to hear about his untimely death at the age of 51. He was most known for his role in the mobster TV series, The Sopranos. Like many other celebrity deaths, his death has been thoroughly reported by all news outlets from E-news to Forbes. Unfortunately for Mr. Gandolfini's heirs, the focus of the reporting has largely concerned how the $70 million estate would be distributed. Even worse, Mr. Gandolfini estate is largely governed by his will which means that the entire estate will go through the probate process and therefore, be open to the public.

What appalled me the most were the news site that linked directly to Mr. Gandolfini's actual will online. Yes, thats right, news outlets like Forbes have a link to the PDF of Mr. Gandolfini's Last Will and Testament. Like watching a car accident, I must admit I read with much guilt some of the news articles that invaded the privacy of Mr. Gandolfini's personal life. Don't we all think we should have privacy about our affairs when we die? These articles reveal the provisions of his will, line by line, listing the legal names of many of his close friends and relatives and how much each will receive, i.e. $200,000 to his assistant, $500,000 to his niece, $100,000 to his god son, etc. I am sure once the process is all said and done, people will remember him for who he was. For now, because of the public nature of probate, expect more “news” to emerge regarding who is getting what and which family member is upset about not getting enough.

What does all of this mean to you? Consider avoiding probate to keep your affairs private. Make sure your assets with deeds, titles and account numbers have beneficiaries designated so that probate will not be necessary. If you need assistance determining the best way to accomplish this, we would be happy to assist you.

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person’s situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.

The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement.
If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

 

If an estate goes through probate, how much taxes do we pay?

By Associate Attorney Keith Stevens

Screen Shot 2013-09-30 at 10.58.28 AMIn the last couple weeks, clients have asked me the following and similar questions:

“If an estate goes through probate, how much taxes do we pay?”

“So if we avoid probate, then we don't have to pay taxes, right?”

While these questions reflect the normal concern about after-death expenses, they also combine two entirely different issues into one. Let's untangle these issues.

First, probate may be necessary even when no estate taxes are due and, on the flip side, estate taxes may be due even when there is no need for probate. This is because these two expenses are for different things.

A probate proceeding is the judicial oversight of the administration of a decedent's estate in order to ensure that creditors are paid, the beneficiaries are protected, and the decedent's wishes are upheld. To this end, and depending on the size of the estate, the court may charge hundreds to thousands of dollars of filing fees and imposes expensive requirements on the estate, such as having real estate and other valuable property appraised. However, the real expenses with probate, money-wise, are in the fees that attorneys charge to guide an executor through the probate process, which can cost as little as a few hundred dollars for single small asset to much more for the entire estate itself.

If your assets are not properly protected against probate, a single car or bank account could spend months in limbo before it is available to your beneficiaries, regardless of the value.

The estate tax, meanwhile, is leveled against a decedent's estate if it exceeds a certain value. It serves as a “transfer” tax, a tax on wealth being transferred to the next generation. While Ohio got rid of the estate tax effective January 1st, 2013, there is no guarantee that it won't come back. Further, the federal estate tax still remains, to tax those with an estate larger than $5.25 million (as of 2013). If an asset is in your estate (i.e., you earned it or own it and haven't purposefully gifted it away), then it is countable toward that exemption.

Even if all your assets avoid probate court, they are still subject to the estate tax.

These two after-death expenses do not intermingle (except to the extent that an Ohio estate tax return is filed with the probate court), so probate protection and tax planning are two separate beasts often that require different approaches. If you want to learn more about how to minimize the after-death expenses for your beneficiaries, contact an estate planning attorney at Cooper, Adel & Associates for more information.

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person’s situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.

The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement.
If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

 

“What does this ‘per stripes’ thing mean?”

By Attorney Keith Stevens

Screen Shot 2013-09-11 at 2.16.05 PMWhen I sit down for a review with a client, I am sometimes asked what “per stripes” means. These clients have looked at their documents for the first time in a while and do not understand the particular Latin phrase, “per stirpes”, that shows up around the names of their beneficiaries. This is a bit of a mispronunciation, but an understandable one, and gives us a chance to talk about contingent beneficiaries.

I recommend that clients name contingent beneficiaries in their wills and trusts. These are the people who would inherit from them in the event that the primary beneficiaries predecease my client. For instance, if Mom and Dad name Son & Daughter as their beneficiaries, what happens if Son dies before Mom and Dad?

The three most common methods for people to establish contingent beneficiaries, from my experience, are first per stirpes, second per capita, and third to surviving spouses. Let's break these down in turn:

  1. Per stirpes is a Latin term that literally means “by the stocks.” This allows the distribution to follow the beneficiary's blood line. So, if Son in my above example had children of his own, his share would continue to the next generation. There are two ways of determining how to distribute it to the next generation, but Ohio adheres to the traditional (and easier) version – if Son has biological or adopted children, they equally split his share.

  2. Per capita, meanwhile, means “by the head.” This is a winner/survivor takes all scenario. In my example above, if Son and Daughter are beneficiaries per capita and Son dies before Mom and Dad, his share goes to Daughter. In other words, naming beneficiaries per capita appoints a class of beneficiaries and the survivors split the inheritance.

  3. To the surviving spouse. My clients frequently ask me what happens to their daughter-in-law or son-in-law if their own child passes away and, while they may express some concern, they usually decide to let their child provide for the spouse. Most of my clients bypass a child's surviving spouse as a contingent beneficiary, but if they choose to use a surviving spouse as a contingent beneficiary then it is advisable to use language to ensure that they were still married to the primary beneficiary at his or her death.

Of course, in setting up your estate plan you can name specific individuals or organizations as your beneficiaries and contingent beneficiaries. It may be a topic for another blog post, but it is worth remembering that, with potential exceptions for spouses and minor children, no one is legally entitled to inherit from you if you do not name them as a beneficiary. This is fully under your control.

If you would like to discuss how you can arrange for your beneficiaries, please give us a call.

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person’s situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.

The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement.
If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

 

Get the Kids Involved

By Attorney Keith Stevens

Screen Shot 2013-07-15 at 10.27.19 AMIt’s not unusual for clients to want to do their estate planning in a vacuum, that is, without their children. They want to get everything set up to provide for their family if they pass away, or so that the family can provide for them, but they don’t want to get the family involved until that dramatic moment. They may want to create a power of attorney naming their son as their agent, but they don’t want the son to know about it.

Of course, every situation is different. There are situations where children have taken advantage of the powers that their parents have granted them. But by and large, your estate plan will work better if the family knows what’s going on.

Estate plans often include a complex collection of documents and arrangements designed to allow easy, cost-effective proxy representation and private transfer of assets. A modern estate plan often uses family members as helpers, in roles such as attorneys-in-fact, executors, or trustees. Surprising a helper by keeping them in the dark until the moment they are needed usually slows things down significantly, as we have to take time to get the helper up to speed.

Some people seem to have it in their heads that it is improper to discuss their assets with their children. But the advantages of making sure that everyone is on-board and on the same page will outweigh the perceived awkwardness.

So bring your kids along when you meet with your estate planning attorney. They may pick up something that you miss or they may remember some fine detail that fades with time. At the very least, they won’t be lost if you become incapacitated or pass away and have to figure everything out from scratch.

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person’s situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.

The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement.
If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

 



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