Saturday, January 16, 2016

Bankruptcy - I cannot say it any better than this: "Bankruptcy is an excellent retirement strategy"

Image courtesy of Stuart Miles
Anyone who has checked out my blog knows I advocate filing for bankruptcy before spending down retirement accounts. It has been a recurring theme in many blogs but time after time we, bankruptcy attorneys, see clients that have burnt through $50-$60-$100 thousand dollars in retirement funds before filing bankruptcy. And the ultimate slap is they still find themselves needing to file for bankruptcy protection.

I read this article this morning and wish I could improve upon it ... but I can't: "Bankruptcy is an excellent retirement strategy" written by Chip Parker, Esq. on Bankruptcy Law Network. In his article, he lays it out:
"Just look at the math:

Let’s say you’re about 10 years away from retirement, and you owe $25,000 in credit card debt at
a typical 18.9% interest. Based upon your budget, you can pay no more than $500 per month toward this debt while maintaining your monthly expenses.

If you pay $500 per month toward the credit card, it will take you 100 months (8 years, 4 months) to pay it off. You’ll pay a total of $50,000, including interest.

Pay that same amount per month into a retirement account with a mediocre net annual return of 7% (after fees), and at the end of 100 months, you’d have about $100,000!

That’s a total wealth swing of nearly $150,000 in 100 months!"

Not one of my clients has walked into my office and said,
"This was my plan; I wanted to run up all these debts; live a life like I was destitute for years; let creditors harass me for months on end, collect a judgment or two against me; and now refuse to pay what I owe..." 
No one I ever helped, that I know of, expected to be in my office to file bankruptcy when they started down the road of building debt. In fact, many expected to use the debt to help them get back on track. It is even worse when you are approaching retirement or retired.

I have worked with clients who are retired. It is even harder to recover once you hit that fixed income. Recovery is much harder if not impossible. If a person finds themselves in financial trouble later in life, they can make bankruptcy part of their retirement planning. Check out the article and some of the other links it contains.

If you want assistance, legal representation, or just want to know more about Mark Medvesky or our firm of Wells, Hoffman, Holloway & Medvesky LLP, check out our website at

Other Blog Articles:

Bankruptcy - How can I file bankruptcy with $50,000 in my retirement account?
Bankruptcy - When is it a "good" time to file?
Bankruptcy - What information do I need for my first meeting with a bankruptcy attorney?
Bankruptcy - Listen for the information you don't want to hear and ask the questions you don't want to know the answers to ...

#bankruptcy #Chapter7 #Chapter13 #MontgomeryCounty #lawfirm #BucksCounty #Pennsylvania

Tuesday, January 12, 2016

Estate Planning - Anyone who has life insurance and kids probably should set up a Trust ...

People seem to think only "rich" people need to set up Trusts for their families. Terms like "irrevocable," "testamentary," "special needs," pour-over," "unfunded," and "living" related to the word "Trust" generally sends shivers down people's spines and crosses their eyes. The purpose of the Trust and the people who are the beneficiaries will determine the complexity of the trust. But what I am talking about here is pretty basic.

Image courtesy of photostock at
Many middle class parents have life insurance to protect their family if something happens to them. Most have the policies through their jobs. The value of the policies can run from $100,000 to $500,000. Usually, they name their spouse as the primary beneficiary. Sometimes they name their children as alternate beneficiaries and sometimes they do not name a secondary beneficiary at all.

If a tragic accident strikes and the parents of minor children died at the same time, what will happen to the insurance money without a trust? There is a real risk in Pennsylvania the money will be deposited into a sequestered account. That means the minor children and/or their caretakers will have limited or no access to the money. Then, as soon as the minors turn 18,  they will receive the entire sum. If both mom and dad had $250,000 of life insurance, the children would receive their share of the money at 18 with no controls, restrictions, or safeguards on the funds. Would you trust your 18 year-old child with $500,000?

If parents want to help guide their children financially even after they are gone, they can do it through an unfunded trust agreement. Basically, they have a trust agreement drafted to accept the proceeds of their insurance policy should their primary beneficiary (their spouse) not be alive at the time the policy pays out. The money would be paid into the trust and managed by a trustee.

The trust is a list of directions on how the money will be used for the support of the children and when they will receive control of the money itself. Parents can give the cash to them when the kids are as young as 18 or as old as they want. The money can be held in a trust until the beneficiaries turn 30 if the settlor wants. 

The trustee can be another family member, someone the settlor has a relationship with, or a professional trust manager or institution like a bank. The trustee is the gatekeeper and manages the money. A simple trust can help protect a young adult from wasting money before they are ready to properly manage it.

If you want assistance, legal representation, or just want to know more about Mark M. Medvesky or Wells, Hoffman, Holloway & Medvesky LLP, check out our website at
#Bucks_County #lawyer #lawyers, #MontgomeryCounty #Souderton #Law_Firm #Wills #Power-of-Attorney #Living_Will #Healthcare #Trusts 

Friday, January 8, 2016

Military - Special Needs Trust for diabled military children

MOAA Reported; "Special Needs Trust Update" - - allowing military members and retirees the option of directing their " Survivor Benefit Plan (SBP) payments to a Special Needs Trust (SNT) for permanently disabled children." Up until last year, this could not be done. That meant disable children would lose access to other public benefits. Now parents can use their survivor benefits to supplement their child's income instead of replacing it. It is a short article. If you know someone that may benefit from the new law, encourage them to talk to an attorney to help with their estate planning.
Image courtesy of David Castillo Dominici at

If you want assistance, legal representation, or just want to know more about Mark M. Medvesky or Wells, Hoffman, Holloway & Medvesky LLP, check out our website at

#Bucks_County #lawyer #lawyers, #MontgomeryCounty #Souderton #Law_Firm #Wills #Power-of-Attorney #Living_Will #Healthcare #Trusts