Powers & French

By

Second Circuit Court Joins First Circuit: the federal Defense of Marriage Act is Unconstitutional

The Second Circuit Court of Appeals ruled that the Defense of Marriage Act (DOMA) violates the constitutionally protected rights of same sex couples. Relying on the Equal Protection clause of the US Constitution, the federal court found that marriage is a state issue and, where a state allows same sex marriage, the federal government must recognize and give effect to state law. The case was brought by a New York same sex, surviving spouse, seeking a refund of estate tax paid on assets she inherited from her deceased spouse. Heterosexual, married couples receive a spousal deduction and so do not pay estate tax on assets inherited from a deceased spouse.

The First Circuit Court of Appeals, which includes Maine, previously ruled that portions of DOMA are unconstitutional. In its ruling, a court panel found that the federal government did not have sufficient support to justify its interference with state law defining marriage as including same sex couples, and that denial of federal marriage benefits to same sex couples amounted to unconstitutional discrimination.

Given these two rulings, DOMA clearly will be heading to the United State Supreme Court.

http://www.powersandfrench.com/news/547/

By

Medicaid Settlement Will Provide Relief

A large, national class action lawsuit regarding Medicare coverage has been settled with a proposed change in government regulations that will bring relief to thousands of Medicare recipients. The current practice of terminating home health, skilled nursing home care and outpatient therapy on the basis of lack of improvement will be changed so that improvement is no longer required for continued coverage of these services. A comprehensive New York Times article on the subject:
http://www.nytimes.com/2012/10/23/us/politics/settlement-eases-rules-for-some-medicare-patients.html?comments#permid=42

By

Maryellen Sullivan At Senior Expo

Maryellen-and-Dan-31-300x225
Our estate planning attorney, Maryellen Sullivan, attended the Southern Maine Senior Expo on September 25, 2012 at the Freeport Hilton Garden Inn. The event, organized by the Maine Senior Guide, included exhibitors, speakers, and activites.

Maryellen volunteered at the Lawyer Referral and Information Service exhibit. LRIS is operated by the Maine State Bar Association and provides information and referrals to clients of all ages. All of the attorneys at Powers & French, P.A. serve as LRIS attorneys. More information is available at www.mainebar.org/lris.asp.

By

2012 is the Year to Give Gifts

2012 IS THE YEAR FOR GIFTS

2012 is a great year to give gifts because the federal gift tax exemption amount is $5.12 million this year. Unless Congress acts before the end of the year, the exemption rate will return to $1 million in 2013. The exemption amount is basically the total amount of gifts that an individual can give over their lifetime without taxation. So, in 2012, if an individual exceeds the exemption amount of $5.12 million, they would owe the IRS gift tax for any gifts given over the exemption amount. Most of us don’t pay gift tax, but it’s a tax owed by the giver. Recipients do not pay tax on gifts.

Many people also are not aware that some gifts have to be reported to the IRS. There is an annual exemption amount, currently $13,000/recipient, which does not have to be reported. Gifts of over $13,000 to one individual, excepting some family members, need to be reported. Such gifts are not taxed if they are under the lifetime exemption amount, but the reporting is required so that the IRS can keep a tally. If and when the tally exceeds the exemption amount, the giver must pay gift tax thereafter.

Gifting is a popular estate planning tool for wealthier individuals because it can remove potentially taxable assets from an estate. If someone has enough assets to maintain their lifestyle, including adequate savings, they may seek to remove other assets from their ownership so that these assets are not subject to estate taxation later. Gifting assets also allows those assets to grow estate-tax-free – so that someone can transfer stock, for instance, worth $100,000 as a gift instead of leaving it by Will to someone when it has increased in value to $150,000 (and so potentially saving the taxes on the $50,000). Givers even can leverage gifts by giving gifts to specially created trusts that purchase life insurance, which allows an even greater return on the original gift amount. Giving gifts also can incur less tax, if you have a multi-million dollar estate, than after-death bequests because a gift is taxed on the amount of the gift while an estate is taxed on the total value of the estate, not just the amount someone will receive after taxes are paid. (This is easiest to understand with a simplified example: at a 50% tax rate and no exemptions, a $1 million gift would incur a $500,000 tax and so cost $1.5 million total, while to leave someone $1 million by Will would cost an estate $2 million because a $2 million estate would pay $1 million in taxes so be left with $1 million to distribute.)

Even for those without $5 million to give away, gifting can be a rewarding and useful option. We often talk to our clients about it being more fun to give a gift while they are living than waiting to transfer assets as an inheritance once they have passed away. While you’re living, you receive the immense gratification of helping a loved one and seeing the difference that your gift can make in someone’s life.

By Maryellen Sullivan, Attorney
Powers & French, P.A. 209 Main Street, Freeport, Maine 04032; Tel: (207) 865-3135

By

LANDLORD/TENANT LAW – Frequently Asked Questions

FREQUENTLY ASKED QUESTIONS: LANDLORD/TENANT LAW

I AM A LANDLORD. WHAT SHOULD I KNOW?
At Powers & French, P.A., we recommend new landlords start off on the right foot by meeting with us first to set up some standard practices. Landlords often will want to form an LLC or otherwise transfer ownership of a rental property from their own names in order to avoid personal liability for the property. If another entity owns the property, all bills should be in that entity’s name, the entity should have its own checking account, and rent should be paid to the entity. Lease terms are very important as well, and should have specific provisions about the condition of the property, expectations of the landlord and tenant, and provisions for termination. The laws in Maine are quite protective of tenants, but there are some things landlords can do to protect themselves. Finally, Maine law requires landlords to keep security deposits in separate accounts; there are stiff penalties for not doing so.

I NEED TO EVICT A TENANT. WHAT SHOULD I DO?
Powers & French, P.A. handles evictions, also known as Forcible Entry and Detainer [FED] actions. Evictions can be a complicated and time-consuming. Tenants have substantial rights in Maine and cannot be evicted without a court order.
Landlords first should consult their leases, which should provide both for early termination under certain circumstances and for remedies for default or tenant malfeasance. Landlords next need to provide tenants with notice that they are in violation of their lease or that their lease has terminated. These notices, called Notices to Quit, must be in writing and must give tenants 7 or 30 days to move out, depending on the circumstances. After the 7/30 days, tenants must be served by a Deputy Sheriff with an FED complaint and summons to appear in court (court dates must be obtained from the clerk of court for this notice and a tenant must be given at least 7 days notice of a hearing date). Once a tenant has been served, proof of service, a copy of the Notice to Quit, and a copy of the FED complaint need to be filed with the court.
At the FED hearing, both parties have the opportunity to present evidence and testimony. If an eviction is approved by the court, the court will give a tenant 7 days to appeal or move out. Thereafter, a landlord can request an eviction order from the court that provides for police removal of tenants who do not vacate the property within 48 hours of the order.

MY TENANT LEFT SOME THINGS BEHIND. WHAT CAN I DO?
Property left behind by a tenant is still considered to be the tenant’s property, at least for a while. Landlords should compile an itemized list of the property and its approximate value. If the property is worth less than $750, the landlord can send the tenant the list with a demand that they claim the property within 14 days. If the property is not claimed, the landlord has the right to sell or dispose of it. Landlords also can hold left property if a tenant owes them money. If the property is worth more than $750, documentation must be provided to the State Treasurer before a landlord can sell the property.

CAN I KEEP A SECURITY DEPOSIT?
Landlords can keep security deposits for damage or unpaid rent, but not for ordinary wear and tear. If you would like to keep a security deposit, you need to provide a tenant with a detailed explanation, in writing, of the reasons for keeping the deposit within 21 or 30 days, depending on the type of tenancy (or sooner if required by your lease).

I AM A TENANT. WHAT RIGHTS DO TENANTS HAVE?

RENT INCREASES: Landlords must give tenants notice of rent increases in writing, 45 days in advance.

LATE CHARGES: Landlords only can charge interest/fees on late rental payments if they tell you in writing, in advance. The interest/late fee cannot exceed 4% of the monthly rent.

HABITABILITY: Landlords owe a tenant an implied warranty of habitability; rental properties must be safe and fit to live in, meaning that they must have drinkable water, a heating system able to heat living spaces to at least 68%, smoke alarms, working plumbing, no insect infestations, etc. If there is an issue of the habitability of your rental space, you first need to notify your landlord in writing. You have the right to fix the problem yourself and deduct the cost from your rental payment if you did not cause the problem. To use this “repair and deduct” remedy: (1) notify your landlord in writing, sent by certified mail/return receipt of the problem and request that it be fixed within 14 days (shorter if an emergency) or you will fix it and deduct the cost from your rent; (2) pay for the repair yourself, using a licensed worker if the problem is heat/plumbing/electrical and charging only for materials if you do the work yourself; (3) the cost to fix is either less than $500 or half of your monthly rent, whichever is greater; (3) provide your landlord with a copy of the receipt; (4) deduct the cost from your next month’s rent. Please note that this remedy does not apply to rental property where the landlord lives in t the building and there are fewer than five units. Also note that, if the repair is more costly than the $500/50% limit and there are multiple tenants, each tenant can pay up to the limit. Finally, tenants are still liable for rent dispute habitability issues although you could use the issue as a defense in an eviction proceeding.

UTILITIES: A landlord cannot turn off utilities. In this circumstance, you could seek emergency assistance from the court plus damages and costs.

PROPERTY LEFT: A landlord can keep any personal property you leave in your rental property after moving out if you owe back rent or damages.

SALE OF THE BUILDING: If you have a lease, you probably will have the right to stay until the end of your lease term. If not, you will have to reach a new agreement with the new owner. If you are concerned about a sale, you should get a comprehensive lease and record in the county Registry of Deeds.

DISCRIMINATION: Landlords cannot refuse to rent to you, charge you extra or evict you on the basis of race, ethnicity, sex, sexual orientation, physical/mental impairment, religion, welfare status, or having/expecting children.

ENTERING MY HOME: Landlords can enter your home only during reasonable time and with reasonable notice to you, unless there is an emergency. For non-emergencies, this usually means that landlord visits must be during waking hours, with 24 hour notice. Tenants can sue landlords for entry violations, requesting court orders to prevent future entries and damages or a $100 fine. Tenants cannot, however, change the locks without notifying the landlord and providing a set of keys to the landlord within 48 hours.

EVICTION: Eviction process either is governed by your lease or, if you have no lease or no lease language regarding evictions, by state law. Landlords must provide tenants with notice that they are in violation of their lease or that their lease has terminated. These notices, called Notices to Quit, must be in writing and must give tenants 7 or 30 days to move out, depending on the circumstances/lease. If the termination is for failure to pay rent, a tenant has until the end of the notice period to pay the rent due and thus avoid eviction; it is important to get a receipt stating that a rental payment was received in this instance. After the notice period has ended, tenants must be served personally by a Deputy Sheriff with an FED complaint and summons to appear in court (a tenant must be given at least 7 days notice of a hearing date). If any of the notice language, method of service or timing is incorrect, the tenant should use this as a defense in court.
At the FED hearing, both parties have the opportunity to present evidence and testimony. If an eviction is approved by the court, a tenant has 7 days to appeal or move out. Thereafter, a landlord can request an eviction order from the court that provides for police removal of tenants who do not vacate the property.