Law Offices of Lana Zolon & Associates, PLLC

Power of Attorney is a document that gives authorization to one person, Agent, to act on behalf of another person, Principal in matters specified by the Principal.

The New York Law governing Power of Attorney has been changed on September 1/ 2009.     The new revisions tend to protect many individuals from fraudulent transferring of their assets under POA and to scrutinize obligations of Agents acting on behalf of Principals.  The new law is quiet complex and requires all new Powers of Attorneys to comply with new rules in order to be effective.  This article is not intended to reflect completed analysis of issues but just general characteristics of new changes.  It merely highlights some major changes that should be considered in both designating and accepting POA.

• Expansion of acceptance by the third parties

Previously only banks, credit unions, pension funds and retirement systems had to accept POA. New Statute required all parties accept statutory form of POA unless they can show a reasonable cause for rejection which could be for example fraud, undue influence or inability to show original POA by the Agent. Statute also provides how to compel third party to accept POA by beginning of special proceedings.

• Fiduciary responsibility of agent and compensation.

 NY Law now expressly instructs Agents to have fiduciary responsibilities to act in the best interest of the Principal. Agents are not entitled to the compensation from Principal’s estate except if it says otherwise in the POA or as a reimbursement for some reasonable expenses related to his Agent’s duties.

• Statutory Major Gift Rider (SMRG)

 A Principal may authorize an Agent to make major gifts (more then $500) by attaching to the POA a Statutory Major Gift Rider (SMRG) signed and executed with certain procedures similar to the formation of wills.

• All POAs presumed to be durable unless expressly stated.

 Durable means that Agent’s authority by POA will not be extinguished if Principal becomes incapacitated.

• Requirement of a notary acknowledgment.

 Signatures of the Principal and the Agent must be notarized. POA is effective upon execution by the Principal and the Agent.

• Validity of all POAs executed prior September 1.

 All valid POAs executed prior September 1 are effective and do not have to be replaced by a new POA. However execution of the new POA by the Principal will automatically revoke all prior POAs unless document will specify otherwise.

 For more information regarding POA and the new laws governing it, please contact us at (718) 684-1996.

           In the recent past ill or injured people paid money directly to their doctors for any medical assistance. Fortunately for all of us, times have changed and people now can insure their health and pay for a medical assistance through the third party.  That party can be a private entity as a health insurance provider where for a regular premium every insured patient can obtain coverage for any expensive medical assistance.  However, if a person can’t afford a premium for private health insurance and has a low income or belongs to a certain aged group then he or she could be qualify for government funded coverage.  Government funded programs as Medicaid and Medicare were established in 1965 and sought to create the safety-net for the elderly and the indigent.

What is the difference between those two programs?

         Medicare and Medicaid are both federal programs but they have major differences. Medicare program rules are the same for all states, despite Medicaid administered differently from each state.  Medicare is a program for people over 65 and for those who are on Social Security disability. Medicaid, on the other hand, is designed for low-income, financially “needy for care” people (for example struggling single parents, homeless people, low income workers).

        Furthermore, except during the time when patient is in the hospital, Medicare does not cover medications and pays only for basic services. Medicaid instead covers almost all medications and services that Medicare does not. However, кеер in mind that you might qualify for one of these programs but not the other.

           There are also two main Government benefit programs – Social Security Income (SSI) and Social Security Disability (SSD) – that were created to provide crucial needed income support for aged (65 and over) and/or disabled adults and children. “Disabled” is determined as a physical or mental disorder that keeps one from having gainful employment.

      Social Security Income (SSI) is a financial assistance program for those people who don’t have a working history to be eligible for disability “credits”. However, an individual will qualify for SSI only if his income and assets are below a certain level.

Social Security Disability (SSD) provides cash assistance to disabled workers who have earned enough Social Security “credits” by paying money to Social Security during their past work experience. A person does not have to have limited income or assets to qualify for SSD.

        Notwithstanding that income support and other benefits from SSI and SSD is low, it is fair to say that very often these benefits substitute income that keeps many disabled individuals out of streets with a roof over their heads.

There are many negative false myths about Bankruptcy.  In fact, people who have filed for bankruptcy felt relieved and were able to get reprieve from collection activities and lawsuits.

    One of the most essential protections of the Bankruptcy Code is the Automatic Stay, which erects fundamental wall around the debtor prohibiting creditor’s actions against the debtor and his property. This statutory wall arises automatically upon the filing for bankruptcy and causes all acts against the debtor to cease, with few exceptions (divorce proceedings)

    A creditor still can seek injunction of the stay but the burden is on the creditor to show evidentiary grounds for (1) irreparable harm and (2) a probability of success on the merits of the case in the underlying action.

    Automatic stay immediately halts any collection attempt by the debt collection agencies   This means that if a creditor attempts to collect a bill, such creditor will be in violation the Bankruptcy Code and could be prosecuted. Harassing phone calls, garnishments, letters, attempts to foreclose or repossess property are all types of collection.  However, there are several common actions when an automatic stay does not apply:

• Criminal proceedings
• Establishment, modification, or collection of alimony or child support
• Establishment of paternity
• Audits by governmental units to determine tax liability
• Co-signers or co-debtors

     The automatic stay ends as to particular property when that property ceases to be a part of the Bankruptcy estate, when a debtor receives a discharge or when a bankruptcy case is dismissed.

  A debtor benefits from the automatic stay for as long as his or her Bankruptcy case is pending or is under a review, unless action is taken by a creditor (such as a motion for relief from automatic stay).  When eventually discharge replaces the automatic stay, that order will prohibit collection of any discharged debts.  This is the ultimate goal – debtor’s “fresh start” is completed.

Deciding which type of business to form is seldom easy. All entrepreneurs start a business for one simple reason…to make a profit. As your business becomes successful, those profits transform into personal assets and wealth. One of the main reasons for you to form a Corporation or LLC is to protect your personal assets by separating them from your business liabilities.

Asset protection is not the only reason to operate your business through a Corporation or LLC. You can also acquire instant credibility by adding “Inc” or “LLC” and deduct normal business expenses  for Corporation and LLC, for example salaries, before they would be included in owner’s income.

LLC and Corporation are also flexible in a tax election. Notwithstanding that profit and loss typically pass through an LLC and get reported on the personal income tax returns of owners, an LLC can also elect to be taxed as a corporation. Likewise, a corporation can avoid double taxation of corporate profits and dividends by electing Subchapter S tax status.

An LLC is hybrid between a corporation and a partnership. The LLC owners are usually called members and they enjoy limited liability like shareholders in a corporation. Unlike a corporation, however, an LLC with one member is completely disregarded for tax purposes and an LLC with two or more members is usually treated as a partnership for tax purposes.

A business corporation may be voluntarily dissolved by filing a Certificate of Dissolution.

General Partnership. There are two great advantages of a general partnership first is that you don’t have to register with your state and pay an often hefty fee, as you do to establish a corporation or limited liability company and second – easy filing tax returns because the partners, not the partnership, are taxed unless you specifically elect to be taxed like a corporation. Unlike a regular corporation, there is no need to file separate tax returns for the corporate entity and its owners

 It is also important that you prepare a written partnership agreement establishing each partner’s share of profits or losses, day-to-day duties and what happens if one partner dies or retires.

 Limited partnership can be attractive for a limited partner who can provide funding but not expertise, and does not have the time to devote to being a hands-on part of the business. Taking on the financial risk of his or her investment, but not the liability risk, is also more attractive to a limited partner. A dissolution of a partnership generally occurs when one of the partners ceases to be a partner in the firm. Dissolution is distinct from the termination of a partnership and the “winding up” of partnership business. The UPA defines dissolution of a partnership as “the change in relationship of the partners caused by any partner ceasing to be associated in the carrying on as distinguished from the winding up of a business.” This means that the partnership continues until the winding up of partnership affairs is completed. Thus, the process starts with dissolution, followed by the winding up and termination of the partnership’s legal existence.

          Accordingly, if a partner resigns or if a partnership expels a partner, the partnership is considered legally dissolved. Bankruptcy or death of a partner, an agreement of all partners to dissolve, or an event that makes the partnership business illegal would also cause dissolution. If, however, the partner withdraws in violation of a partnership agreement, the partner may be liable for damages as a result of the untimely or unauthorized withdrawal.

        After dissolution, the remaining partners may carry on the partnership business, but the partnership is legally a new and different partnership. Partner may leave the partnership without dissolving the partnership only if the departing partner’s interests are bought by the continuing partnership and if it was provided by the partnership agreement.

         Corporation, partnership or an individual may file Bankruptcy cases. Under chapter 7 Bankruptcy Code a trustee is appointed to collect and sell all property that is not exempt and to use any proceeds to pay creditors. In the case of an individual, the debtor is allowed to claim certain property exempt. In exchange for this, the debtor gets a discharge, which means that the debtor does not have to pay certain types of debts. Corporations and partnerships do not receive discharges. Consequently, any individuals legally liable for the partnership`s or corporation`s debts will remain liable. Therefore, in some cases individual bankruptcies may be required as well as the corporation or partnership bankruptcy.

The law says that anyone filing a petition for Bankruptcy, may file in any Federal District Court having the petitioner’s “domicile, residence, principal place of business . . . or principal assets in the United States . . . for the one hundred and eighty days immediately preceding” the filing of the case.  In other words, the petitioner must prove that he or she has resided in the selected Federal District for 180 days prior to filing.  Furthermore, the exemptions that the petitioner will claim will also depend on where he or she is filing, as different US Federal Districts have different exemption programs in bankruptcy cases.  Normally, to ascertain one’s residency is not a difficult task.  However, this question is not easily answered for those who are not Lawful Permanent Residents (LPR) or Citizens of the United States. 

          Very frequently, aliens arrive lawfully to the United, establish businesses, buy property and live lives very similar to the rest of us.  However, what they do not realize is that their rights are substantially different from LPR and Citizens of the United States.  One such example is eligibility to file for Bankruptcy.

          In a 1987 South District of Florida case, In Re Gilman, 68 B.R. 374, 375, the Court decided that “an alien debtor can only satisfy the permanent residency requirement if the debtor is granted a permanent visa.”   In a later case, the Court reasoned that “unless the debtor is issued such permanent status, the alien debtor cannot legally formulate the requisite intent to make the house the family’s permanent residence, regardless of the debtor’s subjective intention to remain indefinitely.”  (In re Bermudez, 1992 Bankr. LEXIS 547 (Bankr. S.D. Fla. 1992)

Furthermore, the debtor’s claimed exemptions must be examined in light of the debtor’s “resident status” in order to protect the debtor’s assets, particularly his or her home, in a bankruptcy proceeding.  In a 2006 case known as In re: Zsolt Fodor, Case No.05-14144-8W7, the debtor met the eligibility requirements for a Chapter 7 filing because he was in the United States lawfully.  The debtor has married a US Citizen and was granted a temporary green card, which made his status conditional on the duration of his marriage (since the marriage at that time was less than 2 years).  In order to remove this conditional status, the debtor and his spouse must have proved prior to the end of the two-year conditional period that they did not get married to evade the immigration laws of the United States. 

Later, the debtor has filed a Bankruptcy petition for Chapter 7 Liquidation.  He also claimed his home as a homestead exemption, wishing to keep it from creditors.  Unfortunately for him, the Court disagreed.  The court reasoned that since the debtor did not receive permanent resident status until three months after he filed his bankruptcy petition, he was not able to avail himself of the benefits of the exemption.  The law is clear: the exemption applicability, along with other benefits of filing for Bankruptcy, is determined as of the date of the filing of the petition.   In this case, on the date of the filing, our debtor’s status was conditional, which meant under the rules stated earlier that he could not legally formulate the requisite intent to make this house the family’s permanent residence, regardless of the his subjective intention to remain in the country indefinitely.

        The consequence for this particular debtor was that he could not protect his home from creditor’s claims under bankruptcy law and creditors who objected to his claim of homestead exemption had their objection sustained and they were free to proceed against the debtor’s home utilizing any and all collection activities as though the bankruptcy petition had never been filed.

          Although one should not be afraid to explore the possibility of filing for Bankruptcy, it is strongly advised that he or she should seek legal counsel and not speculate.  Bankruptcy is a fresh start with a hopeful and promising future, but only if done properly.

The old catchphrase, “Love & Marriage” has given way to the new 21st century idiom of “Divorce & Bankruptcy”. While you could have one without the other, more often than not, the wedding between divorce and bankruptcy is inevitable and has spawned all manner of nightmarish descendants.

Prior to October 17, 2005 the protections for domestic support obligations (DSO) owed to a non-filing spouse were in jeopardy when the debtor spouse filed a bankruptcy. Crafty, creative and cunning matrimonial attorneys attempted to negotiate alimony and support obligations into “property settlements” because they anticipated that these debts would be dischargeable in bankruptcy; and for a time, they were.

Because of abuses in the interplay between divorce and a subsequent bankruptcy filing wherein support obligations were being discharged as property settlements the bankruptcy laws were amended after 1994. From 1994 to 2005 certain property settlements were not dischargeable except in Chapter 13 cases when a separate adversary complaint needed to be filed by the debtor to determine if the support obligations were actually in the nature of a property settlement, and as such a dischargeable debt.

Establishing the issue of what is support and what is a property settlement was fertile province for litigators, and as in most litigation, usually, the ones benefited most were the attorneys. Once again, Congress responded by creating the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). Under BAPCPA’s new definition of a domestic support obligation (DSO) 11 USC Sections 101(14A) and 523(a)(15), virtually all DSO’s are non-dischargeable.

Such a broad and sweeping definition seemingly would be sufficient to put the baby of DSO to bed, but not so quick. Just as a teething child suffers in cutting new teeth, so does every new piece of legislation. The language contained in the definition “in the nature of support”, Section 101(14)(A)(B) and “in the nature of alimony or support”, Section 523(a)(5) is not immune from supplementary interpretation and consequently further confusion and uncertainty clouded what was otherwise thought to be final clarity on the subject.

To understand how DSO claims are treated in the family of claims against a bankruptcy estate, it is essential to understand what constitutes property of the bankruptcy estate. Qualified Domestic Relations Orders (QDRO) control pension funds and retirement accounts in divorce proceedings and when that retirement asset is included in the debtor’s bankruptcy schedules it is there for notice purposes only and is not part of the property of the bankruptcy estate.

Because a bankruptcy debtor enjoys the protections of the bankruptcy automatic stay, any attempts to collect upon a debt from estate property would be a violation of the stay and subject to serious sanctions from the bankruptcy court. Certain debts however, survive a bankruptcy filing and attempts to collect divorce related/support collection actions are excepted from the automatic stay as are actions to determine paternity. To the extent a non-debtor spouse seeks to recover property of the bankruptcy estate, said spouse must seek relief from stay by showing cause. One such cause is to collect non-dischargeable debts and post-petition support obligations.

Bankruptcy is complicated and no place for the faint of heart. LANA ZOLON & ASSOCIATES, PLLC is a client centered law firm with professional staff possessing more than 22 years experience in consumer bankruptcy law. We will protect you, your family and your assets during the entire bankruptcy process so that a “fresh start” is not just an expression but an actuality.