Fortunately, the Child and Citizenship Act of 2000, which became effective February 27, 2001, streamlined the process of foreign born children being adopted by American citizens securing Pennsylvania birth certificates. This Act allows for adoptees in some cases to register their Foreign Adoption Decrees and then secure a Pennsylvania birth certificate rather than the prior requirement of a second or re-adoption in the United States after their adoption in their country of origin.

There are no definitive answers on what makes a foreign adoption able to be registered, but the language in the Act provides a Court “determines if it can be registered.” The requirements of a Petition to Register a Foreign Adoption Decree sets out criteria for the Petition which essentially defines which Foreign Adoption Decrees can be registered and which cannot. Continue Reading Registration of Foreign Adoption Decrees – Goodbye Re-Adoption (Maybe)

In a historic 2014 ruling, the U.S. District Court in Whitewood v. Wolf made same-sex marriage legal in Pennsylvania. This ruling, while finally allowing a sizable segment of the population the same legal freedoms heterosexual couples have always enjoyed created problems for some same-sex couples that had done their best to take care of one another in a pre-Whitewood world.

Prior to the legalization of same-sex marriage, it was not uncommon for same-sex couples to go through an adult adoption. This was the only method available to them to create a legal family unit. By one partner adopting the other, couples were able to enjoy some of the protections and benefits only available to families. One of those benefits was a reduction of inheritance taxes. Prior to the Whitewood ruling, when one partner of a same-sex couple died, the other partner would have to pay 15% inheritance tax because the surviving partner was simply viewed as “other heir” under the tax code. Imagine paying 15% tax on assets you helped acquire during your relationship, while married heterosexual couples were taxed at 0% on the same inheritance. By adopting one’s partner, same-sex couples created a legally recognized family unit and reduced inheritance to the 4.5% of lineal heirs. While a vast improvement, the solution was far from perfect. Continue Reading Legalization of Same-sex Marriages in Pennsylvania Causing Adoption Reversals

During the holidays, we all become nostalgic about the things in our lives that have touched us, have changed us in some way or has simply been a blessing.  When I think of those things at this time of year, I immediately go to the blessings of my family and dear friends.  For so many of us family is the most important part of our lives, and I have been so lucky to have had the pleasure of being part of adding to many of my clients’ families over the last 20 years.  Continue Reading Adoption The Greatest Gift of All

The other night I found myself sitting with my children watching America’s Got Talent. While America’s Got Talent is clearly a popular show, it is not one which I have seen before. That being said, my children and I became engrossed in the wonder of this all-American talent show where some acts were silly, others dangerous and some downright amazing. What struck me most of all however, was a young man named Jacob, who at just eighteen years old sang a moving rendition of John Mayer’s “Waiting”. It wasn’t so much that he was young, handsome and extremely talented, but it was his back story that touched my heart. You see, Jacob shared with the world that he had been the child of neglectful parents who are addicted to drugs and ultimately, their inability to care for him and his sister caused them to be placed in foster care.  At the time, Jacob was only five years old and spent several years bouncing from foster home to foster home. He described this experience as being like someone’s luggage, never knowing where you would end up. Clearly what he wanted most was a family that loved him and the stability of knowing where he would end up.

Fortunately for Jacob, he and his sister were adopted, and before he took the stage that night his adoptive mother shared words of encouragement and gave him a big hug. Jacob walked confidently out on to the stage and delivered an extraordinary performance. But again, even then, it was not the performance that struck me, but instead, the words of his mother after hearing Jacob’s backstory as portrayed by NBC.  She said without hesitation, “That is my son, and I am his mother.” Those simple but impactful words are the epitome of what adoption means to me and my law practice. The thousands of children that are adopted every day are impacted by the generosity and compassion of the families that add them to their home. That addition is not done for fame or fortune, it is not to gloat or to be perceived as a good person.  Instead, it is a simple, yet profound relationship just as Jacob’s mom suggested, “That is my son, and I am his mother”.

For families who open their homes and their hearts to children awaiting adoption, the impact of the decision to include a child as part of a family will change that child’s life forever. Jacob is a perfect example of that. At five years old he was trapped in a neglectful home and then removed to the instability and uncertainty of the foster care system. Jacob’s parents’ decision to adopt him, changed his life forever and allowed him to be a strong confident eighteen year old, standing on a stage in New York City, singing a song for hundreds of thousands of people in that theater and watching across the country.  How could anyone ever question the impact of adoption?

Holly Filius is an attorney at Russell, Krafft & Gruber, LLP in Lancaster, Pennsylvania. She received her law degree from Widener University School of Law and practices in a variety of areas, including Adoption

There is good news for taxpayers who have recently adopted a child or are planning to adopt a child in the near future: the adoption tax credit, which I have discussed in previous posts, has survived the fiscal cliff. The American Taxpayer Relief Act of 2012, which was passed by Congress and signed by President Obama on January 1, 2013, permanently extends the adoption tax credit. 

In general, the credit allows parents to apply the ordinary and necessary expenses involved with adoption, including attorney fees, travel expenses, adoption fees and court costs, against their federal tax liability. Because the maximum amount of the applicable credit is indexed for inflation, the amount changes from year to year. For 2012, the maximum credit is $12,650 per adopted child.

There are, however, some income restrictions. The tax credit begins to phase out at income levels that reach $189,710. Any taxpayer with an adjusted gross income over $229,710 is prohibited from utilizing the credit.

One potentially negative change is that the credit is no longer “refundable”, which means that it can only be applied toward existing tax liability. For example, if your tax liability for 2012 is $8,000, the credit can be used against that entire amount. However, because the credit is not refundable, the taxpayer will not receive a refund of the additional $4,650 that the credit provides for. If the credit were refundable, which it was for tax years 2010 and 2011, the taxpayer would receive additional $4,650 as a refund from the IRS.

Care should be taken when claiming the credit because there are numerous procedural steps that need to be met. In addition, there are expense substantiation requirements, however the substantiation rules are relaxed to some extent with regard to taxpayers who adopt children with special needs. Moreover, taxpayers who claim the credit will increase the likelihood that they will face an Internal Revenue Service audit. As a result, I strongly suggest consulting with a tax professional to determine how to calculate the credit and properly claim it on your tax return. For more information, please see the IRS website.

 

Matthew Grosh is an attorney at Russell, Krafft & Gruber, LLP in Lancaster, Pennsylvania. He received his law degree and LL.M. in Taxation from Villanova University

In previous blog posts, I wrote about the adoption tax credit, which provides qualifying taxpayers who have adopted children with relief from the expenses related to the adoption. While those expenses must be substantiated with documentation, if the child has received a determination from the state that he or she has special needs, then the full credit can be claimed without substantiation. Additionally, because of the substantiation requirements, taxpayers cannot use the Internal Revenue Service’s per diem rate tables.

When I had previously written about the credit with regards to the adoption of children with special needs, the Internal Revenue Service had not provided any guidance with regard to substantiating a determination of special needs from the state. Since then, the IRS has issued some guidance on their website. According to the IRS, a state’s determination of special needs may be substantiated with the following items:

  1. A signed adoption assistance or subsidy agreement issued by the state;
  2. Certification from the state or a county welfare agency verifying that the child is approved to receive adoption assistance; or
  3. Certification from the state or a county welfare agency verifying that the child has special needs.

Please note that this list is not exclusive.

For the 2011 tax year, taxpayers can claim up to $13,360 for each child they have adopted. The credit limit has gone up from $13,170 for the 2010 tax year and $12,150 for 2009. While the credit can be taken in multiple years, the credit limit is cumulative and includes any adoption tax credit claimed in prior years. That means for each adopted child, once the credit limit is reached, no future credit will be available unless the credit limit is raised. Further, since 2010, the credit is "refundable," meaning that qualifying taxpayers will receive the credit even if they do not owe any tax for that year.

Continue Reading An Update on the Adoption Tax Credit for 2011

I have come across many clients who have a child that qualifies for certain government benefits because the child has special needs. Unfortunately, a well-intentioned gift to a child can, in some cases, inadvertently disqualify the child from the government benefits. In other instances, a child might have become entitled to sizeable funds, such as through a settlement or award in a personal injury lawsuit, which could also disqualify the child from benefits. This is where special needs trusts come into play.

The role of special needs trusts is to provide economic security for a person with special needs without disqualifying them from government benefits. There are three types of special needs trusts, depending on the circumstances: common law discretionary trusts, OBRA-93 payback trusts and pooled trusts. 

Common Law Discretionary Trusts:

This type of trust is referred to as “common law” because it arises from a series of court decisions and not from a particular statute. Typically, common law trusts should be used when the source of the funds is coming from a third party, such as money in the form of a gift to the person with the special needs. 

There are four primary requirements for establishing a common law discretionary trust. 

  1. The trust must explicitly state that proceeds of the trust are meant to supplement and not supplant public benefits. 
  2. The trust must also require that public benefits be considered by the trustee prior to distribution of any income or principal. 
  3. The trust must be irrevocable, which generally means that once funds from third parties are in the trust, they cannot be removed later by the third party. 
  4. The trustee must have total, absolute and unfettered discretion to pay, or refuse to pay, the income or principal from the trust to the disabled beneficiary. As a result, required periodic payments are not permissible. It is also helpful if there are other beneficiaries of the trust, such as other children of the parents creating the trust. 

Continue Reading An Overview of Special Needs Trusts

Making a will is something that occasionally crosses your mind, it’s one of those things you think maybe you need but don’t have the time or desire to make it a top priority. In addition, there are many things that can deter you from making a will such as lack of money or property, the unlikelihood that something catastrophic will happen to you or just simply procrastination. However, if you are a parent, one of the most important reasons you should have a will is to appoint a person to care for your child upon your death and the death of the other parent. The care of your child upon an unfortunate event such as death can happen to anyone regardless of the size of your estate. As a parent myself, I believe that one of the most important parts of a will is the section that appoints a guardian for anyone with minor children.

Continue Reading How a Will Can Help Determine Who Will Care For Your Child if you Die?

On April 27, 2011, Holly Filius received a Letter of Commendation from the Lancaster County Commissioners in recognition of the Central Penn Business Journal’s Women of Influence Lifetime Achievement Award. She will formally receive her award on May 16 at the Women of Influence Luncheon. Holly was presented with the Letter of Commendation during the Lancaster County Commissioners’ Meeting. The letter acknowledged Holly’s commitment to her clients and community,

"With respect and appreciation, the Lancaster County Board of Commissioners would like to congratulate you on being named the 2011 Central Penn Business Journal’s Women of Influence Lifetime Achievement Award recipient. We are honored to recognize your impressive career, leadership skills and accomplishments in the business community. You have committed your life to making Lancaster County and all of Central Pennsylvania a great place to work and live." 

Holly S. Filius, Managing Partner, of Russell, Krafft & Gruber, LLP in Lancaster, PA has recently been named the recipient of the Lifetime Achievement Award in the Central Penn Business Journal’s Women of Influence Awards program.

Filius received her B.A. in Political Science from Villanova University and her J.D. from Widener University School of Law. She concentrates her law practice in Family Law, Adoption and Estate Planning. Filius joined the firm as an associate in 1998 and attributes her early success to hard work, a commitment to client service and integrity, which has earned her a solid reputation among her clients and the legal community. This success led to a partnership offer after only five years in private practice. Six years later in 2009, she was elected Managing Partner of the firm. Filius’ commitment to excellence and her leadership skills made her an ideal candidate for the position.

Filius has earned a reputation as one of the best Family Law attorneys in Lancaster. Over the years she has acted as a mentor to all of the young lawyers at Russell, Krafft & Gruber, LLP. In addition to mentoring lawyers in her own firm Filius often makes time for law clerks and even lawyers in other firms who recognize her expertise and appreciate her professional and approachable demeanor.

Currently, Filius serves as President of the Board of Directors of the S. June Smith Center Foundation. She is active in numerous community and professional groups, has served on the Board of Directors of The Pennsylvania State Foster Parent Association and as a member of the Women in Business Committee of the Lancaster County Chamber of Commerce and Industry.

Filius’ career achievements are ones that stand out among both the men and women in her field. Under her leadership the firm has been able to successfully balance growth and caution in the midst of a struggling economy and position the firm for the future. As a long time resident of Lancaster County, she feels a commitment to her community and strives to make Lancaster county a better place to live and work.

The Women of Influence awards were created in 2010 to recognize midstate women leaders who are influential in their companies, industries and communities. In total, 28 local women business leaders will receive awards recognizing their outstanding leadership, integrity and accomplishments in the midstate’s business community at the Central Penn Business Journal’sWomen of Influence event on Monday, May 16, 2011 at the Hilton Harrisburg. The award recipients will also be profiled in a special supplement to the May 20, 2011, issue of the Central Penn Business Journal. This list will also appear in the Business Journal’s 2012 Book of Lists publication.

 

Continue Reading Holly Filius named the Recipient of the Women of Influence Lifetime Achievement Award