Family Emergency, Seeking Tax and Legal Insights

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cornellbuds
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Family Emergency, Seeking Tax and Legal Insights

Post by cornellbuds » Mon Feb 06, 2017 2:59 pm

My brother's wife is a manic-depressive that has descended into psychosis. In early December 2016, she abruptly left the family and has been living in hotels, occasionally in jail, posting aggressively on social media. Although subject to mental health assessments when arrested, she's released because she's "not a threat to herself." I share because there is no legal basis -- yet -- for a claim of mental incapacity that my brother might use to facilitate resolution of issues). My brother has filed for divorce (residence NY).

For years, she was the family breadwinner and financial steward. Extreme and irrational spending is a hallmark of her psychosis, and she's drained her retirement assets to essentially $0. (In December alone, the account was reduced by $63k). While my brother's job covers basic living expenses (e.g. food), he has no savings and many pending bills and outstanding debt. He's taken his name off of jointly-held credit cards and frozen credit lines where he is at risk. Below are a few salient issues where insights from experienced members of this community would be appreciated.

Primary Residence
House jointly owned. Between the mortgage and a line of credit, there's little, if any, equity. Property taxes of ~$10k are due now. Mortgage and credit-line debt service is ~$1350 month. He can't afford the house and would like to sell as soon as possible. How can the property be put of for sale when the wife 1) isn't around, and 2) isn't mentally stable enough to participate rationally even if she was?

Credit Cards
The wife routinely transferred balances to new cards with zero % rates. She opened two cards in my brother's name where the 0% rates are expiring on March 31 and Jun 1 with balances of $6600 and $2500 respectively. His plan is to pay a 3% transfer charge and flip these balances to yet another 0% card that will hold that rate for 18 months. (In essence, he pays about $275 now for the privilege of deferring the debt for a year and a half). Good strategy? He's not exactly sure what was purchased on these cards and whether or not he benefited from any of the purchases.

Tax Filing
Previously, they filed jointly. For 2016, the thought is to file as married, filing separately. It's not clear he'll have access to the records necessary for him to do so. He's not sure he'll be able to locate prior-year returns or this year's documents. They jointly own (free and clear) a rental property that has been depreciated, but my brother has no idea what sort of depreciation schedule has been used. Any thoughts on the best way to move ahead with tax filing? Or how to proceed with incomplete records?

Divorce Proceedings
My brother paid a retainer of $5300 to a divorce attorney of which $1200 has been used to create, serve, and file the divorce papers. He is desperate to NOT run up legal fees and is trying to use the attorney as little as possible. We are anticipating difficult proceedings with his wife. How can the the divorce move forward when the opposite party is not available or stable? How do we get the legal advice we need without running up legal bills?

College
The FAFSA filing period is upon us. Same issues about how to move ahead when the wife's financial circumstance is unknown and in flux...

"Cash Reserve" Loans
Finally, two jointly-held so-called "cash reserve" loans totaling ~$5600 have huge interest rates. The accounts have been frozen so the principle amount can't get bigger, but in the meantime, my brother is on the hook for paying the monthly interest. We'd like to pay them down (if we can free up funds), but if we do so, we'd also be paying her loan amount as well and we'd like to avoid that. Can he appeal to the bank to assume half the loan value? Or to pay only half the interest?

We are concerned for my brother's wife and hope she can get the help she needs. We hope my brother can somehow start emerge and start fresh. Thanks for any and all guidance you may be able to offer.

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CAsage
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Re: Family Emergency, Seeking Tax and Legal Insights

Post by CAsage » Mon Feb 06, 2017 3:06 pm

Your brother is gonna need a lot of legal help. Divorce issues tend to be very state-specific. Suggest getting a DIY guide to divorce for the education on what he can do or expect (e.g. Nolo Press, so as to not ask lawyer questions he can read up on). Note that he will still need a lawyer, his situation is VERY complicated. And probably a very good tax person. You can request copies of old tax returns from the IRS. Not clear married filing separate will help... And you can't sell a house without both owners, or close credit cards on other people. My deepest sympathies.
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.

Rupert
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Re: Family Emergency, Seeking Tax and Legal Insights

Post by Rupert » Mon Feb 06, 2017 3:13 pm

Unfortunately, this is a very complex situation that requires good legal advice from a divorce (and maybe probate) lawyer in your brother's community. Divorce and probate law are very state specific; so seeking advice on an anonymous internet forum is a very bad idea. For example, I would recommend that he initiate commitment proceedings against the wife, which the facts you recite would support in my jurisdiction. But it's unusually easy to have someone committed in my state. It's much harder elsewhere. Your brother will likely have to pay the lawyer(s) for their help. There's no way around it unless there's a free legal aid clinic of some sort in his community. He should perhaps call the local bar association and ask about that. It could take years to unwind this mess if the wife contests the divorce. If she is opening new credit accounts in your brother's name without his permission, he should immediately talk to his lawyer about possibly freezing his credit and filing police reports. I don't recommend he do that without first consulting his divorce lawyer though, as such moves may impact the divorce proceedings in some way.

cornellbuds
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Re: Family Emergency, Seeking Tax and Legal Insights

Post by cornellbuds » Mon Feb 06, 2017 4:26 pm

CAsage and Rupert,
Thanks for your advice. Each of you suggests that legal help is paramount. What is one to do when assets can't support the legal bills? Is there any way to get legal counsel from public sources?

Rupert
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Re: Family Emergency, Seeking Tax and Legal Insights

Post by Rupert » Mon Feb 06, 2017 4:48 pm

cornellbuds wrote:CAsage and Rupert,
Thanks for your advice. Each of you suggests that legal help is paramount. What is one to do when assets can't support the legal bills? Is there any way to get legal counsel from public sources?
If there's a law school nearby, you might check there to see if they have a clinic. Many local or state bar associations also offer some pro bono services.

Katietsu
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Re: Family Emergency, Seeking Tax and Legal Insights

Post by Katietsu » Mon Feb 06, 2017 5:27 pm

What income does he have?

What are his assets and liabilities?

He should contact the IRS and request copies of his past 2 or 3 years of tax returns.

If I were him, I would also consider filing an extension for this year to give himself more time. The only reason I would hesitate to wait would be if he is expecting a large refund or if he is concerned his wife will file including his or his children on her return.

He should obtain credit reports for himself and his children. I would think it would also be prudent to freeze the credit for all the family members as well.

I think this is a true crisis. I respect his desire to keep his payments up to date. However, the priority must be his and his children's immediate needs. Food, shelter, transportation, medical, utilities need to be first. I would even consider saving for legal fees to be higher priority than making credit card payments.

If there is a good chance that the house is going to end up in foreclosure, I would discuss with a lawyer the option of not paying the mortgage.

The college student should make an appointment with the Financial Aid office at their college. These people are usually true caring professionals who have seen these situations before.

And Breathe.

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celia
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Re: Family Emergency, Seeking Tax and Legal Insights

Post by celia » Mon Feb 06, 2017 6:16 pm

cornellbuds wrote:My brother's wife is a manic-depressive that has descended into psychosis.
First and most importantly, your sister-in-law is a person. She has an illness. Her illness is manic depression. She is not manic depressive, but has an illness that goes by that name. (If she had cancer, would you say she IS a cancer?)

Second, has she been diagnosed? If not, that is the first step. If your brother cares for her at all, he should see that she gets the care she needs. Take her to an emergency room of a hospital that offers behavioral health care. It should be covered by medical insurance. (He can call her carrier to see what they recommend.). If he was the person with the illness and had been acting like she is, would he want his wife to intervene for him?

Unless all the above has already been attempted, considering this as a financial/legal issue is inappropriate, in my opinion. Yes, we don't discuss medical issues here, but I have seen cases like this greatly improved if the correct medical (behavioral health) care is received.

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dual
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Re: Family Emergency, Seeking Tax and Legal Insights

Post by dual » Mon Feb 06, 2017 6:31 pm

cornellbuds wrote:CAsage and Rupert,
Is there any way to get legal counsel from public sources?
See if you can find a local chapter of NAMI, the national alliance for mental illness
http://www.nami.org/

Depending on the chapter, the people there may be able to help you.

Also check out this webpage for suggestions on how your BIL can deal with this and try to get your SIL to get treatment:
http://www.schizophrenia.com/sznews/arc ... 05561.html

The webpage is for schizophrenia but the advice is good for any psychosis.

aredhel
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Re: Family Emergency, Seeking Tax and Legal Insights

Post by aredhel » Mon Feb 06, 2017 6:45 pm

celia wrote:If your brother cares for her at all, he should see that she gets the care she needs.
The OP's brother's wife is an adult, and cannot be forced to accept care unless she represents an immediate danger to herself or others. And unfortunately, totally trashing their family finances may not qualify as such a danger in the eyes of the court.
Last edited by aredhel on Tue Feb 07, 2017 10:57 am, edited 2 times in total.

cornellbuds
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Re: Family Emergency, Seeking Tax and Legal Insights

Post by cornellbuds » Mon Feb 06, 2017 10:28 pm

First and most importantly, your sister-in-law is a person. She has an illness. Her illness is manic depression. She is not manic depressive, but has an illness that goes by that name. (If she had cancer, would you say she IS a cancer?)

Second, has she been diagnosed? If not, that is the first step. If your brother cares for her at all, he should see that she gets the care she needs. Take her to an emergency room of a hospital that offers behavioral health care. It should be covered by medical insurance. (He can call her carrier to see what they recommend.). If he was the person with the illness and had been acting like she is, would he want his wife to intervene for him?

Unless all the above has already been attempted, considering this as a financial/legal issue is inappropriate, in my opinion. Yes, we don't discuss medical issues here, but I have seen cases like this greatly improved if the correct medical (behavioral health) care is received.
Celia,
Forgive the clumsy language in describing my SILs illness. I understand the sensitivity. I left out much of the story in my original message, but yes, my SIL has been diagnosed. This is only the latest of several episodes. My brother has been struggling to get her the care she needs, but unfortunately, his efforts were construed by her to be an attack and his request that she see her physician was the catalyst for her abrupt abandonment of the family.

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celia
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Re: Family Emergency, Seeking Tax and Legal Insights

Post by celia » Mon Feb 06, 2017 10:36 pm

aredhel wrote:
celia wrote:If your brother cares for her at all, he should see that she gets the care she needs.
The OP's brother's wife is an adult, and cannot be forced to accept care unless she represents an immediate danger to herself and others. And unfortunately, totally trashing their family finances may not qualify as such a danger in the eyes of the court.
But if she is not thinking straight, how can she make any decisions? If someone is high on drugs, in intense pain, under sedation, or doesn't comprehend a question (due to any reason), his/her answer is not being given freely. How many mentally ill homeless on the streets seek care? How many even KNOW they need care? A person won't even think about seeking care if they don't KNOW they need it.

P.S. Aredhel, Please note that when you have a quote box without text in it, it likely means someone's words are being attributed to the wrong person. I fixed them in this post.

JimInIllinois
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Re: Family Emergency, Seeking Tax and Legal Insights

Post by JimInIllinois » Mon Feb 06, 2017 11:15 pm

celia wrote:But if she is not thinking straight, how can she make any decisions?
Apparently the legal system is allowing her to make decisions, terrible ones, the consequences of which the OP would like to help his loved ones avoid. His sister-in-law may be a person, but the choices are being made by the disease and the damage is being done by the disease so thinking of her as a cancer is probably the right frame of mind. That's not his sister-in-law. That's the thing that killed his sister-in-law. And it needs to be stopped first and rescued later.

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