Working With Your Spouse | Mediation Blog

Posts Tagged ‘Working with Your Spouse’

Transfer of Property between Spouses

Tuesday, October 6th, 2009

The transfer of property between you and your spouse as part of your divorce is not a taxable event as long as the transfer takes place within one year after the date of your divorce. That means that all of the settlement issues you’re discussing in terms of who-gets-what won’t have any immediate tax consequences.

The non-taxability of transfers between spouses also applies to stocks, bonds, mutual funds, and any other property which you owned jointly and now one of you will own that same property separately.

Capital gains taxes and transfer taxes (in the case of real estate or other titled assets like (boats and cars) will apply if you later transfer that asset to a third party, either by sale or gift. Example: Bob and Jill jointly own a house which they purchased for $100,000, but is now worth $175,000. They also own stocks worth $50,000 which they bought for $30,000. Bob transfers the house to Jill and Jill transfers the stocks to Bob. Both assets have appreciated in value, as indicated above. Neither of these transfers triggers any tax.

Bob then sells the stock (to a third party) two weeks later to pay off some debts. He will owe capital gains tax on the $20,000 appreciation of the stocks, typically about 33%.

Jill sells the house two months later to a third party, as well. Because the appreciation is $75,000, she wouldn’t owe capital gains tax because the first $250,000 of appreciation is exempt from capital gains tax, but she would owe any transfer taxes which are assessed by her county or town.

For more information on the financial aspects of divorce, see http://www.peace-talks.com/finformation.php. Also visit the Peace Talks resource center at http://www.peace-talks.com/resources.php.

Excerpted from Your Divorce Advisor: A Lawyer and a Psychologist Guide You Through the Legal and Emotional Landscape of Divorce (Simon & Schuster/Fireside 2001). For more information: http://www.yourdivorceadvisor.com/.

For more information contact Peace Talks www.peace-talks.com

Tags: Creating Fair Settlements, Working with Your Spouse
Posted in Property Division | 1 Comment »

Timing of the Sale of Your House

Thursday, September 24th, 2009

Evaluate your circumstances to determine when and how the equity in the house is best split, and whether that must be accomplished by a sale, or a refinance or buy-out between spouses. Sometimes it can be done immediately, and in other situations a delay is preferable.

If one spouse wishes to keep the house, and there is a way to divide the equity and offset it against other assets, or refinance the house so that the spouse giving up the house is paid his or her share of the house as soon as possible, then the spouse retaining the house would be under no obligation to sell the house subsequently. This is the cleanest way to handle this situation.

However, you may not be in the economic position to split your home equity in this manner, or may be ineligible or unable to afford a refinance. Therefore the timing of how a spouse is paid his or her share of the house equity becomes a central issue.

If the division of equity will not happen immediately, there may be an obvious dividing point, such as when the children graduate from high school or college, the remarriage of the spouse retaining the house, whenever that spouse begins to live with someone under circumstances tantamount to remarriage, or any other life event that you determine in advance. Generally, when the first of these events occurs, the spouse who gave up ownership of the house or right to occupy the house needs to be paid his or her equity, either through a refinance or a sale. Sometimes, the spouse to whom payment is owed is given an opportunity to buy the house if the spouse who retained the house wishes to sell it at that time. If you want help in considering all of your options, consider meeting with a divorce financial planner, see https://www.institutedfa.com/ReferralSearchPage.aspx. Also, be sure to see the Peace Talks resource center at http://www.peace-talks.com/resources.php.

For more information contact Peace Talks www.peace-talks.com

Tags: Creating Fair S, Working with Your Spouse, Your Responsibilites, Your Rights
Posted in Divorce and Your House | 1 Comment »

Community Property States

Friday, August 21st, 2009

The remaining nine states are Community Property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. This means that, with a few exceptions, only property which was accumulated during the marriage will be divided, and that property will be divided 50/50, asset by asset, whenever possible. Wages, income and bonuses are community property, as is credit obtained during the marriage. Therefore, homemakers are not penalized by not working outside the home, and claims of “I earned all of the money, so all of the property is mine!” aren’t considered by the court. Property which accumulated to either of you prior to the marriage, or during the marriage through a gift or inheritance, or by virtue of appreciation or rents from other pre-marital property is considered “separate property” and is not subject to division by the court (again, with some exceptions).

In Community Property states, the main exceptions are:

when one spouse receives a community property-funded education, the community property used to fund that education will be reimbursed for the educational expenses, unless both spouses received a community property funded-education, more than 10 years has passed since the education was completed, or the marital community has benefitted in some other way. Any educational loans taken out for educational expenses are the responsibility of the person who received the education.
when liabilities exceed assets.
when one spouse has misappropriated family assets. Oddly enough, this does not include excessive gambling debts, as all debts incurred during the marriage are considered marital debts, irrespective of whether one spouse had the permission of the other spouse to incur the debt.
lawsuit liabilities for injuries. For lawsuit liabilities, who has to pay depends on whether the accident happened in the course of “marital business”. For example, if you are involved in an accident while driving to the store to buy groceries, then the liability is paid from community assets. If you get in an accident while on your way to meet a friend for a social outing, the liability is paid from your separate property.

For people with children and a family home, the family home may be awarded to the custodial spouse, and the other spouse may receive other assets to compensate for giving up an interest in the home.

Businesses started prior to the marriage present a special problem. The division depends upon whether any increase in the business value is due to the nature of the business, or the businessperson’s special efforts. If the business has increased in value because of the nature of the business, then the business is generally separate property. The leading case in this area of law is VanCamp, pertaining to the divorce of the VanCamps of pork & beans fame. Their business value increased drastically during World War II just because of the nature of the business, i.e., canned food during wartime. Such a business was maintained as separate property.

For a host of free divorce information, see http://www.peace-talks.com/resources.php. A list of other resources is available at http://www.peace-talks.com/divorceinformation.php.

For more information contact Peace Talks www.peace-talks.com

Tags: Divorce Basics, Working with Your Spouse, Your Responsibilities, Your Rights
Posted in Property Division | Comments Off

Other Factors Influencing Property Division

Wednesday, August 12th, 2009

Other factors that can influence property division are how long you have been married, how old each of you are, what your health is like, what your educational backgrounds are, your prospects for future income, whether or not the judge thinks that the spouse ordered to pay child support and spousal maintenance will actually pay the orders, and a variety of other factors. Inheritances and money that each spouse contributed to the marriage are often important as well. Be sure to bring these matters up with your lawyer and discuss what they mean in your particular case, given your state’s laws. While each case is decided individually by the court, your lawyer can give you an idea of how judges in your state would consider each factor, and how that would translate into property distribution in your case.

Courts recognize non-monetary contributions to families just as they do monetary contributions. Housewives, stay-at-home moms, stay-at-home dads, and spouses who contributed to the family in non-monetary ways are recognized along with spouses who contributed to the home with salary, inheritance, or savings.

Don’t expect the court to do a dollar-for-dollar accounting of all money earned and spent by each spouse.

Most courts will assume that while you and your spouse were married, you made certain decisions together in the best interests of your family as a whole. The Court will not second guess those decisions by punishing one spouse for not working, or for not earning as much, unless those are material issues in your case. For example, if the reason your spouse didn’t work is because he or she had a drug problem, the Court will likely consider that unfavorably toward your spouse in the property settlement. If your spouse didn’t work because he or she stayed home with the children while you advanced your career, the Court will view that spouse as an equal contributor to your family assets, even though his or her contribution was not monetary. It is not the Court’s purpose to unravel every financial transaction during your entire marriage to decide who contributed exactly how much money, who purchased which item of furniture, and who worked the most hours, thereby creating a disparity in earnings. It may be helpful for you to work with a divorce financial planner. To find one near you, see https://www.institutedfa.com/ReferralSearchPage.aspx. See the financial section on the Peace Talks website at http://www.peace-talks.com/finformation.php.

For more information contact Peace Talks www.peace-talks.com

Tags: Creating Fair Settlements, Divorce Basics, Working with Your Divorce Lawyer, Working with Your Spouse, Your Responsibilites, Your Rights
Posted in Property Division | 1 Comment »

Property: Equitable Division of States

Monday, August 10th, 2009

Forty-one of the fifty states are Equitable Division states (i.e., every state except Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin). That means that the court has the ability to order that any property belonging to either you or your spouse may be subject to division by the court. The division is based on what the court determines to be fair, hence the name “equitable division.” All property acquired during the marriage is subject to division, as well as property which was acquired prior to the marriage by either of you individually, gifts from one family, inheritances, personal injury lawsuit settlements, bonuses, pensions, stock options and other assets which you have value to you.

Typically, most courts will focus on dividing the assets which accumulated during the marriage rather than those which accumulated prior to it. Pre-marital assets may be subject to division, however, depending upon the individual circumstances of your case.

For example, if you and your spouse have $150,000 in assets which accumulated during the marriage, both of you are in good health and have decent jobs, and your children are healthy and don’t require any special care, then the court will focus first on dividing those assets. Assets which each of you accumulated prior to the marriage will be considered, but if dividing the marital assets will provide each of you with a reasonable settlement, then several thousand dollars of pre-marital savings or property is probably “safe” from the court’s orders.

If, on the other hand, one of you has $100,000 in premarital savings, and together the two of you accumulated no assets, but $20,000 in credit card debt, it is likely that a court will order a portion of that $100,000 to go to the other spouse, and to pay the credit card debts. For information about finances and divorce, see http://www.peace-talks.com/finformation.php. You may also find it helpful to work with a divorce financial analyst, see https://www.institutedfa.com/ReferralSearchPage.aspx.

For more information contact Peace Talks www.peace-talks.com

Tags: Creating Fair Settlements, Working with Your Lawyer, Working with Your Spouse, Your Responsibilites, Your Rights
Posted in Property Division | Comments Off

More Alimony Considerations

Friday, August 7th, 2009

Someone in the 28% federal tax bracket, every $100 in alimony paid “costs” only $72 because of the tax savings. If the recipient is in the 15% tax bracket, each $100 received means only $85 is truly realized because of the taxes owed. As you can see, there’s a gap of $13 which is the IRS’s way of helping divorcing couples make ends meet. By utilizing alimony effectively, the couple saves $13 in taxes for every $100. Many state tax laws also provide for alimony deductions on top of the federal deductions. If your and your spouse’s incomes are unequal alimony may help you both save money, so explore the tax ramifications of an alimony order, both individually and as a couple. Alimony can help keep money in your collective pockets rather than in the hands of the IRS. As much as spouses dislike giving alimony to each other, giving it to the IRS is even less popular!

If you have children, and paying alimony in addition to child support is a possibility, the IRS has another vehicle by which you may take advantage of tax provisions called “Unallocated Alimony and Support,” which is a special combination of alimony and child support — all of which is deductible by the paying spouse and taxable as income to the receiving spouse. If your incomes are very disparate; for example, if one of you stays home with the children and does not earn an income, then this option may make most sense for you.

Courts have also modernized alimony in creating “rehabilitative alimony” or limited term alimony. Rather than have alimony continue for the rest of one’s life, as was typical 20 years ago, courts nowadays are considering orders which last for a specific period of time and then terminate. For example, in the case of a woman who has taken time off from her career as a teacher to raise 2 children, now ages 3 and 5, the court might award alimony for four years. During that 4 year time period, the woman has an opportunity to renew her teaching license, look for a job, and establish the children in school. By the time the 4 years pass, she should be in a much better position to support herself, without further need for alimony. Without a reasonable reprieve (in this example, 4 years), she may be unable to find a job immediately because her teaching license or education is out of date, she might be unable to find reasonably priced daycare for the children, and the children would be forced to adapt to a sudden change of living circumstances. Even a few years of modest alimony helps this situation immensely.

On the other hand, there are also traditional cases in which women who have made their lives as housewives find themselves 30 years later without a pension, 401K, or even a job. Many of these women married in college, or before college, and never finished their education. Some have never worked outside of the home, and find themselves for the first time without financial support. Because of their family work and skills, their husbands were able to further their careers without having to worry about keeping house or daily arrangements for the children. At age 55, finding a first job is extremely difficult. Alimony in this type of a scenario is more likely to be ordered for an indefinite period. For some terrific resources on divorce and money, see http://financialplan.about.com/od/divorceandmoney/Divorce_and_Money.htm. Also see the Peace Talks website’s financial information at http://www.peace-talks.com/finformation.php.

For more information contact Peace Talks www.peace-talks.com

Tags: Divorce Basics, Working with Your Spouse, Your Responsibilites, Your Rights
Posted in Alimony | Comments Off

Legal Issues During the Waiting Period

Tuesday, July 28th, 2009

During the waiting period, you begin to resolve each of the issues germane to divorce. You are thus working toward a fair settlement for the post-divorce period. Two categories of issues must be resolved: financials, and if you have children, issues related to legal custody and parenting arrangements.

Financials

alimony or spousal support
personal property
division of liquid assets: cash, stock, and bank accounts
division of retirement accounts and pensions, stock options and less liquid assets
whether or not to sell the house and other real estate
who will keep the house and other real estate if it is not to be sold
tax issues
child support, medical insurance, and tax exemptions for children

Parenting Related

legal custody and parenting schedules
special provisions concerning children: medical expenses, college, extracurricular activities, private school and the like

Considerations Before Settling

what do you believe is in the best interests of your children?
can you handle all of your new responsibilities?
have you considered all of the tax ramifications?
have you considered the mix of assets you’ll be receiving: liquid vs. non-liquid, and does the settlement meet your immediate needs?
does the settlement set you on the right path for your long term needs?
can you live with the proposed settlement, even though your not completely satisfied?
will a trial cost more emotionally and financially than what you hope to gain?
if you cannot settle, will what you’re fighting about matter in 5 years?

Agree upon what to tell family and friends so that there is no misunderstanding about what the living arrangement signifies.

Making sure you are prepared and know all your options will help things go much more smoothly for you and your family. Be sure to visit the Peace Talks resource center at

http://www.peace-talks.com/resources.php. For basic divorce information, see http://www.peace-talks.com/divorceinformation.php.

For more information contact Peace Talks www.peace-talks.com

Tags: Working with Your Spouse, Your Responsibilites, Your Rights
Posted in Legal Separation | Comments Off

Serving Your Spouse Divorce Papers

Monday, July 20th, 2009

In order for the service of process to run smoothly, the sheriff needs to know how, when, and where to find your spouse. The more information you can give your lawyer and the sheriff about where to find your spouse, and the best time to find him or her, the easier it will be for the lawyer to get the papers served, thereby expediting your case and saving you money. The appendix contains a Sheriff Information Sheet which you may use as a guide for information to give the sheriff.

Give the sheriff a written schedule of where your spouse can be found. Include his or her home address and telephone number, and the days of the week and times he or she is ordinarily available. If you want the sheriff to serve your spouse at work, list his or her work address and telephone number as well as hours and days worked. If your spouse can be violent, or carries a gun, the sheriff needs to know that. If you suspect that your spouse will attempt to avoid service, the sheriff needs to know that too. If you don’t want the papers served during certain hours when the children are home, be specific in your instructions. If you need to be notified before service so that you can make sure you’re in a safe place when it happens, also let the sheriff know.

The sheriff will need a description of your spouse’s appearance: height, weight, hair color, race, whether your spouse has facial hair or wears glasses. Attach a photograph to the written description. The color, make and model of your spouse’s car is also helpful information, as is the license plate number.

Under certain circumstances, the sheriff may be able to simply leave the papers at your spouse’s house, as opposed to handing the papers to your spouse personally. Each trip that the sheriff makes costs you money, so make it as easy as possible for the sheriff to successfully serve your spouse. This can be a stressful time. Make sure you have all the information you need. Visit the Peace Talks resource center at http://www.peace-talks.com/resources.php. For another good article on being served with a divorce summons, see http://www.gitlin.com/pages/questions/qa_servedwithasummons.html.

For more information contact Peace Talks www.peace-talks.com

Tags: Divorce Basics, Working with Your Spouse
Posted in Filing for Divorce | Comments Off

Preparing Your Spouse to Receive Divorce Papers

Wednesday, July 15th, 2009

Although it may be very difficult for you to broach the subject of divorce with your spouse, if you have decided to file for a divorce it is best to let your spouse know in advance that the divorce papers are coming. Even when the marital relationship has gone awry, the spouse served is often shocked and upset when the papers finally arrive. Try and soften that blow to the extent you can. It may set the stage for how much you and your spouse will cooperate throughout the process. For a terrific article on serving divorce papers, see http://www.womansdivorce.com/how-to-serve-divorce-papers.html.

If, on the other hand, you feel that you may be in danger if your spouse knows in advance that the papers are coming, then make sure that your lawyer is aware of your fear. You will want to make sure that you are in a safe place when the papers are served. If your spouse becomes violent or threatening after the papers are served, call the police. Don’t take any chances. Call your lawyer after you have had a chance to get to someplace where you will be safe. Your lawyer can do little to remedy the immediate situation; that’s why it’s important to call the police first.

How to Serve the Papers

How you handle serving papers on your spouse can be instrumental in how the rest of your case progresses. Most sheriffs and process servers can arrange with your spouse to deliver the papers so that it is not unduly embarrassing. Your spouse will be able to meet the sheriff to receive the papers so that service can be as private and non-confrontational as possible.

Generally, receiving divorce papers is painful and scary. Expect some hurt feelings and angry words. If your spouse has been violent in the past or has started behaving erratically recently, consider having a phone handy to call 911 in the event that your spouse becomes a problem, or be prepared to file a temporary restraining order. At the very least, establish a “safe haven” in advance where you and your children can spend the night if your spouse becomes violent. These scenarios happen infrequently, yet you want to be prepared if you are at risk. To make sure you are prepared, be sure to visit the Peace Talks resource center at http://www.peace-talks.com/resources.php.

For more information contact Peace Talks www.peace-talks.com

Tags: Divorce Basics, Working with Your Spouse
Posted in Filing for Divorce | Comments Off

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Posts Tagged ‘Working with Your Spouse’

Transfer of Property between Spouses

Timing of the Sale of Your House

Community Property States

Other Factors Influencing Property Division

Property: Equitable Division of States

More Alimony Considerations

Legal Issues During the Waiting Period

Serving Your Spouse Divorce Papers

Preparing Your Spouse to Receive Divorce Papers