The deadline for filing 2019 federal and state income tax returns is right around the corner – July 15, 2020. If you were divorced in 2019, here are a few things to think about:
Filing Status – Your marital status as of December 31st controls whether you are considered married or single for purposes of filing your tax returns. Remember the Nisi period discussed in a prior post? Under Massachusetts law, a party is not considered divorced until the Nisi period expires. This means that even if the Judgment of Divorce is dated December 1, 2019, due to the Nisi period, you remained married for another 90 days. If you were still married as of December 31, 2019, you can file your 2019 tax returns as married filing jointly or married filing separately. There are risks and benefits to either filing option, so consult with your attorney. There is also an option to file as head of household where you are “considered unmarried” due to living apart from your spouse for six months or more during the tax year. To qualify as head of household, you must also have paid more than half the cost of maintaining your … Keep reading
Seems you can’t log on to social media, read a news headline or flip on the television these days without hearing about the coronavirus. The Center for Disease Control has warned Americans to prepare for an outbreak, large cities (including San Francisco) have declared emergencies before even one confirmed case, and the World Health Organization is on the verge of declaring the coronavirus a pandemic, which is a disease found on more than one continent that spreads frequently between people. As a result of fears related to the Coronavirus, global markets have been hit hard, and in the last few days, the Dow Jones and the S&P 500 have been decimated, erasing all 2020 gains. According to the New York Times, flights on Chinese airlines are selling for less than a cup of coffee.
So how does this all relate to divorce? Well, asset division is a major component of divorce. In Massachusetts and Rhode Island, dividing assets is a three-step process. First, it must be determined whether the asset is part of the marital estate, next the asset must be valued, and finally, the asset must be divided. As fears relating to the coronavirus have crippled the global … Keep reading
Often times in a divorce matter, the two biggest assets the parties have are their house and retirement accounts. While everyone was busy with the recent holiday rush, President Trump signed the SECURE Act into law as part of the government’s spending bill. The SECURE Act takes effect on January 1, 2020, and makes important changes to retirement savings. While not a law directed specifically to divorcing spouses, it is important to understand the changes the SECURE Act has made given that retirement accounts are a significant consideration in most divorce matters. Some of the most important changes the SECURE Act made are as follows.
The SECURE Act now allows for annuities to be included as 401(k) investments. Annuities can be complex investments with many different moving parts. In some instances, an annuity cannot be divided between spouses. The inclusion of annuities in 401(k) plans will likely complicate the division of retirement assets in the context of a divorce.
The SECURE Act also increases the age for required minimum distributions (RMD) for qualified retirement plans. Previously, RMDs were to begin in the year in which the account holder turned 70.5. The SECURE Act has increased the RMD age to … Keep reading
It’s advisable to review and update your estate plan with any change in personal circumstances, financial circumstances, changes in the law, or just the passage of an extended time. But if you’re in the midst of a divorce, or contemplating one, this may be the furthest thing from your mind. Here are a few key reasons why you should make updating your estate plan a top priority:
Divorce can take a while. Divorce proceedings often take many months, and you wouldn’t want your soon-to-be-ex-spouse benefitting from or having any rights with respect to your estate if you were to die in the meantime. While beneficiary designations for certain assets cannot be changed once a divorce proceeding is filed, you may be able to update documents like a Will, Trust, Durable Power of Attorney, and Health Care Proxy at any time, whether or not your divorce is finalized.
Your estate plan may no longer reflect your wishes. In Massachusetts, a final divorce automatically revokes any beneficial provisions for and fiduciary appointment of your former spouse (or his/her family members) in documents like your Will and Trust, but leaves the rest of these documents in-tact. The “back-up” individuals named in your … Keep reading
For as long as there has been money, people have come up with creative ways of hiding it from others. As one could imagine, there have been more than a few instances of a divorcing spouse concocting an imaginative scheme to hide or disguise assets that are subject to division in a divorce proceeding. Historically, these scheming spouses resorted to hiding assets in offshore accounts in Switzerland and the Grand Cayman Islands or literally stuffing cash under a mattress.
These days, elevating one’s mattress with cash or taking a “ski trip” to the Alps are not the only ways spouses seek to hide assets in divorces; the age of “virtual currency” is upon us, and opportunistic spouses may think these new currencies will be the best way to maintain their hidden assets since the Swiss Banking Law of 1934.
By now, many of you have heard of Bitcoin, the first and most famous of the virtual or “crypto” currencies, which has experienced meteoric rises and precipitous drops in market value even within the past year. Here is a basic overview of this complex and relatively new form of currency:
Bitcoin, first introduced in 2009, is just one example of
Newly separated and divorcing clients almost always come to us with preconceived ideas of what they hope/expect might happen in their cases. All too often, these preconceived ideas are based on a client’s own sense of equity and justice, but are incorrect as a matter of law. Here are five of the most common misconceptions, and reality checks for each.
1. My spouse almost never spent time with the kids while we were together, so he/she should not have significant parenting time with them now that we are separated.
Reality:Everything is subject to change post-divorce, including a parent’s active involvement in the day-to-day caretaking of the children. Gone are the days when it was presumed that the children would remain primarily with one parent after a divorce, spending every other weekend and perhaps a weekday dinner visit with the other parent. Courts are increasingly defaulting to shared-custody arrangements, even in situations where one parent’s involvement pre-divorce was fairly minimal. Every parent will be given the opportunity to be significantly involved in their children’s lives.
2. My spouse cheated on me, so I’m going to take him/her to the cleaners in this divorce.
In the highly awaited decision of Van Arsdale v. Van Arsdale, the Supreme Judicial Court has ruled that application of the durational limits contained within the Alimony Reform Act to alimony agreements predating the Act is not unconstitutionally retroactive.
William and Susan married in 1979 and divorced 18 years later in 1997. At the time of the divorce, alimony in Massachusetts had no durational limits. And so, William and Susan agreed at the time of the divorce that William would pay alimony to Susan until Susan remarried or until one of them died. They also agreed to review the amount of alimony when the children emancipated and when William retired. In 2015, after the enactment of the Alimony Reform Act, William asked the court to terminate his alimony obligation based upon the durational limits contained in the Act and because he had retired from full time employment. For a marriage of 18 years, the Act provides that alimony shall continue for not longer than 80% of the number of months of the marriage. Susan argued that applying the durational limits retroactively to her agreement with William, which was entered into before the law went into effect, was unconstitutional.… Keep reading
As people scramble to purchase Powerball tickets for a chance (however small) at the 1.3 billion dollar jackpot, the largest in U.S. history, I couldn’t help but think about the practical considerations that come into play when dealing with divorce and lottery winnings, especially for those who are divorcing, or already divorced. Sure, it’s nice to fantasize about buying a second (or third, or fourth) home in the most exotic of locales, or giving thousands of dollars to charities and every person you’ve ever met, but lottery winnings could also affect property division in a divorce, or a child support and/or alimony obligation.
Can my former spouse claim any of my lottery winnings?
Separated or divorced parents face unique challenges regarding the financial impact of preparing for and paying for their children to attend college. Luckily, there are ways to handle the situation without breaking the bank!
From start to finish there is no question that divorce is expensive. Sometimes it is a juggling act; do you spend the money for the expensive expert or do you agree on a shared one? Or do you skip an expert altogether (which can be dangerous)? The most commonly needed experts, outside of parenting matters, are residential real estate appraisers, business valuation experts, commercial real estate appraisers, defined benefit pension valuation experts, and forensic accountants.
If money is tight – and no matter how much you have, money is tight when you are in the process of divorcing – maybe you can share the costs of a joint expert. This is often a plausible idea for residential real estate because there is a common sense way to reality-check the results. Most folks have a reasonable idea of their residential real estate values, thanks to Zillow.com and your town assessor’s office.
It also makes economic sense to share the cost of the actuary doing the defined benefit pension valuation. There generally will be some form of information from the pension provider which also will provide a good reality check.