Why Honesty Is the Best Policy for Divorce Property Division

“Honesty is the best policy” is a familiar saying most of us have heard during our upbringing. This policy also holds true during divorce for property division. As most men know, the financial burden of divorce often falls on them. While you may feel like you’re getting the shaft in terms of custody and support, don’t be tempted into retaliating by misrepresenting your financial status. Financial Disclosures One way of cheating is to say you make less income than you do. If you own your business or have a family owned business that you co-own with your spouse, dividing up assets can become contentious. Ultimately, you can save in court costs by gathering up all the documentation that confirms your finances and laying it all out on the table. According to an article in Forbes Magazine a survey done on spouses showed that: 31% of American adults who combined assets with their spouses or partner were deceptive about money 65% of women said their spouse/partner lied to them about finances, debt and money earned 47% of men said their spouse/partner lied to them about finances, debt and money earned 58% of spouses surveyed said they hid cash from their partner/spouse 54% hid a minor purchase from their spouse/partner 30% hid a bill or statement from their spouse/partner 34% admitted they lied about finances, debt or money earned Hiding Assets Hiding assets is another form of dishonesty, such as sending money into off-shore accounts, transferring assets into separate accounts, overpaying the IRS, delaying payment of commissions or raises until after a final decree or creating false expenses. Lying Is Illegal When...

Zooming In on Some Aspects of Property Division

We’ve covered the basics about property division, but here are some factors you should also know when making important decisions. How You Divide Your Property Is Usually Final Courts will review settlements for child support, custody, visitation and spousal support as life circumstances substantially change, and often you can obtain modifications of these orders. The same is not true with property division. It is rare that a court will review a property division agreement and allow you to renegotiate terms or litigate aspects of property division once the final decree is issued. What about Your Family Pets? Currently, pets are still considered personal property. The Animal Legal & Historical Center explains that a court will decide which spouse receives custody of a pet but courts can also grant shared custody or visitation. Even so, the shared exchange is typically similar to requiring a couple to share a car or other item, trading back and forth from week to week. However, in some courts, the view is changing toward personalizing pets. Some judges have considered what is in the pet’s best interests when awarding custody of the pet. Avoiding the Pitfalls of Mortgage Issues When a couple marries, owns a home together, and both spouses work, they typically pay their mortgage using combined income. As a couple, when buying a home they also qualified for mortgage financing based on their combined incomes. After divorce, the spouse who gets the home must qualify for re-financing. However, the bank may not want to finance a single spouse due to higher risks for default. You should carefully consider your finances when deciding what...

Do Retired Couples Face Different Property Division Challenges with Divorce Than Younger Couples?

Aside from the fact that younger couples usually have fewer assets than older couples, the main difference in property division is dealing with retirement accounts and Social Security benefits. Retirement Accounts There is a lot to understand about retirement accounts and you should discuss when you can receive distributions with your lawyer. You also want to be sure to avoid any tax penalties, so timing is important. Loans taken out against a retirement account should be repaid before any property division occurs with the account. Sometimes dividing retirement account benefits requires a Qualified Domestic Relations Order (QDRO). A QDRO is a separate court order that mandates distribution of benefits to the ex-spouse when the spouse with the retirement program begins receiving benefits. Plan administrators receive the QDRO, which obligates them to make the specified distribution share based on the divorce settlement. Social Security Benefits The Social Security Administration allows divorced individuals to receive Social Security benefits based on their ex-spouse’s record of paying into Social Security if: They were married 10 years or longer The are currently unmarried They are age 62 or older The ex-spouse would receive a benefit that is less than the ex-spouse who paid into Social Security, generally about half as much. Two years after your divorce, you are eligible to receive such benefits even if you ex-spouse is not yet receiving benefits despite eligibility. C.E. Borman & Associates works with couples involved in gray divorce and has the experience necessary to deal with retirement accounts, Social Security benefits and other financial factors unique to your divorce....

What Does Timing Have to Do with Divorce?

The common phrase “timing is everything” also applies to divorce, and in particular, regarding taxes. Divorce timing affects whether you can file taxes jointly or must file separately, and sometimes it’s worthwhile to delay divorce until after December 31st. Based on IRS rules, here are some factors to consider: Whether you’re married or divorced on the last day of your tax year determines whether you can file jointly or must file separately. For most people the day is December 31st. The parent with child custody for the greater part of the year (the custodial parent) can claim the child as a dependent In addition to claiming the child as a dependent, the custodial parent can also claim a child tax credit, dependent care expenses and earned income credit Child support is not a deductible expense Child support payments are not taxable income When you file taxes jointly, even though you get a divorce and the decree states your spouse is responsible for taxes, the IRS can often hold you accountable as well. Even when you made no income on the joint return that was filed, it’s possible you will still be held accountable if more money is owed for tax, interest or penalties. There are certain exceptions that may apply though, called innocent spouse relief. When you file separate returns, you have up to three years after your divorce to amend your tax filing to change it into a joint return. However, the opposite is not true for joint returns. When you file jointly, you cannot later amend it to separate returns. Overall, joint filing is usually to your...

Pro’s and Con’s with Keeping the Family Home in a Divorce

If you and your spouse buy a home and later decide to divorce, the family home is often your largest asset. Under the Texas Family Code, the court considers your home community property. This means your home is subject to property division as a result of your decision to divorce. So, now you face the decision of how to deal with your house. Here are some options to consider: Keep the house and defer property sale and division because you have minor children. Staying in the family home can be a source of security and stability for your children. Divorce is difficult enough for kids, and when parents keep a home for their children’s sake, it limits the amount of change the children face. They can stay in the same school and continue their social lives with the same friends. If your house lost value during the housing market crash a few years ago, keeping your home provides an opportunity for it to regain value as the housing market recovers. However, keeping your home with you and your ex both paying on the mortgage can also involve challenges. What if your ex fails to make a mortgage payment? In terms of credit, it’s less favorable having the mortgage debt appear on both of your credit reports, which it will. Also under the IRS Section 1041 (http://www.law.cornell.edu/uscode/text/26/1041), you only have up to one year after your divorce is final to transfer assets to your former spouse and have the assets be tax exempt. Have one spouse buy the house from the other spouse. This is another option for keeping the...