Category Archives:Spousal support


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Divorce Help: Don't Let Your Divorce Be More "Taxing" Than Necessary

Tax
Tax (Photo credit: 401K)

With the federal income tax filing deadline a little under a month away, many California residents are feeling the pressure of preparing and filing their taxes on time.  Filing your taxes can be confusing regardless of your financial situation.  However, they become even more complicated when you have undergone a major life change in the last year, such as a divorce, legal separation or other family law issue.

A divorce is stressful enough and despite your circumstances, the government will still expect you to file your taxes promptly and correctly. If you are really confused about your taxes, the best thing to do is to seek assistance from a tax professional.  Nevertheless, there are a few standard guidelines for filing taxes after a divorce.

What is my tax filing status?
Most importantly, you must decide the correct filing status to use.  In general, your federal income tax filing status is determined by your marital status as of the last day of the tax year.  Thus, if you were married on December 31, 2011, you will be considered married for the entire year.  If you were divorced on December 31, you are considered divorced for the year.  In general, a person who is legally separated is not considered as married.  This can vary based on state law, however, so may be a good idea to double-check with a California family law attorney.  Even if you were still married on December 31, you can choose whether to file jointly or separately.

Can I Qualify as a “Head of Household”
If your divorce was final on or before December 31, 2011, you can either file as single or as head of household.  Filing as “head of household” may result in a lower tax bill than if you were to file as single, but this designation has strict requirements. To qualify as head of household you must:

  • maintain the primary home of household for a qualifying child, or someone you claim as a dependent for more than half the year
  • be unmarried at the end of the year or living apart from your spouse for more than six months
  • provide more than half the cost of maintaining the household
  • be a U.S. citizen or resident alien for the entire tax year

Note: It may not be clear who had custody for more than half the year and is able to file as a head of household when parents have joint physical custody of their child.  The parents should agree between themselves how to handle this issue. A daily log of exactly where the child lives during the year should be kept, as well as a record of household expenses and who paid them.

Can I claim an exemption for my children?
In general, a child’s custodial parent will claim the child as an exemption in their taxes.  Although, in some cases, it may make sense financially to trade the exemption to the other parent.  A financial planner may be able to help you determine the best use of the exemption. 

Are child support payments considered taxable income?
In almost every situation, child support is tax neutral.  Child support payments are not taxable income for the parent receiving the support, nor is it tax deductible for the parent paying the support.

Are alimony payments considered taxable income?

Spousal support, on the other hand, is considered income for tax purposes.  Such payments are almost always taxable income for the recipient –and they are tax deductible for the payor.  There are some guidelines and qualifications in regards to spousal support.  Alimony must be included in an official court order or court-approved settlement in order to qualify for tax deduction.  In addition, any alimony payments made while the spouses lived together may not be deducted.

Are assets transferred as part of my divorce settlement agreement taxable?
In general, when assets are transferred as part of a divorce settlement agreement, the person that receives the transfer does not need to pay taxes based on the transfer alone.  However, if the recipient decided to sell the asset at some future date, they would likely have to pay capital gains on the appreciation of the asset both before and after the transfer.

It cannot be denied that there are many details to consider when preparing your federal income tax return.  If your situation is especially complicated, it may be a good idea to enlist the services of a California tax or family law professional to guide you through the process.

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Legal updates brought to you by the Riverside and OC attorneys at Don Ho, LLP.
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Divorce Help: Am I Entitled to Spousal Support?

When dissolving a marriage or domestic partnership, the issue of spousal support or alimony is often a primary concern of the parties.  In general, there are two types of alimony that can be awarded: permanent support, which deals with the support to be received at the conclusion of the divorce going forward, and temporary support, designed to maintain the status quo (as much as possible) during the divorce

Temporary Spousal Support
A spouse may have the right to receive temporary support during the dissolution process for the purpose of assisting that spouse with their financial obligations.  Immediately obtaining a temporary spousal support order may be necessary to secure financial security for a spouse who was dependent on the income of the other party.  Calculations of temporary spousal support are generally based upon the needs of the supported party and the ability of the supporting party to pay.  Prior to a judgment for dissolution, calculations for temporary spousal support are similar to calculations for child support and use a judicially recognized “guideline” calculated by a program.

Permanent Spousal Support
Permanent spousal support, or support ordered after a judgment for dissolution has been entered, is calculated by a careful consideration of a long list of factors under Family Code section 4320.  Such factors include the respective incomes of each spouse, the length of the marriage, ability of a party to pay, the standard of living during the marriage, the assets and debts of each party and whether there has been any domestic violence.  Permanent spousal support is generally payable for duration of half the length of the marriage, except in cases of a marriage of a long duration, or over 10 years, where the court may reserve jurisdiction over the termination of spousal support.  When calculating permanent spousal support it is important to evaluate the specific factors of the Family Code and also to consider the unique facts applicable to the individual’s case.  For example, the supported spouse may require retraining or education, one of the parties may have paid for one spouse to go to school and obtain additional professional skills, the supported spouse may previously had job skills and is that supported spousal maximizing their earning potential.

Modifications for Support Order
Unlike property division orders, an order for spousal support may be modified upon a determination of necessity.  On motion for modification of spousal support, a judge will consider changes in circumstances, such as unemployment or disability.

When you are going through a dissolution that involves temporary spousal support and permanent spousal support in particular it is important to have an experienced family law attorney because a negative result may not be modifiable and may a long-term financial impact.

Legal updates brought to you by the experienced attorneys of the Orange and RiversideCounty Family Law firm of Don Ho, LLP.

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Turning to Mediation in Tough Economic Times

In tough economic times, it is important to find ways to ease the cost of divorce, both emotionally and financially.  One way to do this is by taking advantage of mediation.  Mediation has always made sense for a lot of couples, and is even more attractive in today’s tough economy.
Why Mediation?
Though the mediation process can often be misunderstood, it can also be a highly viable alternative to litigation.  Although mediation may not be the right path for all divorcing couples — particularly in instances where domestic abuse is present, judgment is impaired by drugs or alcohol or a spouse is hiding assets — it does have significant advantages over courtroom litigation for many people.
 Here are some reasons why mediation is a good option for many divorcing couples:
  1. It can be less expensive than litigating a divorce in court;
  2. It can offer privacy as California law protects settlement discussions in mediation as confidential;
  3. It allows the parties in a divorce to have more control of the outcome, rather than a judge; and
  4. It can be a more amicable way to part ways, which can prevent hostility for years down the road, especially if children are involved.
    Issues for Mediation
    The mediator will typically mediate the following issues:
    • Child Custody and parenting plan
    • Support including: Child Support; Spousal Support; Family Support
    • Property division
    The Mediation Process
    Whether you have been referred to mediation by the courts or have chosen to initiate mediation on your own, the first step is to secure a qualified mediator and schedule a time that is best for all of the parties involved.

    Initial Appointment: Once a mediator has been selected, an initial appointment is held during which both spouses attend and the general goals of the parties are discussed.  During this appointment, a written agreement between the parties themselves as well as the mediator will be reviewed and signed and the mediator will assign certain tasks at this initial meeting, such as bringing in certain documentation for the next meeting.

    Subsequent Appointments: A series of subsequent appointments are then conducted.  Most of these appointments will involve both spouses and the mediator but sometimes the mediator may have individual meetings with only one spouse.  The number of appointments will depend on the number of issues the spouses need to negotiate and the degree to which they are willing to compromise.  The frequency of appointments is scheduled according to how much time spouses need to complete “homework assignments” and/or to “think” between sessions.
    Agreement:  The mediator will make detailed notes of agreements as they are reached during the sessions.  Once all issues are resolved as a result of the mediation sessions, the mediator will draft a settlement agreement which summarizes all agreements that have been made.  It is recommended that each spouse take the agreement to a “consulting attorney” to look over the final document before signing. Once signed, the document is sent to Court for approval by the Judge and the matter is concluded.
    Legal updates brought to you by  the Orange and Riverside County Family Law firm of Don Ho, LLP.
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    Watch Out Kardashian: Humphries Wants an Annulment

    Last month, we discussed how reality television star Kim Kardashian had filed for divorce from her husband, professional basketball player Kris Humphries, just seventy-two days after their nuptials.  Now, Humphries has filed for legal separation and annulment, and asking a California family court judge to invalidate the couple’s prenuptial agreement.
    Kris HumphriesImage by Keith Allison via Flickr

    According to documents filed on December 1 in Los Angeles Superior Court, Humphries filed for both a legal separation from Kardashian and a nullification of their entire union.  What it really means is that Humphries wants an annulment, but if he is unable to get one, he wants a legal separation.  According to the filed documents, Humphries requested an annulment on the grounds of fraud, essentially alleging that Kardashian tricked him into marrying her for the television wedding and subsequent payday.  It has been reported that Humphries is seeking annulment instead of divorce for religious reasons.  Nevertheless, his attempt to invalidate the prenuptial agreement makes it more likely that his finances, not his religion, may be behind this move.

    Annulments are only granted in a handful of rare situations because they completely invalidate the marriage altogether.  Unlike a divorce action which is maintained to terminate a valid marriage on grounds arising after the marriage, a nullity proceeding is maintained on the theory that, for reasons existing at the time of the marriage, no valid marriage ever occurred.  In an annulment, the court determines that a marriage or domestic partnership is not legally valid because: 
    • of force, fraud, or physical or mental incapacity; 
    • one of the spouses was legally too young to marry or enter a domestic partnership; or 
    • one of the spouses was already married or in a domestic partnership.
    More information about the grounds for nullity, as well as time limits for filing for an annulment, are available from the California Family Code, sections 2210 et seq.
    Additionally, Humphries is attempting to have the couple’s prenuptial agreement invalidated.  According to reports, he wants the prenup voided in order to avoid being bound by the document’s confidentiality clause so he can speak publicly about the marriage and the divorce.  It is Humphries’ hope that if the marriage is invalidated, then the prenup will no longer control what happens in the wake of the couple’s split.

    Legal updates brought to you by Orange County attorneys at Don Ho, LLP.

    All factual information provided by Los Angeles Times
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