Articles Posted in Spousal Support

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spousal support changesHow can spousal support changes to the new 2019 tax law affect you? For anyone looking to get divorced in the near future, you may want to get things settled in the very near future—before the end of the year, in fact. That is because changes in federal tax laws are going to have a significant impact on anyone who receives or pays spousal support, potentially making negotiations for these payments significantly trickier.

Factors Considered When Determining Alimony

A number of issues must be weighed as the court makes judgments regarding spousal support payments. Naturally, disparate incomes are a central factor. Just a few of the many other items considered include:

  • The length of the marriage;
  • The ability of the lower-earning spouse to obtain employment without having an adverse impact on minor children;
  • The amount of support one partner gave another in the pursuit of education and/or career goals;
  • The health of the parties involved;
  • The tax consequences of any settlement agreement.

How Important Are the Upcoming Spousal Support Changes?

The implications of the new tax laws will be felt by all individuals paying or receiving alimony payments, and is expected to be be quite significant for couples who jointly earn between $60,000 and $500,000. Here is why:

For the past 75 years, alimony payments were deductible for payers, and recipients were expected to claim the money as income. Since the higher-earning spouse received a deduction, Uncle Sam collected taxes based on the lower tax bracket of the recipient. The couple jointly kept a bigger chunk of dollars earned with this arrangement. Starting in January 2019, all of that changes, and the payer will be unable to deduct alimony payments, making that money taxable at the earner’s higher tax bracket rates.  

Spousal Support ChangesThe Numbers Tell the Story

So, let us say in 2018, Spouse A, who is in a 33% tax bracket, is paying $30,000 in alimony. The deduction saves him or her $9,900.

Spouse B, who receives that $30,000, is in only a 15% tax bracket. The tax burden on alimony income is $4,500. The couple has jointly saved $5,400 that would otherwise be going to the federal government. In 2019, Spouse A will be paying the taxes on that $30,000, meaning there will be $5,400 less in the joint coffers to divide between the divorcing spouses.

Do not be fooled into thinking that Spouse B will be making a killing by keeping that extra $4,500.  Experts predict that alimony negotiations will take all of this into account, meaning each spouse will take a hit. Presumably, a 2018 alimony requirement of $30,000 will be significantly less in 2019 because the government’s chunk of the money will have to be factored in. Continue reading →

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Spousal Support Tax Law ChangeHow does the new spousal support tax law for 2018 affect couples currently divorcing or considering a divorce? On Friday, December 22, 2017, President Trump signed the new tax reform bill into law. The changes went into effect on January 1, 2018.

The tax law preceding the new tax reform bill of 2018 made payments of spousal support (alimony) deductible to the payor and taxable to the recipient.

The prior law held: “Amounts paid to a spouse or a former spouse under a divorce or separation instrument (including a divorce decree, a separate maintenance decree, or a written separation agreement) may be alimony for federal tax purposes. Alimony is deductible by the payer spouse, and the recipient spouse must include it in income.”

Spousal Support Tax Law Change

Under the new law, spousal support is no longer tax deductible to the payor nor is it taxable to the recipient. While the new law goes into effect on January 1, 2018, this change will not affect anyone who is divorced prior to December 31, 2018. Consequently, parties who divorce prior to that date will be “grandfathered” in to the old law regarding tax consequences of spousal support. There will be no effect on those parties who divorced prior to December 31, 2018.

The number of payors of spousal support who took the support deduction on their federal tax returns in 2015 was approximately 600,000. While nothing will change for them, the payors who divorce after December 31, 2018 will no longer have the benefit of deducting their support payments.

The new spousal support tax law rules won’t affect anyone who divorces or signs a separation agreement before 2019, but undoubtedly this new spousal support tax law will change the landscape of divorce cases, family law litigation and settlements for years to come in terms of how parties approach spousal support. Continue reading →

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support PaymentsSupport payments in California. Leaving a marriage can be a difficult decision. It is not made any easier by the financial constraints associated with dividing a household. Living separately is obviously going to cost more, and in many cases that means both parties are going to have to adjust the living standards to which they have become accustomed. How are the financial decisions made in California divorce cases? If you are seriously considering divorce, it is time to see an experienced family law attorney.

How are Spousal/Partner Support Payments Calculated?

California Family Code section 4320 lays out specific considerations to factor in when determining how much spousal or partner support payment is appropriate:

  • Time: How long has the marriage or domestic partnership existed?
  • Need: How can each partner best experience an equivalent standard of living?
  • Liabilities: What debts will each partner keep?
  • Assets: Who, if anyone, will stay in the home? What other property is being divvied up?
  • Employment: Will both partners be employed, or will one have primary childcare responsibilities?
  • Previous career advancement: Did one partner support the other through school or licensing programs to propel a career?
  • Training: Will on partner need education or training in order to obtain meaningful employment?
  • Age/Health: Do one or both partners have particular health needs that must be addressed?
  • Domestic Violence: Was there mental or physical abuse in the relationship?
  • Tax Impact: Because tax laws do not recognize domestic partnerships, will tax implications be favorable or unfavorable?

Temporary or Permanent Spousal Support Payments

Temporary support payments may be assigned while a case is pending; judges typically use a formula specific to their own county to make a calculation for the appropriate amount. Once the case is finalized, “permanent” support payments may be ordered based on the factors listed above. Do not be fooled by the term permanent. In this case, it simply means the order becomes valid once the divorce is finalized. It may or may not have time limits.

Changing the Support Payments

Imagine that after the divorce, the person paying support loses a job, or the person receiving support payments inherits a windfall. Either individual may, at some future time, experience a significant change in financial circumstances, prompting a request to change the amount of support. If both partners agree to the changes, a simple stipulation written up and given to the court will result in a new order relatively quickly. On the other hand, if there is a dispute, the individual requesting the change must file a motion with the court. This is something that should be done sooner rather than later, as changes to the order cannot be made retroactively. Continue reading →

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Spousal SupportDetermining Spousal Support. Divorcing couples often have questions regarding the financial obligations of a higher-earning spouse toward a lesser-earning spouse. In some instances, one spouse may not have held gainful employment at all, leaving him or her with potential financial woes were it not for spousal support ordered through the courts. This complex issue requires the consideration of multiple factors. An experienced divorce attorney can help you maneuver the paperwork and pitfalls of this and other matters you will encounter in the course of a divorce.

Factors Considered in Determining Spousal Support

Just how much financial support might the court order, and for what period of time? Factors examined will include:

  • The duration of the marriage/domestic partnership;
  • Necessities required for each person to maintain a similar standard of living;
  • Current and potential earnings of each person;
  • Other obligations, such as child care, that would impact the ability to work;
  • Health issues and age of the individuals divorcing;
  • Assets and debts;
  • Previous support from one spouse to another while getting an education;
  • History of domestic violence;
  • Tax issues.

How Long Will Spousal Support Payments be Ordered?

The courts will look at the above considerations and make a determination as to the amount and duration of payments. Generally speaking, payments will last for at least half as many years as the length of the marriage. Some marriages of lengthy duration may require support payments until the remarriage or death of the receiving spouse.

Changes in Support in Future Years

Either partner may request changes in the amount of support at a future date. There are some basic situations in which this might occur:

  • The financial status of one of the individuals changes significantly, giving the court reason to consider alternative arrangements;
  • The individual receiving support remarries or enters a domestic partnership;
  • The court issued a Gavron Warning during the initial divorce proceedings, indicating that the supported spouse must work toward self-sufficiency within a reasonable period of time, at which time support would be decreased or eliminated.
What if the Person Ordered to Pay Support Fails to do so?

If an individual ignores a court order to pay spousal support, his or her wages could be garnished. As a last resort the payer could be cited for contempt of court, and jailed for that reason.

If Wages are Garnished, can Employers Punish an Employee?

Employers are not allowed to discriminate against employees due to a court ordered garnishment. An individual who experiences retaliation or loses a job under these circumstances may have a legal case against his or her employer. Continue reading →

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spousal support payments, spousal supportHow are spousal support payments calculated in a California divorce? Ending a marriage can affect almost every aspect of your life, including your financial stability. In many relationships, one party chooses to forgo education or pursuing a career in order to support the other person’s ambitions. Even if this is not the case, some couples fall into “earner” and “caretaker” roles, particularly when there are children involved. This may result in significant economic inequality between the parties to a marriage, and may leave one spouse without any income absent judicial intervention.

Fortunately for some who people seeking a divorce, California law allows a court to order spousal support payments (or partner support payments, in the case of a domestic partnership) in order to provide for the financial needs of the party unable to support themselves financially. Spousal support payments can significantly impact both parties: the one ordered to pay and one receiving spousal support payments. Consequently, it is important for anyone involved in a divorce or other legal proceeding in which spousal support is at issue to discuss their case with an experienced lawyer as soon as possible.

How Are Spousal Support Payments Awarded?

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In many relationships, one partner–often the higher earning husband, takes on the responsibility of handling the couple’s finances. The partner who does not participate in financial decision making may have a general idea of where the couple stands financially, but is usually unaware of the couple’s precise income and investments, or how to access the couple’s assets.

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Spouses who are do not have a clear picture of finances within their marriage may face financial difficulties during their separation.
While this type of arrangement may feel harmless or even efficient when the couple’s relationship is prospering, it can place the spouse who doesn’t have a clear picture of the couple’s finances in a difficult position should the couple decide to separate. A partner who has not been involved in the couple’s finances may not be able to easily determine how they will pay for living expenses. In addition, they may be at greater risk of entering a divorce settlement that does not reflect their fair share of the couple’s assets.
Separating spouses should be aware of their rights and entitlements with regard to joint accounts.
Individuals who are considering separating from their spouse should be aware of their rights and entitlements with regard to joint assets. One of the first questions that individuals who are in the process of separating often inquire about is how to handle funds that are kept in joint accounts.
A recent Forbes article written by Jeff Landers, President and Founder of Bedrock Divorce Advisors, which is a divorce financial strategy firm, provides some useful suggestions regarding how joint accounts should be handled during a separation.
Separating spouses should determine their immediate financial needs and consult with an attorney to determine whether it is appropriate to secure that amount from joint accounts.
Landers advises individuals who are either planning to file for divorce in the near future, or believe their partner may be doing the same to set aside funds from the couple’s joint account for their immediate needs. He acknowledged that when and how much an individual should withdraw is a complex question with legal implications.
For example, in many states, including California, spouses can freely transfer and withdraw funds prior to formally filing for divorce. However, once the divorce process has begun and a legal filing is submitted to the court, the couple’s assets are subject to certain restraining orders that may impact either spouses’ ability to access joint accounts.
Since spouses are generally entitled to half of the couples jointly titled assets during a divorce, they may consider withdrawing that amount from joint accounts prior to a formal divorce filing. However, if a spouse is aware of other accounts that are in the sole name of their partner, the individual may think about withdrawing more than half of the funds in the joint account in order to offset those amounts. However, partners who withdraw funds from joint accounts should consider how their actions may impact the way their spouse handles the divorce proceeding. In some circumstances, withdrawing funds prior to a divorce filing may cause the opposing spouse to become vindictive and uncooperative during the divorce process.

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The popular misconception of what does child support cover is that child support is intended only to cover only a child’s bare necessities, like food and clothing. The truth, however, is that child support covers much more. Child support includes school fees, entertainment, medical expenses, and extracurricular activities, among other things. In California, courts do not require parents to prove the child support payments they receive are going toward specific activities. The exception to this rule occurs where there are concerns that the child’s basic needs, like food, shelter, and clothing, are not being met.

Basic Necessities
It seems fairly obvious that child support may be used to pay for food, shelter, and clothing. Purchasing groceries and clothing, and even paying the mortgage, rent, or utilities is acceptable.

Uninsured Medical Expenses

Child support may be used to pay for uninsured medical expenses and any out-of-pocket medical costs exceeding the cost of basic health insurance. Such costs include co-pays, deductibles, and surgery expenses. In California, parents must pay for half of all uninsured medical costs.

Education

Even public education is not completely free. Child support may be used toward the cost of school uniforms, textbooks, lunch money, and even private tutors, if necessary. California divorced parents are required to pay for half of all education-related expenses.

Childcare
If one or both parents work, and cannot stay home with their child, child support is appropriate for covering childcare expenses, including daycare, babysitters, and nannies. Of course, during school breaks in the summer months or on holidays, child support may also be used to cover any childcare needs.

Transportation
Child support may pay for basic transportation and travel costs, because children need to be transported safely and securely. Transportation costs may include car maintenance, gas, registration, and insurance. Child support may also be used for travel costs, particularly when traveling to visit the non-custodial parent.

Entertainment

Child support may be used for age-appropriate entertainment activities, as agreed upon by both parents. Entertainment can range from computers, television, and the internet to the movie theater, amusement parks, camping trips and possibly other activities as questioned in our recent family law attorney blog post..

It is important to remember that the purpose of paying child support is ensuring that the child’s standard of living does not decrease simply because his or her parents divorced. At any time, either parent may request a review of the child support order by the local child support agency. The request must be in writing, stating the reasons for changing the support order. Generally, modification is justified when getting a new job, losing a job, or if custody/visitation changes. However, quitting a job is not justification for a review.

If the local child support agency decides the requirements for review are not met, the parent requesting the review may ask the court to review the order. In the event that both parents can agree on the amount of support ahead of time, the parents can sign a stipulation that must be filed with the court.

Certainly, in these difficult economic times, payment of child support is a difficult obligation. In the event that a parent cannot make the full child support payment, they should immediately contact their local child support agency to avoid or minimize any legal actions as a result.


See related blog posts:

The Importance of Establishing Paternity
Divorce in Six Months or Six Years

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Family Law - Annulment Small.jpgWhen parties in Northern California are considering a divorce, sometimes they question whether they can get an “annulment”. Under very specific and limited circumstances, parties can request a California court to declare their marriage null and void.

For the court to grant a judgment of nullity the must determine that the marriage was either void or voidable. Under the Family Code, a marriage is void from the beginning when the marriage involves either incest or when a marriage is entered into while either party is married to another person. In the later situation, the marriage is usually bigamous and void from the beginning.

A party who mistakenly believes their spouse to be deceased can have a marriage deemed void if for 5 successive years immediately preceding the marriage, the party’s spouse had been absent and not known to the party to be living or at the time the marriage was entered into, the party’s spouse was generally reputed or believed by the party to be dead.

Under the Family Code, when a marriage is void, it is void from the beginning, technically meaning that no marriage has occurred. However, this does not mean that a party should not obtain a judgment of nullity, because depending on the circumstances, a party may want a public record of their marital status. Furthermore, in specific circumstances, a party to a void marriage may be entitled to assert property and support rights as though the marriage had been valid and the parties may also address issues of custody, visitation, and child support in a nullity action.
On the other hand, a voidable marriage is valid until it is declared void and judicially declared a nullity. A marriage is voidable when a spouse was a minor and lacked the ability of consent; a spouse had an unsound mind at the time of marriage; consent was gained through fraud or force; or a spouse is physically incapable of entering into the marriage.
In situations of minority, a marriage is voidable if, at the time of the marriage, the petitioner was under age 18 and the requisite parental and court consents were not obtained. Nullity based on unsound mind occurs when either party is incapable of understanding the nature of the marriage contract and the duties and responsibilities it creates at the time of the marriage ceremony. Seeking an annulment on the basis of fraud will require the court to determine that the consent to enter into the marriage was obtained by false representations relating to a matter of substance that go to the very essence of the marital relation.

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Where to File for Divorce in CaliforniaMaking the decision to file for a divorce in California is very difficult and many people are overwhelmed with the process and the paperwork. There are complicated decisions about finances, dividing assets and debts, developing a parenting plan and so much more. Additionally, and often times just as important as the legal issues is the emotional turmoil many parties feel and a feeling of not knowing what to do.

When a person makes that difficult decision to file for divorce sometimes there are some initial questions such as “Where do I file?” and more importantly “Can I file for divorce in California?”
The later question should be answered first because in order to file for divorce in California, the state requires that you be a resident of California for at least six months and that you have been a resident of the county wherein you reside for at least three months. Depending on the specific circumstances of your matter even if you do not meet with the jurisdictional requirements for a divorce in California, you may be able to file for a legal separation, which can later be amended.
The question of “Where do I file?” is more easily answered. Filing for divorce in California requires the preparation of several documents and a filing fee. The required documents are a Petition for Dissolution of Marriage, a Summons and if the parties have children, an additional form called the Declaration Under Uniform Child Custody Jurisdiction and Enforcement Act or “UCCJEA”. In short, the UCCJEA is a uniform act that grants the court of the “home state” of a child exclusive jurisdiction for issues of child custody. All of these documents listed above must be completed and delivered to the clerk of the family law court, with two copies, and the required fees.
However, simply filing a Petition for Dissolution will not grant either party rights to child custody, child visitation, child support, spousal support or divide any property rights. A party seeking to have any of the above issues must file a motion with the California court specifically seeking the requested relief.
Another serious issue to consider is the numerous tactical issues that affect the timing of a person filing a California Petition for Dissolution. These can range from specific issues regarding a determination of child custody and the best interests of the children to issues of property control. For example, by filing a California Petition for Dissolution and serving the required documents on your spouse, there are financial restraining orders that prohibit your spouse from transferring property, encumbering property or changing beneficiary designations without your consent.

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Family Law - Spousal Support.jpgWhen a marriage or domestic partnership is being dissolved, the issue of spousal support or alimony is often a primary concern of the parties. In part, this is because marriage involves mutual obligations of respect, fidelity and support and this continues even through the dissolution process. The experienced family law attorneys at Santa Rosa Attorney will assist you in this very important determination, regardless of whether you are the spouse entitled to receive temporary spousal support or the party that may have the obligation to pay
Temporary Spousal Support

During the dissolution process a spouse may have the right to receive temporary spousal for the purpose of assisting that spouse balance their financial obligations. Often times, it is very important to obtaining a temporary spousal support order immediately so as to secure financial security to a spouse who was dependent on the income of the other party. In the situation of temporary spousal support its calculation is generally based upon the needs of the supported party and the ability of the supporting party to pay. Prior to a judgment for dissolution, temporary spousal support is calculated much like child support and uses a judicially recognized “guideline” calculated by a program.

How is Temporary Spousal Support Calculated?

To calculate temporary spousal support, the experienced attorneys at Beck Law, will determine the relative income of each party and calculate what guideline temporary spousal support may be. This is a complex process, which involves many specific calculations and consideration of applicable deductions and allocation of expenses between the parties. If not performed correctly, the calculation may result in a spouse receiving far less than what they may be entitled to receive or paying far more than they should.

Permanent Spousal Support

Permanent spousal support, or support that may be 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. In particular these 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.

How is Permanent Spousal Support Calculated?

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 your case. For example, will the supported spouse require any retraining or education, did the parties pay for one spouse to go to school and obtain additional professional skills, did the supported spouse previously have job skills and is that supported spousal maximizing their earning potential. When you are going through a dissolution that involves 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 financially impact you for many years to come.

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