Recently Divorced? Here’s Why You Should Put Aside Your Differences Come Tax Season

Divorce can wreak havoc on your finances. But what many divorced couples don’t realize is that they can expect to face recurring financial challenges during tax season for years after the divorce is finalized. While divorce is often adversarial, leaving both spouses with animosity in its wake, tax season is an opportune time to put aside those differences and cooperate to reach a mutually beneficial outcome.

Filing taxes in the midst and even after divorce can be complicated. Even after a divorce, many couples retain financial ties in the form of ongoing support, shared assets, lingering retirement plan divisions, and tax breaks, all of which can significantly affect tax liability. You can avoid another bitter battle by sitting down with your ex-spouse—and ideally a trusted lawyer—to discuss a few key issues.

Will You File Jointly or Individually?

Couples in the midst of a divorce can file “married filing jointly” or “married filing separately.” Each filing status has its pros and cons, so you should only make this decision after consulting with a lawyer and a tax advisor.

Couples with a divorce finalized before the New Year have to file separately, so consider delaying the finalization of your divorce until after December 31st if you’d like to reap the benefits of filing as a married couple.

Whatever you do, don’t wait until tax season to decide how to file, and don’t decide without consulting with your spouse. Coordinating your filing status can be advantageous to both parties if you plan ahead.

Who Claims the Children?

This is another important issue worth determining before tax season. Typically, the divorce judgment will include a stipulation on who gets to claim the children and the associated credits or deductions. Many couples choose to take turns by alternating years or each claiming one (or more) child individually . But if you don’t already have this determined in a court order, you might need help determining which parent has the most to gain one way or the other. In general, primary custodial parents have the right to claim the children, however in the case of shared custody, that right can fall in either direction. Likewise, divorcing couples that are filing separately will need to make this decision, but it is best first to figure out whom the claim will benefit the most before you decide.

How Will You Handle Dividing Your Assets?

Not all types of property divisions are tax friendly. Make sure you consult with a lawyer before you put your property division in writing to ensure the spouse who receives the assets is not met with an undue tax burden come tax season. This is more of concern for couples in the midst of a divorce, but divorced couples can run into issues about jointly held assets (such as the family home), too. And failing to include a stipulation regarding jointly owned assets in the judgment can create trouble.

The spouse who retains residence of the family home doesn’t necessarily get to claim all the tax benefits, especially if he or she is not financially responsible for the home. Cooperation is essential in this matter. The division of retirement accounts can also affect your taxes. Make sure you file a Qualified Domestic Relations Order to divide plans without penalty. Liquidating the accounts to divide them will result in penalties and a higher tax liability.

How Will You Characterize Support?

Orders for alimony (also called spousal support or spousal maintenance) and child support are common in many divorces. Child support has no bearing on tax liability and cannot be deducted. Alimony, however, is a little more flexible. Alimony is typically taxed as income to the receiving spouse and a deduction for the paying spouse, but the wording in your judgment can affect this. Work with a lawyer before you finalize your divorce to ensure your alimony order will be mutually beneficial to you and your spouse.

If you’re divorced and need financial guidance, consider sitting down with us. As your Personal Family Lawyer®, we can help you strategize your tax filing for maximum benefit this tax season.

This article is a service of Gratia P. Schoemakers, esq. We don’t just draft documents, we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why we offer a Family Wealth Planning Session™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. Begin by calling our office today to schedule a Family Wealth Planning Session.

What Is Elder Abuse and How Can You Keep Yourself (or Your Parents) Safe?

One day, you will be an elderly person, you hope. Maybe you are already there. Or, your parents are.

And, unfortunately, as more of us age, there is more and more cases of elder abuse, and in order to stop it, we must first spot it and understand the totality of the problem.

Physical abuse is obvious. Signs of physical abuse include bruises, broken bones, and scrapes, often resulting from sexual abuse, hitting, pushing, and restraining.

Physical abuse also includes dispensing medicine that affects a person’s ability or desire to function properly. For example, administering additional pain or sleeping medication may lead an elder to be bedridden when they would otherwise be active and mobile.

Emotional abuse takes a heavy toll on a victim, but especially the extra vulnerable, such as seniors. Emotional abuse includes insults, threats, and screaming. It can also include isolating someone from others, interfering with their access to friends and family members. These behaviors are demeaning and can lead victims to withdraw, become angry, or suffer other types of personality changes.

Financial abuse is most often hidden, and the one that you (and your parents could be most at risk from).

Financial abuse encompasses taking advantage of, as well as stealing from, seniors. And, surprisingly, often occurs when seniors get trapped in a Court system with unscrupulous lawyers, guardians and conservators. You can read story after story of the heinous crimes being committed by our very own court system against our elderly community, starting here.

You might think it can’t happen to you, or your parents, and yet when you read the actual stories, you begin to realize that it could. Without trusted legal counsel on your side, even the “right documents” sometimes aren’t enough.

If you would like to ensure you have trusted counsel on your side to keep you and your family out of Court and outside of risk of elder abuse from our own Court system, start by having a Family Wealth Planning Session with our office. We’ll look at what you own, who you love, and how to ensure you are more financially organized and empowered than you ever have been before to keep yourself and the people you love out of court and out of conflict.

This article is a service of Gratia P. Schoemakers,  Personal Family Lawyer,® who develops trusting relationships with families for life.  That’s why we offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a time for us to sit down and talk because this planning is so important.

Legal Rights of Grandparents: In Honor of National Grandparents Day

When all is ideal in a family, the bond between grandparent and child is a special one. Maybe you’ve even heard that grandparenting is the grand reward for parenting.

But what happens when the grandparent becomes the parent? Or when parents’ divorce or one parent dies and a grandparents’ visitation rights are taken away?

This is happening more and more often, and it’s an issue you’ll want to be aware of, if your child has a close relationship with your parents, or if you are a grandparent who wants to maintain relationship with your grandkids no matter what, or if you do not have a relationship with your parents and want to ensure that your child doesn’t either, if something happens to you.

Let’s begin with the first scenario: your child has a close relationship with your parents, that you want to maintain, no matter what happens to you. In that case, you must put in writing your nomination of your parents as the legal guardians of your child or children. Otherwise, if something were to happen to you, they could lose custody and even visitation rights.

This is especially a risk if you are a divorced parent. If you were to die, and your child’s other parent or other grandparents were to fight or attempt to deny your parents’ visitation, your known and documented wishes that your parents maintain a relationship with your child could be pivotal.

If you are a grandparent reading this, make sure your child has legally named guardians for your grandchild so that you do not have to suffer through a protracted court battle, created because your child didn’t take a simple action to legally document his or her choices now.

In the event that you know you would never want your parents raising your child, it’s just as critical for you to name legal guardians. Quite often, if both parents have become unable to care for their child, due to death or incapacity, grandparents would be the first option the Court system would look to as caregivers for the child.

But, maybe you would choose someone else, or perhaps you would even want there to be restrictions on the care or visitation of your child by your parents. In that case, you must legally document your choices. You may even want to create a confidential exclusion of guardianship, which we prepare as part of a comprehensive Kids Protection Plan® for your family.

Finally, if you are a grandparent who has already become a primary caretaker for your grandchild, you will want to take the steps of naming legal guardians for the child or children in your care, in case anything happens to you.

This National Grandparent’s Day, make grandparenting a priority in your family. When you call and schedule your Family Wealth Planning Session to get more financially organized than you’ve ever been before and provide for the care of your children, if anything happens to you, not only will we waive our Family Wealth Planning Session fee, but we will also create a no-charge health care directive for the grandparent in your family, or you if you are the grandparent.

This article is a service of Gratia P. Schoemakers, Personal Family Lawyer,®  who develops trusting relationships with families for life. That’s why we offer a Family Wealth Planning Session,™ where we can help identify the best strategies for you and your family. You can begin by calling our office today to schedule a time for us to sit down and talk because this planning is so important.

The Talk You Need to Have With Your Parents

When you were a kid, your parents dreaded the talk they had to have with you.  You know the one.  Well, now that you are an adult, there’s a talk you need to have with your parents that is likely to be just as squirm-worthy – which is why so many of us put it off.

It’s about money.  Specifically, your parent’s money.  The money that may become yours one day. Or may not.

Whether you or your parents think it’s none of your business, it is.  You are most likely the one(s) who will need to deal with all the financial issues your parents leave behind when they become incapacitated or after they die.

Not knowing anything about their finances will place you at an immediate disadvantage, making what will be a hard job almost impossible.

So how do you get the conversation started?  Here are some tips from a recent New York Times column on the subject:

Think about what you need to know.  You need to know more than where to find the will, you need to know if parents have executed powers of attorney, advance health care directives or a trust as well.  You need to know if they have life insurance or other assets and, if so, where the policy is located.  You need to know if they keep a list of all their debts and, if they bank and pay bills online, you need their log-in information for each account.

Bring in a support team.  Your parents may feel more comfortable discussing financial issues with their attorney or financial planner present to facilitate the conversation. They may also feel more comfortable talking with all their children at once, or to only one – take family dynamics into consideration.  And call us in at the beginning of the process.  We can help ease the way tremendously.

Make a plan.  Chances are you will need immediate access to cash in order to pay expenses related to a parent’s passing.  Since probate can be a lengthy process, you may want to plan for this eventuality by having parents establish a revocable living trust, which allows assets to pass outside probate.

Document storage.  Be sure your parents do NOT store their important documents in a bank safe deposit box because getting at them could require you to obtain a court order.  Use a strongbox or safe that is kept in the home instead. Or make sure you are a signer (and there are back-ups besides you) on the safe deposit box.

If you would like to have a talk about estate planning for your family, call our office today to schedule a time for us to sit down and talk.