Tax consequences of divorce: Dependency exemption

In Florida, the parent that has the child the majority of the time typically receives the tax exemption from the IRS. However, within marital settlement agreements, the parties may negotiate for the parent with a lesser amount of overnights to alternate the exemption or have this exemption every year. For example, if the parent with the majority of the time does not need to file taxes, that parent may utilize this dependency exemption as a bargaining chip (worth approximately $4,050.00 in 2017 as a deduction).

The IRS requires in these types of scenarios for the parents to file a Form 8332 in order to allow the "noncustodial" or parent will lesser amounts of time-sharing to take the exemption.

Another consideration is the actual value of the exemption. Currently, for every $2,500.00 above $287,650.00 in gross income, the value of the exemption is reduced by 2 percent, up to $410,150.00 total gross income. After that gross income point, the exemption can no longer be taken.

This blog post is not intended to provide readers with legal advice or tax advice in any way. This does not create a legal relationship or agreement between the reader and Bouchard Law, P.A. Bouchard Law, P.A. and its attorneys and staff do not claim to be experts in tax matters.  Bouchard Law, P.A. recommends consulting a tax professional to fully evaluate your tax implications and consequences of your particular position.

 

Tax consequences of divorce: Alimony

Alimony

For those who may be on the hook for on-going alimony payments, the word "alimony" may seem like a dirty word. However, many overlook the tax benefit of classifying payments as "alimony" versus something different, such as a property distribution.

Alimony is currently considered a taxable event meaning the recipient of the alimony is receiving taxable income. The alimony as paid is tax-deductible to the paying party, provided the settlement agreement does not state otherwise. This has been in the tax code since 1942.

But buyer beware! Tax changes are on the horizon. "Because of the new tax law, spouses paying alimony won’t be able to take a deduction while spouses receiving alimony will no longer have to report it as income..." reports the American Bar Association. Come 2019, alimony will no longer be a taxable event, which means no more tax deduction and more money flowing to the government due to the payers of alimony mostly being part of higher tax brackets.

Source: http://www.abajournal.com/news/article/new_tax_law_affects_alimony_could_spur_divorce_surge/

This blog post is not intended to provide readers with legal advice or tax advice in any way. This does not create a legal relationship or agreement between the reader and Bouchard Law, P.A. Bouchard Law, P.A. and its attorneys and staff do not claim to be experts in tax matters.  Bouchard Law, P.A. recommends consulting a tax professional to fully evaluate your tax implications and consequences of your particular position.

 

Florida Fatherhood

A common question I receive is, "What are my rights as a Father if I am named on the birth certificate?" Many times, fathers say they have a "custody" case that they wish to pursue.

Many couples start a family and live in a committed relationship, but what happens when the relationship sours? What are father's rights in Florida?

The legal system requires fathers to file what is called a "Paternity" case in order to legally establish fatherhood. This is a circuit court case that involves the couple (or the court) coming up with a Parenting Plan that addresses child support, parental responsibility, and a time-sharing schedule. 

If there is a dispute as to biological paternity, that will be looked at first. The Court may require DNA testing. If there is no dispute, which is the more common scenario, the couple may sign a voluntary acknowledgement of paternity or stipulate as to the paternity. Thereby, establishing the paternity. In some cases, paternity has already been established by the Department of Revenue in a child support proceeding. However, in these cases, the Dept. cannot go further to establish any right to time-sharing for the father.

The next step is for the couple to work on a parenting plan that is in the best interest of the child(ren). The parenting plan addresses how decisions will be made on behalf of the child (called "parental responsibility"), such as medical and educational decisions. It sets forth a child support obligation, a time-sharing schedule, holiday schedule, obligations on how uncovered medical expenses, health insurance, and extra-curricular expenses will be paid.

Contact us today to set a consultation to discuss your rights. (941) 764-1146

Why do I have to pay child support if I have a 50/50 schedule?

What goes into a determination of a child support obligation is more than just time-sharing. Many people hold the belief that if they have an evenly split schedule there will be no child support paid by either parent.

However, the child support guidelines consider more than just time-sharing. For example, if one parent earns more than the other parent, child support may be ordered. Also, costs for childcare, uncovered or non-covered medical expenses, and health insurance premiums go into the child support guidelines. In some long-distance parenting plans, parties may agree to reduce the obligation if there are travel expenses involved; this may lead to a deviation of 5 percent.

50/50 Is Not Guaranteed

Clients often have the belief that they will receive at least 50 percent of the overnights when it comes to timesharing. 

This presumption is not true. Many factors come into play when coming up with a reasonable and logical timesharing schedule. Florida's public policy is that both parents have frequent and continuing contact with their child.

The statute lists 19 factors that the court considers when fashioning a parenting plan schedule. For example, one factor is if the parent has the ability and willingness to facilitate and encourage a close and continuing parent-child relationship, honor the timesharing schedule, and be reasonable when changes are necessary. (Fla. Stat. 61.13(3)(a)) Yes, the court looks at how well you are going to get along with your soon-to-be ex. Another factor looks at a parent's moral fitness. (Fla. Stat. 61.13(3)(d)) And, the 20th factor allows the court to consider any other factor that is relevant.

When our firm drafts a timesharing schedule, we'll also look at what schedule provides the children with the most consistency given their needs and ages. Also, relevant facts include which parent best facilitates certain activities and if work schedules will accommodate the timesharing schedule. There are many more considerations we make given the case facts, personalities involved, and the best interests of the children involved.

Too young to have a will? Not if you have kids.

Why have your will created now? There are many reasons why putting off estate planning until you are older is a bad idea. A will allows you to decide who gets what when you pass away. If you do not have a will, Florida law controls how your assets are distributed.

First and foremost, do you have kids? One function a simple will does is appoint a guardian for your kids. This is the person or people you intend to have care for your children if you pass away. Of course, if you are married or were previously married to the other parent, your spouse/ex-spouse would take the children. This is not always the case when the parents were never married.

Something also to consider is ensuring your kids will be taken care of. Check with your insurance provider to determine the cost of life insurance. Oftentimes, they will offer a low cost solution with monthly payments. You may designate your child and/or guardian as the beneficiary of the policy. 

Why your case is probably not an "uncontested" divorce.

I often have folks visit me and state their case is an "uncontested" simplified divorce. I tell them it probably is not.

What exactly qualifies as simplified under Florida law? 

Generally, most divorces are contested one way or other. Simplified divorce involves no children, no alimony or spousal support, and, generally, no conflict whatsoever. The parties go to the Clerk of Court to jointly file the Petition for Simplified Dissolution. Most of these cases do not involve lawyers. Our firm finds that a simplified proceeding is a useful tool when the parties have not been married long and they do not own any assets nor have any joint liabilities (financial debts). The parties are not required to have financial disclosure, but are required to attend a final hearing. The parties also give up their right to a trial and the opportunity to examine/cross-exam the other parties and witnesses.

From the Florida Bar Consumer Pamphlet: Divorce in Florida

Not everyone can use the simplified procedure. Couples can use the simplified dissolution of marriage only if all the following requirements are met: 

· Both parties agree to the use of this form of dissolution proceeding.
· They have no minor (under 18) or dependent children.
· They have no adopted children under the age of 18.
· Neither party is pregnant.
· At least one of the parties has lived in Florida for the past six months.
· The parties have agreed on the division of all of their property (assets) and obligations (debts).
· Neither party is seeking alimony.
· Both parties agree that the marriage is irretrievably broken. 


If you and your spouse cannot meet all of the above requirements, you will have to follow the procedure of the regular dissolution of marriage process.

Where people run into problems when filing a simplified dissolution is when they fail to recognize and address their legal needs and rights thoroughly. For example, parties fail to recognize that pets are considered personal property under Florida law. If the parties do not address who retains the pet upon a simplified dissolution, generally, the pro se (the Clerk-provided, do-it-yourself) marital settlement agreement provides that personal property will stay with the person it is currently with. Then, later on, you'll find yourself in small claims court attempting to resolve the issue of who gets the dog, which should have been resolved via your divorce. Other issues that people fail to address involve changing titles/registrations on vehicles, relinquishing their property rights in homes and land, health insurance/care needs, and other types of support.

If you have questions about your case, give us a call at (941) 764-1146 to schedule a free consultation.

What to do with pets when people separate or divorce?

One major concern of our clients is who receives a beloved pet upon divorce or separation. Most people consider their dogs, cats, birds, turtles, horses, and hamsters to be one of the family and akin to another "child." However, under Florida law, pets are treated like personal property, just like a sofa or vehicle.

Our firm has worked with couples to fashion schedules, future expense divisions, and debt associated with pets upon divorce or separation. Yes, dog time-sharing schedules are a thing! Some issues that our clients do not consider on their own include who takes a pet while the other person goes on vacation or up north for the summer, who pays for veterinarian bills and medication, or simply who keeps the crate and dog bed.

This is why you need a firm to make sure these issues are hashed out in any settlement agreement.  If you own a pet, you need a personalized approach. Call Bouchard Law, P.A. today at (941) 764-1146.

Is my out-of-state will valid in Florida?

Florida offers many benefits for retirees and snowbirds to stay awhile, but many wonder whether or not their will, previously executed in their last home state, is still valid once they settle in the Sunshine State.

Florida does recognize most types of wills with three exceptions. In general, a will executed by a nonresident remains valid if the will was validly executed under the laws of the place where the nonresident was at the time of the will’s execution.

Let’s say Mr. Smith moves to Florida to enjoy his golden years and brings with him a will he previously executed in North Carolina. He worries that he will need a new will drafted since he now lives in Florida full-time. The existing will was executed in accordance with North Carolina law with regard to the execution process. Each state has its own execution requirements, which usually requires a particular number of people to witness the signing of the will or to acknowledge the signature, for the signatures to be done in the presence of one another, etc. Here, if Mr. Smith’s will is valid under North Carolina law with regard the state’s execution requirements, Florida will also recognize the will, even if Florida has different execution requirements.

When does Florida not recognize an out-of-state will?

There are three exceptions to the general rule mentioned above.

First, Florida does not recognize some types of “holographic” wills. Holographic wills are those entirely in the testator’s handwriting. (A testator is the person who makes the will.) Those unrecognized by Florida are entirely in the testator’s handwriting and signed by the testator, but not executed in accordance with the Florida requirement that the will be witnessed by two attesting witnesses. So, if Mr. Smith moved to Florida with his North Carolina handwritten will that was executed without any attesting witnesses, it would not be valid in Florida, despite its validity in North Carolina. The only way Florida would look twice at Mr. Smith’s will is if it merely divvied out personal property, such as clothing, his boat and vehicles, and jewelry.

Second, if the person is a resident of Florida at the time the will is executed, the will must conform to Florida law’s execution requirements. If Mr. Smith was initially a Floridian and visited North Carolina to execute his will, this will would need to follow Florida’s requirements rather than North Carolina’s, since Mr. Smith, at the time of the will’s execution, was a Florida resident.

Lastly, imagine Mr. Smith on his deathbed, telling his family and friends how to distribute his personal property. This type of will is called an oral or nuncupative will and is recognized in a small number of states, including North Carolina. Florida does not recognize oral wills.

If you have questions about your out-of-state will and whether it can be probated in Florida, set up a consultation with Bouchard Law to review your will and discuss whether a new will is necessary.