Preparing for Divorce: The Stay-At-Home Parent Part 1

A stay-at-home parent is in a unique position and therefore must consider special planning to ensure they successfully transition through divorce. While divorce is never easy, the stay-at-home parent can help minimize the emotional and financial impact that divorce will have upon the parties, their children and their finances.

Step One: Understand Your Finances

I often find that the stay-at-home parent is either the “chief financial officer” of the family, and is responsible for managing the family budget,  or is so far cut-out of the family finances that they can’t identify their day-to-day expenses, list all the financial institutions used by the family, or otherwise describe how the family finances operate.

Regardless of your position, you should invest a considerable amount of time investigating your financial position and gathering the following records as they will be instrumental to you and your attorney as you move forward with your divorce:

1. Tax returns, Filings and Supporting Documents;

2. Bank Statements;

3. Investment Statements;

4. Mortgage, Debt and Liability Statements;

5. Deeds, Titles, and Registration Documents; and

6. Anything else that documents your financial position

Step Two: Create a Financial Plan

Once you understand your finances, you need to outline how the family is going to support two homes. That’s right, divorce involves unwinding one family and using those resources to establish two “new families”. Planning for this requires understanding current and future expenses and income so that each party can stay financially solvent after the divorce.

Step Three: Plan Long-Term

The stay-at-home parent generally needs to think how they will sustain their home once the other parent ceases paying child support and / or alimony. As part of the divorce planning it is essential that the stay-at-home parent think about retirement planning, when they will re-enter the the work force, and if they will need new training / education. The economy and the new Massachusetts alimony law make it essential that parties engage in long-term financial planning during the divorce process. To help plan, here are a few questions to ask yourself:

1. When will child support and / or alimony cease?

2. Will I need to begin working to supplement my finances?

3. If so, how long until I need to find a job?

4. What jobs would I qualify for given my skills and my potential new living arrangement?

5. How much savings do I have to live on for the next 6 months?

6. Can I support myself and my children if something were to happen to my spouse?

These are just a few questions that a stay-at-home parent needs to think about in the context of a divorce.

I wish you all the best,

Josh Robbins

Of Counsel

Scafidi, Juliano & Hurd, LLP

310 Washington Street, Suite 201

Wellesley, Massachusetts 02481

(T): 781-210-4710

(F): 781-210-4711

(E): jrobbins@sjh-law.com

Disclaimer:

This Blog/Website is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice (or any legal advice).  This blog is for general informational purposes only. Joshua N. Robbins, Esq. does not offer or dispense legal advise through this blog or by emails to or from this site. By using this Blog / Website you understand that there is no attorney-client relationship between you and the Blog/Website publisher.  The Blog/Website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state or jurisdiction. This blog is not published for advertising or solicitation purposes. Regardless, the hiring of a lawyer is an important decision that should not be based solely upon a Blog / Website. The information on the blog may be changed without notice and is not guaranteed to be complete, correct or up-to-date. While the blog is revised on a regular basis, it may not reflect the most current legal developments. The opinions expressed at or through the blog are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

To ensure compliance with requirements imposed by the U.S. Internal Revenue Service in Circular 230, we inform you that any tax advice contained on this site (including any links provided) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the U.S. Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication.

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Divorce and Taxes: Five Often Overlooked Tax Tips

The following information is intended for educational purposes and you should speak with your CPA, Accountant or Tax Adviser before taking action.

Divorced taxpayers tend to focus on tax issues related to children and alimony. However, when trying to figure out what you should pay Uncle Sam, the divorced taxpayer should be aware of the following:

1. What you can and cannot deduct: Generally you cannot deduct legal fees and court costs for getting divorced, but you may be able to deduct legal fees for tax advice, appraisers, and accountants all in the context of a divorce, as well as for fees for obtaining alimony.

2. Property Transfers: There is generally no tax consequence for property transfers between spouses (including those into trust) provided that such transfer is to a spouse and is “incident to a divorce.” A property transfer is “incident to a divorce” if the transfer occurs 1 year after the date that your marriage ends and is related to the ending of your marriage.

3. Form W-4: Remember when you become divorced or separated to file a new Form W-4 to ensure your withholding allowances are properly reflected. 

4. Tax Liability: You are jointly and individually responsible for any tax, penalty or interest due on a joint return for tax years before you were divorced even if your separation agreement states that your former spouse will be responsible for any outstanding amounts due on filed joint returns. A spouse may be able to seek relief under the innocent spouse rule, equitable relief, etc.

5. Sale of Jointly-Owned Property: If you and your spouse sell jointly owned property, make sure that you report your share of the gain or loss from the sale. In order to determine your share of jointly owned property you will have to refer to the state law administering ownership of your property.

As you prepare to file your taxes, take some time to sit down with your tax adviser to ensure you receive the full tax benefit of your alimony payments. IRS Publication 504: Divorce or Separated Individuals 2013 can further assist you as you prepare to file your taxes.

I wish you all the best,

Josh Robbins

Of Counsel

Scafidi, Juliano & Hurd, LLP

310 Washington Street, Suite 201

Wellesley, Massachusetts 02481

(T): 781-210-4710

(F): 781-210-4711

(E): jrobbins@sjh-law.com

Disclaimer:

This Blog/Website is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice (or any legal advice).  This blog is for general informational purposes only. Joshua N. Robbins, Esq. does not offer or dispense legal advise through this blog or by emails to or from this site. By using this Blog / Website you understand that there is no attorney-client relationship between you and the Blog/Website publisher.  The Blog/Website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state or jurisdiction. This blog is not published for advertising or solicitation purposes. Regardless, the hiring of a lawyer is an important decision that should not be based solely upon a Blog / Website. The information on the blog may be changed without notice and is not guaranteed to be complete, correct or up-to-date. While the blog is revised on a regular basis, it may not reflect the most current legal developments. The opinions expressed at or through the blog are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

To ensure compliance with requirements imposed by the U.S. Internal Revenue Service in Circular 230, we inform you that any tax advice contained on this site (including any links provided) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the U.S. Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication.