Spousal Maintenance

Mar 13

Ways to Save Money During a Divorce

saving moneyIf you have decided that it is time for you and your spouse to part ways, there must be some underlying reasons.  That being said, if you are able to work with your soon-to-be-ex through the divorce process, it may end up saving you money, time and aggravation.  There are other ways to avoid high costs for getting divorced.

A good first step when contemplating divorce is by considering the lawyer you need.  There are lawyers with backgrounds in mediation who can work towards a cost effective and timely divorce.  They act as a neutral third party to guide you and your spouse trough the divorce process to a mutually beneficial agreement.

This has the additional benefit of avoiding a litigated divorce where a judge rules over the division of property, custody and support payments.  Coming to an understanding with your ex might be more beneficial because you both know what is necessary to accomplish.  Also, divorces that play out in court can last a long time, be very expensive and tie up your schedule with court appearances.

It will also be important to carefully report your assets and review your exes’ financials.  Honestly reporting your income will eliminate the possibility of being penalized by paying your exes’ attorney fees, fines from the court or even jail time.  An accurate statement of assets will also ensure that you either receive the most amount of support or pay the least.

Closing joint accounts is integral to separate your exes’ purchases from your own.  Otherwise, you could be held responsible for purchases even after the divorce is finalized.  Make sure to remove your spouse as an authorized user on any credit cards you have from your marriage and change any important passwords they might know.

Now that you are making a transition from a combined income to possibly only support payments, create a budget for yourself.  By learning to allocate for your expenses, you will be more financially able to live your new life.  This is a time to get help from family and friends who can ease this transition and think of other cost saving ideas.  Divorce isn’t an easy step in your life but do what you can to limit the stress on yourself.  Contacting a knowledgeable divorce attorney in DuPage County will also ease this burden.

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Mar 13

American Taxpayer Relief Act May Affect You Post-Divorce

StaciMost Americans are familiar with at least some provisions of the American Taxpayer Relief Act (ATRA) that Congress put into effect as of January 1, 2013 in an attempt to avoid the fiscal cliff. What many people may not know, however, is that ATRA may create some sticky financial situations for former spouses once their divorce is final if they fail to take its provisions into account in crafting a settlement agreement.

As recently reported by Forbes, one provision of ATRA significantly raises tax rates for higher income people. Therefore, if you will be receiving alimony following your divorce, you may be pushed into a higher income tax bracket, which now will mean that you owe an increased amount of taxes. In most cases, your periodic alimony payments will be considered to be taxable income by the IRS, and the payments will be tax-deductible for the paying spouse.

In some circumstances, you may be able to structure your divorce settlement to include a single lump-sum payment of alimony, rather than periodic payments, which would result in the payment being neither taxable to you and nor deductible for your soon-to-be-ex-spouse. Relying on a single payment for your alimony income for the rest of your life can be difficult, however, and will require some careful financial planning in order to ensure that you have a sufficient income flow.

Child support, on the other hand, is not considered to be taxable income, and child support payments made are not deductible. Although such an arrangement can be difficult to make, there may be some benefit in seeking more child support and less alimony, as opposed to the less child support and more alimony. Again, the best strategy in this situation will depend on your particular financial circumstances and needs.

As the tax consequences of your divorce can be significant, particularly with the passage of ATRA, it would be wise to discuss your situation with a trusted financial advisor, along with your Oakbrook divorce lawyer.  An experienced divorce attorney will be instrumental in helping you make the decisions that best benefit you financially in the future.

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Jan 13

Common financial mistakes in Illinois divorces

  Divorce is very stressful for people, mentally, emotionally, physically, and financially. People often are not thinking completely clearly when making many decisions during the divorce and often make decisions financially that may come back to haunt them. These mistakes can be easily avoided if people take a few simple precautions.

Lacking Information

In many marriages, it is common for one spouse to handle the family’s finances. In these cases it becomes very easy for the spouse who handles the money to take advantage of the other’s lack of knowledge of their assets, making it possible to negotiate an unfair property settlement.

It is important for both spouses to have an accurate count of all of the assets, including:

  • Real estate
  • Retirement accounts and pensions
  • Stocks and bonds
  • Mutual funds
  • Art, antiques, and other collectibles
  • Vehicles

Each party should also know how much debt the family carries and to whom the money is owed. Each spouse should also know the family’s total monthly income and expenses to determine whether the other may be trying to hide assets.

It is also important to understand the difference between marital and non-marital property, so each spouse is clear on what will be included in the property division. In the simplest form, non-marital property is property that each spouse had prior to the marriage and any gifts or inheritances that the spouse received during the marriage.

Determining what is and is not marital property can sometimes be complicated, however. Appreciation in value of non-marital property can sometimes be marital property and spouses may also mingle marital and non-marital property.

Not Budgeting

Transition to divorced living can be difficult because many people become accustomed to living on two incomes. It is important that people create budgets and stick to them, so they do not find themselves in financial trouble after a divorce.

Not Planning for Long-Term

Many people want to get the unpleasantness of divorce over as soon as possible, but in the rush to complete the matter, they may agree to property divisions that could jeopardize their futures financially. Each spouse should analyze the financial and tax implications of all of the assets that are involved. People should also account for the costs of keeping some of the assets, such as a house. A person should also consider the asset’s liquidity and his or her need for ready cash.

Property division is a very fact-sensitive process and should not be taken lightly. Contact an Illinois divorce attorney for help with your divorce to be sure plenty of thought is put into your asset division. Kathryn L. Harry & Associates can assist you with your divorce and be sure that you start your new life with all that you need.

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