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Alimony is the financial support and maintenance payments provided by one spouse to another in a divorce, or agreed-upon in an enforceable separation agreement. Alimony can be awarded either through a lump-sum payment, or on a continuing basis of payments to the "dependent" spouse. A number of factors go into deciding whether or not one spouse is financially "dependent" on the supporting spouse.
Some of these factors include:
The financial earning capacity of each spouse
Level of education
The earning potential of each spouse
Primary caretakers of any children in the family
The duration of the marriage
Financial contributions by one spouse to any children's healthcare and schooling
The standard of living during the marriage
Tax implications of an alimony award on each spouse
No one of these factors is dis-positive to a judge, and the judge will weigh each factor in determining the appropriate amount of alimony to award to the dependent spouse. It is very important to gather up all of your financial information when considering a divorce.
Property division is a key issue in any divorce and can have a significant impact on your financial security. Moreover, property division must be asserted by one or both of the spouses during the separation period, and prior to the divorce in order to obtain an equitable distribution of the assets to the marriage. Either party may file for an Equitable Distribution motion, either on its own, or along with another motion in order to initiate the process. The property will then be categorized into three separate categories: Separate property, Marital property, and Divisible property.
It is highly recommended that you gather your financial information prior to obtaining an divorce, and being prepared to look for financial documents that could be valuable in a property distribution agreements. It is also highly recommended that you discuss your financial situation with an attorney so that you can prepared for distribution of the property at the divorce hearing.
An attorney can help you with: accurate valuations of businesses and corporate holdings, valuation and proposed distribution of 401(k) plans, pensions and other retirement benefit accounts, evaluating complex assets such as real estate, stock shares and options, trusts, offshore bank accounts, vehicles, locating the opposing party’s hidden assets or income, and establishing ownership rights to separate property such as gifts and inheritances.
Just like in every decision involved with your finances, there are going to be certain tax implications involved in distributing and dividing certain types of property of the marital estate. However, according to the Tax Reform Act, any transfers that are considered "incident to divorce" are deemed tax free transfers.
In order for the court to presume that the transfer of property is incident to a divorce, the transfer must have been made at the end of the marriage or within one calendar year of the end of the marriage. This tax-free transfer rule incident to a divorce is only applicable to transfers of property between spouses, and therefore will not be presumed with property transfers from a spouse to a third party.
Although there is a presumption that transfers in marital property between spouses are incident to a divorce, and thus tax-free, it is always better four you to consult an attorney and to have the language implemented into a divorce decree, equitable distribution motion, or separation agreement to insure that you are not unduly imposed by tax consequences that could have been avoided.
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