Top 3 Considerations For Avoiding Tax Problems In Your Divorce Settlement

Posted by: Gerald A. Maggio, Esq.

Orange County divorce attorneys; The Maggio Law FirmNo one wants any problems with the IRS as a result of their divorce!  In any divorce case, there are tax issues both during and after divorce that need to be considered and addressed.  Divorce is anguishing enough, and dealing with a tax problem thereafter is even worse.  Here is some information and tips on what to consider as part of your divorce in relation to taxes:

  1. Division of Property

Generally, for property transfer between divorcing parties as part of a divorce settlement, there is no tax implication.  That can include transfer of ownership of real property.

However, there can be tax implications when an asset like a retirement account is split.  For example, to divide a 401(k) plan, you cannot simply withdraw funds from the plan without penalties and taxes.  Therefore, a Qualified Domestic Relations Order is often required to divide such plans by a rollover IRA to the other spouse to avoid taxes.

  1. Income Tax Filing Status

If a couple is separated and going through a divorce but have not finalized the divorce, they can generally file as “married filing jointly” or “married filing separately.” However, if one of the parties is not willing to file jointly under these circumstances, that party cannot be forced to do so.  Only a tax professional can truly determine what filing status makes the most sense for the parties.

The timing of entry of the divorce judgment also determines how a divorcing couple can file their taxes.  If the divorce judgment is filed and entered prior to the end of the year, that judgment terminates marital status and that means the parties cannot file jointly or “married filing separately.”  So it sometimes makes sense to wait to file the divorce judgment until after January 1st if the parties wish to file jointly.

After the divorce judgment has been filed, generally the divorced parties will each file as “single” or “head of household” filing status.  It is important to know that pursuant to the IRS Code, a parent that has over 50% physical custody of a child is entitled to file as “head of household” and the other parent cannot.  Even if the other parent has 49.9% physical custody, they are not entitled to file as “head of household.”  The parent with over 50% custody is generally also entitled to claim the child as a tax exemption too.

  1. Child and Spousal Support

There are 2 simple rules regarding the deductibility of child and spousal support payments are as follows:

  • Child support is not tax-deductible to the person paying the support, and does not have to be claimed as “income” by the receiving party.
  • Spousal support (a.k.a. “alimony”) is tax-deductible to the person paying the support, much like mortgage interest.  For the divorced party receiving spousal support, that party has to claim such spousal support payments on their income tax returns and will be taxed on those payments, so that party should pay accordingly and adjust their tax payments during the year pursuant to the recommendations of their tax professional.

The tax issues related to divorce can be complex, and it is highly advisable that divorcing parties consult with an experienced tax professional both during their divorce and when working towards a final divorce judgment that will include a division of property, support orders, and so on.  The more information available to parties enables for a more carefully-negotiated divorce settlement that avoids tax pitfalls.

For further information or to schedule a consultation with Orange County divorce attorney Gerald Maggio of The Maggio Law Firm, please call (949) 553-0304 or visit www.maggiolawfirm.com.  The Maggio Law Firm is an experienced divorce and family law firm serving the Orange County and Riverside areas and neighboring counties, serving clients with legal issues including divorce, legal separation, spousal support, child support and child custody issues.

How To Choose The Best Divorce Attorney Based On Your Needs

Posted by: Gerald A. Maggio, Esq.

Top Orange County Divorce Lawyer; The Maggio Law Firm

One of the biggest and toughest decisions in your life can be filing for divorce, something generally most people do not want to do except as a last resort.  The next biggest issue is choosing a divorce attorney to represent you in your case.

So, how does one go about choosing a divorce lawyer exactly?  It can be a daunting task and ultimately a subjective decision that only you can make.

First, doing your research is always a good idea.  The internet allows you to search divorce attorneys online, look at their websites, and get a feel for the attorneys out there in your area.

Speaking of divorce attorneys in your area, you should generally try to choose an attorney in your city or county, depending on where you are.  For example, if you live in Orange County and your case is in Orange County, you generally should find and retain an Orange County divorce attorney.  Why?  There are 3 reasons:  (1) your attorney will have to travel less time to get to court, which in turn will save you in legal fees, (2) a local divorce attorney will know how the court in your county works (i.e. the little “ins and outs” of the court system) which is invaluable, and (3) a local divorce attorney will be known by the other attorney in your case and, even more important, the judge will likely know that attorney.  All those factors can have an effect on your case in terms of legal fees, the duration of the litigation in your case, and in how your case might be resolved.

Chances are you know someone, i.e. a friend, family member, or someone you work with, that has gone through a divorce.  If they are willing to talk about it, ask for an attorney referral because that person has gone through the process whereas you likely have not.  That person can give you a lot of helpful information and assist you in choosing a divorce attorney that fits your needs.

Much like asking someone you know about their divorce attorney, checking out and reading the client reviews of divorce attorneys is also a good way to narrow the attorneys you will want to set up consultations with.  Such reviews can be helpful in getting a sense of what those attorneys are like.  Some of those reviews are posted on attorney websites, but there are independent websites like Avvo.com that has helpful information about attorneys including client reviews.

It is always advisable to meet with more than one divorce attorney once you have narrowed your choices.  Set up consultations with each.  Some will offer free 60 minute consultations, some will offer a free 30 minute consultation, and some will require a charge for their time, often at the attorney’s hourly rate.  Do not let the issue of free vs. paid consultation be the determining factor in choosing an attorney.  Instead, in meeting each attorney, ask questions about the attorney, about how they handle their cases, about how available they are by phone/email/in person when needed, etc.  Make an informed decision about the divorce attorney you pick after doing all of this.  You want to pick an attorney that you feel comfortable with, is accessible and who actually listens to you.

A word of warning:  if a divorce lawyer that you meet promises or guarantees an outcome in your case, run out of their office.  NO divorce attorney should EVER promise or guarantee an outcome, because there are many factors involved if your case goes to trial that may affect the final outcome.   Don’t ever choose an attorney that says only what you want to hear, but one that also tells you what you need to hear.

In the end, there is no such thing as “the best attorney.”  There are many qualified divorce lawyers out there.  Rather, the issue is choosing the best attorney for you.

For more information or to schedule a consultation with Gerald Maggio, please call our Orange County office at (949) 553-0304 or go to maggiolawfirm.com.

Top 20 Financial & Legal Steps To Take After Your Divorce Is Done

Posted by: Gerald A. Maggio, Esq.

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In most divorce cases in most states, you cannot charge estate plans, life insurance beneficiaries, etc., until after your divorce case has been resolved and your divorce judgment has been entered by the court.  However, once your divorce is final, you need to take immediate financial and legal steps to reflect your new reality.  The following is a checklist of the actions that you need to take:

  1. Change your name on all of your financial documents, bank accounts, etc.
  2. Close and/or change the names on all joint accounts.
  3. Make sure that all credit card bills and loans are paid promptly and closed by you (or your spouse if such bills or loans were designed as their responsibility in the divorce).
  4. Open a checking and savings account in your name.
  5. Open a credit card in your name to establish your own credit history.
  6. Set up and start depositing money into an emergency bank account to cover 6 months of living expenses and don’t ever dip into it.
  7. Check all of your investment accounts to make sure that the stated ownership of stocks, bonds, mutual funds, annuities, and retirement accounts are correctly listed.
  8. Change your name with the Social Security department.
  9. Change your name on your driver’s license.
  10. Change the title on your automobile(s) into your name if necessary.
  11. Change your automobile insurance coverage into your name alone.
  12. Have your spouse’s name take off of the mortgage (or lease).  This may be difficult to do without a refinance of the mortgage.
  13. Make sure that you transfer ownership of all deeds for your real estate and record with your county recorder’s office if not accomplished in the divorce case.
  14. Change your beneficiaries on all life insurance policies.
  15. Change beneficiaries on all retirement and pension plans.
  16. Revise your health insurance coverage, dependent on the terms of your divorce judgment.
  17. Make sure any Qualified Domestic Relations Orders that need to be done to divide retirement benefits per your divorce judgment get done.
  18. Contact an estate planning attorney and have a new estate plan done.  Be sure to update your medical and financial powers of attorney.
  19. Speak with a financial advisor if you did not do so prior to concluding your divorce case and determine a financial roadmap for you post-divorce.
  20. Review your tax withholding allowances and taxes with your CPA, particularly if you are receiving or paying spousal support (alimony), and make any necessary adjustments with your payroll department.

For more information or to schedule a consultation, please contact the Orange County family law firm of The Maggio Law Firm at (949) 553-0304 or at www.maggiolawfirm.com.

 

What Role Does Social Media Play as Evidence in Divorce?

Posted by: Gerald A. Maggio, Esq.

Top Orange County Divorce Attorneys; The Maggio Law Firm

What happens when a spouse reads a “tweet” you sent about your latest date or your spouse sees photos of you on a vacation she didn’t know you were taking on your Facebook page? Is Social media acceptable as evidence in a family law case? Family law is determined by state law which means each state has its own unique requirements for property division, custody and support. All states now have some form of no-fault divorce though. In a no-fault divorce it doesn’t matter if a spouse had an affair or if a spouse was otherwise to blame for the dissolution of the marriage. The idea of no-fault divorce is to save couple from gathering evidence of wrong-doing and from blaming each other in order to get more property or something other advantage out of the divorce.

In custody disputes though, a parent whose behavior could be construed as harmful to the children, or as irresponsible for a parent, etc. evidence of drug use, drinking, or otherwise inappropriate behavior may be used against a parent in a custody case. State laws vary on what may or may not be considered in a court’s custody determination and in some states, adult behavior which does not occur in the presence of the children and does not impair a parent’s ability to parent may not be a factor. Judges have a great deal of discretion though so every case is different, even different cases in one state may have different outcomes based on each judge’s discretion.

Facebook and Twitter can be used against you.  Social media sometimes offers clues to the opposing side about the truth of matters.  A person who is claiming he cannot afford to pay child support and then posts pictures of his latest cruise to the Bahamas may have some explaining to do. An individual who claims she cannot find a job and then “tweets” about her new consulting business could be caught in a contempt situation. We live in a new world where people are constantly talking about their own day-to-day activities as well as those of the people around them. Even a careful individual who does not post photos on Facebook might end up on Facebook if a friend (or even a friend of a friend) posts a photo and tags a person in it.

Is social media admissible in court? This is a growing area of law and is not entirely clear in every state or in every situation. Tweets and Facebook pages must be verified as true and verified as coming from a reliable source. Like information in Wikipedia, not everything you see or read on the internet is true, so verifying the truth of anything in social media can be difficult from an evidentiary standpoint. It has created new questions and new challenges for attorneys and for the courts. Perhaps the best advice if you are going through a divorce is to steer clear of social media until your divorce is finalized. An experienced family law attorney can help you understand your specific rights and responsibilities with regard to social media and divorce under your specific state’s laws.

For more information or to schedule a consultation, please contact The Maggio Law Firm at (949) 553-0304 or at www.maggiolawfirm.com.

Domestic Violence Victims Should Seek Legal Help in Riverside County

Posted by: Gerald Maggio

Top Orange County divorce lawyers; The Maggio Law Firm Every week police are called to homes where spouses and children are affected by domestic violence. Alternatives to Domestic Violence in Riverside County has seen an increase of victims throughout the state, a need for more donations for their emergency shelter, and kids and spouse’s whose lives are at risk. Their crisis line has received up to 7,000 calls a year from people needing help. October is Domestic Violence prevention month and reminds us as a society that we need to be mindful of the millions of women and men who suffer physical and emotional pain from their intimate partner. Riverside has many resources to help domestic violence victims and perpetrators get back on the path to better life. Alternatives to Domestic Violence, for example, runs the Casa de Paz shelter where victims can have a short-term, stable living environment and get counseling and education services. If a person and their child do not actively seek help and legal action, the domestic violence can turn deadly. Emotional, physical, and other types of abuse often lead to more aggressive forms of abuse. The CDC’s Violence Prevention campaign says that many of the perpetrators have a substance abuse history, carry a weapon, and have a mental health issue. A person can initiate divorce proceedings when this is the best course of action to cut ties with the perpetrator. At the same time, individuals can request a restraining order, ask for custody and child support, and discuss concerns about visitations with the child. California courts want to protect the child and spouse from any further harm. If mediation is ordered by the judge, a spouse can take a support person with them to be there as the child custody and other matters are decided with the ex. In cases where a person does not feel safe, an individual can ask to speak with the mediator separately so that the issues with the abusive ex do not halt the proceedings. The courts will want the perpetrator to undergo counseling to improve their behavior. Perpetrators must comply with the court orders to be able to have monitored visitation or custody in the future. Victims should get legal representation to assist with their divorce and family law matters. Riverside County family law attorney Gerald Maggio is a strong ally for a spouse and their children with domestic violence concerns. Gerald A. Maggio is an Irvine and Riverside County divorce attorney.  To learn more about Riverside County divorce lawyer, Gerald A. Maggio, visit Maggiolawfirm.com or call (949) 553-0304.

 
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