Four Exceptions To The Recapture Of Front-Loading Of Maintenance

This is part of our Divorce Tips series

The Tax Reform Act of 1984 enacted rules designed to prevent excess front-loading of maintenance payments. Recapture under §71(f) can occur only in the third post-separation year. The Internal Revenue Code under Section §71(f)(5) provides four exceptions where the alimony recapture rules do not apply:

Exception #1: Either spouse dies before the end of the third post-separation year or the spouse entitled to receive the payments remarries before the end of the third post-separation year. [§71(f)(5)(A)(i)]

Exception #2: [Read more]

Divorce Your Health Insurance?

When one spouse brings home the health insurance, what’s the ex-spouse supposed to do for health insurance?

This is an important consideration no matter which spouse loses the health insurance, especially if they have pre-existing conditions.

For example, it is not uncommon for women over 40 years of age to develop severe health problems. Some become almost uninsurable, at least at a reasonable cost. This is a real concern where they are suddenly on their own and responsible for acquiring health insurance.

And the longer the marriage lasts, the more likely it is that one spouse will leave the marriage with health issues.

The COBRA law passed in 1986 allows a spouse to continue to get health insurance from their ex’s company if it has at least 20 employees, for three years after the divorce. The normal COBRA provision states that, if an employee is fired or leaves a job, he or she can get health insurance from that company for 18 months. However, in a divorce, it is extended to 36 months.

Linda and Bob are getting divorced. Assume that Linda decides to continue health insurance under COBRA from Bob’s company. Linda must pay the premium as agreed. If she misses a premium payment, the health insurance company can drop her and they do not need to reinstate her.

Typically, Linda will not get the discounted group rate but will be charged the full rate. It is important to shop for health insurance, even though the COBRA provision may supply a quick solution to health care coverage, it may not be the best. It may be purchased at a lesser cost somewhere else.

There are two drawbacks to using the COBRA health insurance provision: [Read more]

Baby Boomers and Divorce: A Bumpy Road for Many? Results of National Poll

A first-of-its-kind national poll reveals how divorced boomers are holding up.

To determine if a consensus exists about how divorced baby boomers are holding up, a National Poll on Divorce was conducted by the National Association of Divorce for Women and Children and the Baby Boomer [Knowledge Center].
Questions:

Participants in the poll were asked three fundamental questions about the divorce process, the relationship with their “former” spouse and inevitability the affects of divorce has on the dynamics of the family.

1. What was the most challenging part of getting a divorce: custody of the children, dividing the assets or finances?

2. What life skills would have been helpful when going through your divorce: stress management, coping skills and/or communication skills?

3. What is your relationship now with your former spouse: amicable, have learned to tolerate each other for the sake of the children or can’t be in the same room together and do not speak to each other?

[Read more]

How A CDFA Can Help You Afford to Get Divorced

A Recent Survey Conducted By the Institute for Divorce Financial Analysts Shows Increase in Number of People Unable to Afford Divorce

In a recent survey conducted by the Institute for Divorce Financial Analysts^TM of 270 Certified Divorce Financial Analysts^TM from across the country, 68 percent indicate that they have seen clients who could not afford to get divorced because of recession-related financial problems; 63 percent of respondents says this number has increased since the previous year. Those surveyed believe this will result in delayed or drawn-out divorce proceedings as well as an increased number of couples trying to save money through DIY divorces, foregoing professional legal services.

“It’s imperative for divorcing couples to keep in mind that the current economic conditions will indeed change, and planning for their future is paramount,” says Fadi Baradihi, president and CEO of The Institute for Divorce Financial Analysts^TM (IDFA^TM). “With people cutting back on legal and other professional fees, it’s even more imperative that they understand how to plan for their long-term financial stability. Working with a Certified Divorce Financial Analyst^TM can help to preserve the family’s finances – which is crucial in today’s economy.”

Working with clients and their attorneys, a Certified Divorce Financial Analyst^TM(CDFA^TM) forecasts the long-term effects of the proposed divorce settlement. CDFAs assist attorneys by helping the client make financial sense of proposals, and they also give attorneys the tools they need to help prove their cases. While lawyers serve a crucial role as individual legal advocates, they are not necessarily there to explain financial consequences in detail, or to empower their clients with the knowledge they need to make smart financial choices.

Sharing Children For Tax Purposes

Starting with 2009 tax returns, a noncustodial parent claiming the tax exemption for a child much complete a Form 8332 if  you were divorced (or changed your agreement) after 2008. The noncustodial parent will have to attach Form 8332 singed by the custodial parent and whose only purpose is to release a claim to the exemption.

Check with your tax preparer and/or attorney if you think this situation may apply to you.