taxes

Tax Consequences of Divorce

Divorce gets complicated on several levels. Personally, emotionally, and financially, it can take a toll. Among these layers are further sublayers that are important to be aware of. For instance, among the financial consequences of divorce lie tax considerations. Tax changes that come with divorce, for instance, can have a significant impact on post-divorce finances. While the potential for long-term tax consequences may be far from your mind, you should take care to keep these potential tax impacts in mind. Tax problems that develop incident to divorce can be complex, difficult to handle, and expensive to address.

Tax Consequences of Divorce

There are several issues incident to divorce that can have tax consequences. For starters, transferring property related to the division of the marital assets can have tax consequences. In general, a property transfer that results from a divorce is considered to be a non-taxable event for purposes of both federal income tax and gift tax. Under certain circumstances, however, you may want to consider waiving the tax-free treatment of these transfers. The creation of a taxable event means that it can be treated as a true sale after more than one year since the divorce’s finalization. This allows the purchasing spouse to share benefits from the increased cost basis on the property that has been sold/transferred.

You should also consider the value of tax carryovers when addressing issues incident to divorce such as division of the marital property. In negotiating the division of the marital assets and liabilities, there are things beyond the actual value of the asset or the amount of the liability that should be considered. There are capital losses, net operating losses, charitable deductions, and more to these transfers that have inherent value. Should you delay in discussing these windfalls, you may miss out on reaping the benefits of these tax carryovers.

One more tax consequence to consider in the division of the marital assets should arise if there has been a division of retirement assets incident to the divorce. Preparing required QDROs is essential. It will allow you to avoid tax consequences associated with early withdrawal of retirement funds.

If alimony may be awarded in your divorce, it can also be important to understand the tax consequences of alimony payments. Legislation passed in 2017 eliminated the ability to take a tax deduction for many expenses that were previously deductible, alimony payments included. Divorce agreements established in 2019 and going forward do not allow for tax-deductible alimony payments to be taken by the paying spouse. Furthermore, alimony payments are no longer taxable for the spouse receiving the payments.

If you have children resulting from the marriage, you and your spouse will also need to sort out who will get tax credits from claiming a child as a dependent. A child can only be claimed by one of you. While there is the presumption that the parent with primary physical custody of the child for most of the year is entitled to the tax credit, this may not always be the case. Sometimes, the non-custodial parent may be better situated to claim the credit. In some instances, a divorcing couple may want to alternate who gets the credit from year to year. If there is more than one child, one spouse may take credit for one of them and the other spouse takes credit for the other one.

Florida Family Law Attorneys

At Orlando Family Team, our team keeps in mind your best interests far into your post-divorce life. We are here to set you up for a successful future long after the divorce has been finalized. This includes taking things like tax consequences into consideration as we navigate your divorce arrangements. Contact us today.

divorce papers

What Papers Do I Need to File to Begin Divorce Proceedings?

Have you made the important decision to proceed with a divorce? A difficult and life-altering decision in and of itself, the road ahead can seem overwhelming. You may not even know where to begin. Here, we will go through some of the preliminary things you need to address at the beginning of divorce proceedings. Sometimes, getting started can be the most difficult part. We are here to help.

What Papers Do I Need to File to Begin Divorce Proceedings?

Divorce proceedings are initiated by one spouse, the “petitioner,” by filing the “Petition for Dissolution of Marriage. The other spouse will become the “respondent” in the action. The Petition sets forth the issues of the divorce that you want to and need to be addressed by the court. Issues incident to divorce include division of assets and debts, as well as child custody, child support, and spousal support. Should you and your spouse agree on division of the marital property and debt, neither of you are seeking spousal support, and you do not have any children under the age of 18, you may be able to file a “Simplified Dissolution of Marriage Petition.” Alternately, you may be able to go ahead and submit a settlement agreement to expedite the divorce process.

In addition to completing and filing the Petition for Dissolution of Marriage, a summons must also be completed and filed with the Petition. Check with your county to see if there are other required forms to file. Please note that the forms you use will vary based on your individual circumstances, such as whether you have children. Furthermore, you should be sure to verify that you are, in fact, eligible to file for divorce in Florida. Do you or your spouse satisfy the requirement that at least one of you have lived in Florida for a minimum of six months prior to filing? 

Be sure to wait and sign your petition and paperwork until you are in front of a notary as it is required that your petition be notarized prior to filing. There are often notary services available at a courthouse for a minimal fee. You will submit your signed and notarized petition and filing fee, or request for fee waiver, to the clerk of court. Service of process will need to occur. Your spouse may have accepted service and provided an “Answer and Waiver of Service” to be filed with the court. Should your spouse fail to do so, there are other ways of accomplishing service, such as having a local sheriff hand deliver the divorce petition to your spouse.

In addition to the petition, you will also need a significant amount of financial information and documentation to complete the financial affidavit. This usually needs to be completed and provided to your spouse within 45 days of the date of service. The financial affidavit should be completed in full and documentation regarding your income, assets, debts, financial accounts, and more should be provided along with it.

Florida Family Law Attorneys

As you prepare for your divorce journey ahead, the dedicated family law attorneys at Orlando Family Team are here to provide you with unwavering legal support. We are with you throughout the entire process, protecting your best interests every step of the way. Contact us today.

couple signing divorce papers

What Is the Difference Between Fault and No-Fault Divorce?

In the past, many states required a person to both assert and prove certain grounds in order to be granted a divorce. This is referred to as a fault-based divorce. Now, most states, including Florida, are no-fault divorce states. Let us take a look at the difference between fault and no-fault divorce and the consequences it can have on a person filing for divorce.

What Is the Difference Between Fault and No-Fault Divorce?

In contrast with a fault divorce, a person looking to obtain a no-fault divorce need not assert a fault-based ground for the divorce nor does he or she need to go through the trouble of gathering proof to substantiate the fault-based ground. Instead, the spouse filing for divorce need only assert that the marriage is no longer working and is beyond repair. In other words, the spouse is saying that the marriage is “irretrievably broken.” Florida does also allow a divorce to be granted when one spouse has been mentally incapacitated for a minimum of three years prior to the filing of divorce.

Some may feel that it is a kind of injustice that a fault-based reason is no longer front and center of the divorce. The spouse seeking a divorce may actually want that day in court to point a finger at a spouse and claim that his or her actions were the cause of the marriage’s downfall. No-fault divorce, however, was actually established and has grown in popularity among the states because it provides the spouses relief from not only having to rehash painful and deeply personal issues in court but also relieves the spouses of the burden of having to provide proof of such personal issues in order to obtain a divorce.

While a person seeking divorce need not assert and prove specific, fault-based grounds to obtain a Florida divorce, fault may have certain notable impacts on divorce proceedings. Adultery, for instance, may no longer be available as a fault-based ground for divorce, but it can still be relevant in addressing a number of issues during divorce proceedings. Did you know that adultery is actually considered a crime in Florida? Although it is very rarely prosecuted. Adultery can still have significant impacts on a number of important divorce-related issues. A spouse will, however, need to provide proof of such indiscretions. 

Adultery can actually impact child custody determinations. Judges are steered by the best interest of the child standard in rendering such decisions and will make decisions by weighing a number of relevant factors. While adultery is not specifically included as a relevant factor, a judge will be looking to evaluate and consider the relationship with another individual if there is any evidence of that person causing any detriment or harm to the child.

Adultery can also have potentially significant impacts on the division of marital property and debts. Florida is an equitable division state meaning that the courts will aim to divide marital property in a way that is fair but not necessarily equally. To do so, the court will again look at a number of relevant factors to make such a determination. One such factor will likely be whether either spouse intentionally wasted any marital assets. For instance, if a spouse misused marital assets in the pursuit or furtherance of an affair, then the judge may consider such a waste of marital assets and adjust the distribution of marital property debts and assets accordingly.

Florida Family Law Attorneys

Do you have questions surrounding the complex laws of divorce? Orlando Family Team has answers for you. Contact us today.

divorce

Can I Oppose Divorce?

When your spouse asks for a divorce, even if you might have expected it, your initial reaction may be not to accept it. You may want to try to work things out. Your spouse may not want to do this. You may be wondering whether you have the option of opposing the divorce or, somehow, blocking it from proceeding. The bottom line, however, is that you cannot prevent the divorce process from happening if your spouse wants a divorce in Florida. We will go into more detail here.

Can I Oppose Divorce?

There are only two grounds for divorce in Florida. A Florida court will grant a divorce based on irreconcilable differences or mental incapacity. “Irreconcilable differences” is the most commonly asserted grounds for divorce. As Florida is a no-fault divorce state, a spouse petitioning for divorce does not need to prove fault. This means that, as long as either of the two grounds are asserted and can be substantiated, a spouse can file the divorce complaint to get the process started regardless of whether his or her spouse objects to the divorce.

While you may not be able to stop a divorce from happening, you may still have some options. For instance, you may be able to file a counterclaim that requests the court order marital counseling to try and save the marriage. If there are children involved, the court may be even more amenable to such a request. If your spouse is vehemently opposed to counseling, however, the court may not agree that the marriage is salvageable and deny your request.

Should you refuse to accept or acknowledge the divorce proceedings and refuse to respond to the divorce complaint filed by your spouse, the process can still proceed without you. In fact, your spouse has the ability to file for and be granted a default divorce. This means that the divorce will be granted in your absence. This can have additional negative consequences of you not having a chance to advocate for yourself and your rights to things such as marital property.

In the end, opposing a divorce will not prevent your spouse from being granted a divorce if he or she is set on it. Opposing a divorce is, however, likely to make the process more stressful, more time-consuming, and more expensive. While you may not be able to stop divorce from happening, you can do your part to try and get the process over with reduced stress and anxiety. Florida allows both spouses to agree on divorce terms and the court will usually adopt the agreement in the final divorce decree. Reaching an agreement on your own with your spouse will help ensure you both have more control over the outcome of the divorce.

Without an agreement, the court may order mediation to try and encourage you and your spouse to reach an agreement on key issues of the divorce such as child custody. Should mediation fail, the court will be tasked with determining the terms of the divorce.

Florida Family Law Attorneys

Divorce can be one of the most trying processes anyone faces. At Orlando Family Team, we are here to support you in any way we can. Contact us today.

divorce court case

Can I Request Alimony After Divorce Proceedings Are Complete?

Even when divorce is for the best, it can make a person feel as though their whole life has turned upside down. Going from a two-person income household to two different one-person income households can also be a significant financial change for both former spouses. If a divorce was somewhat rushed and a spouse failed to really consider the financial situation he or she would be in after the divorce, or there was a substantial change in financial situations for a spouse after divorce for some other reason, that spouse may wish to revisit the alimony issue even after the divorce has been finalized. Is this, however, even possible?

Can I Request Alimony After Divorce Proceedings Are Complete?

Alimony, or spousal support, is a payment one former spouse makes to another former spouse in order to ease the notable, and often negative, impact on financial health that can come with divorce. Spouses may have built a life around a certain two-person household dynamic. For instance, one parent may have chosen to stay at home with the kids, forego professional opportunities, while the other spouse rose through the job ranks. Alimony helps to account for the two different income potential opportunities such spouses find themselves in after the divorce.

Alimony is one of the issues addressed in divorce proceedings. Sometimes, the spouses will come to their own agreement on alimony and the judge will more often than not approve the agreement and include it in the final order of divorce. Without an agreement, the court will address the issue of alimony. While the alimony issue is settled, in some sense, during divorce proceedings, it can be revisited later on. This, however, will require a spouse to show that he or she has experienced a change in circumstances that would merit revisiting the issue.

It is important to note, however, that you will not be able to seek a modification of an alimony order unless there is an alimony order in place. If you waived alimony or if the court did not award any alimony, the issue cannot and will not be revisited later on. This is why the divorce orders for some couples include even just a nominal amount of an alimony award. The nominal amount acts as a kind of placeholder. It keeps the door open on the possibility of revisiting and modifying the award after the divorce has been finalized. Both potential payor spouses and payee spouses should be aware of this possibility before agreeing to even a nominal alimony award as part of finalizing a divorce. That nominal amount can be modified later on should a spouse experience a change of circumstances that would merit such modification.

Florida Family Law Attorneys

Protecting and taking steps to protect your financial future after divorce can be a critical element of the process that is overlooked far too often. Talk to the dedicated divorce attorneys at Orlando Family Team about your options. Contact us today.

divorcing couple arguing

What Do I Do After My Spouse Asks for a Divorce?

Whether you have been expecting it or it comes seemingly from out of nowhere, having your spouse ask for a divorce can stop you dead in your tracks. You may freeze, you may be overwhelmed, and you may not know what to even do next. While some couples may be able to work through issues, others cannot. If your spouse has asked for a divorce, no matter what the reasons may or may not be, here are some steps to take in order to protect yourself, your family, and the best interests of you and your loved ones.

What Do I Do After My Spouse Asks for a Divorce?

The first step, and an important one that can set the entire tone for the often long road ahead, is to stay calm. Of course, the prospect of your marriage coming to an end most likely elicits some strong feelings and emotions, to say the least, but being overcome by these things is likely not going to serve you or your best interests. There is a great risk of saying things you cannot take back and will later greatly regret. Remain as collected as possible and focus on the concrete steps you can and should be taking right now.

Should your spouse want a divorce, but you want to try and work things out, talk to your spouse about the potential of seeking marriage counseling. Ask your spouse when he or she is planning to file for divorce, or if it has already been done. Possibly ask that you go to a counseling session, or a few of them, prior to any legal filings being made.

You may be headed for an amicable divorce or a contentious one. Either way, it is important to not only protect your best interests but to understand that even the most amicable of divorces have the potential to turn contentious on a dime. Before making any kind of agreement on issues central to the divorce process, such as child custody, child support, spousal support, or property division, consult with a qualified family law attorney. These are things that will have a profound impact on your post-divorce life. Talk to the attorney about any arrangements you are considering and the potential implications of them.

Avoid falling victim to any threats thrown at you by your spouse. When emotions run high, spouses may throw threats around concerning denying you access to your children and ruining you financially. Do not play into this hand. If the threats concern you, talk to your attorney about them and potential worst-case scenarios. It will likely put your mind at ease and keep you focused on the reality of the situation and not your spouse’s version of the events unfolding.

Additionally, take concerted steps to protect and preserve your financial wellbeing. This means frequently checking your credit reports. Some spouses will try to run up large bills while the divorce is pending or in the near future. Furthermore, considering protecting your savings by doing things like asking financial institutions where you hold joint assets with your spouse to require two signatures for any withdrawals.

Florida Family Law Attorneys

If your spouse has asked for a divorce, do not hesitate to contact the trusted family law attorneys at Orlando Family Team. We will take immediate steps to work with you regarding protecting your best interests. Contact us today.

attorney consulting woman about her business and divorce

Is My Spouse Entitled to Half My Business in a Divorce?

Under Florida law, there should be an equitable distribution of marital assets during a divorce. An equitable split means that the property should be fairly divided which is determined through evaluating several relevant factors. While an equitable distribution does not necessarily mean an equal split, it is common for marital assets to come close to a 50/50 split.

Marital assets, generally speaking, are those assets acquired during the marriage. Marital assets may include securities, tangible property, real property, and other property types. Even a business can be considered to be marital property. Because of this, many business owners have concerns that their spouse will get half their business in the event of divorce. While this may be a possibility, it is not actually what ends up happening.

Is My Spouse Entitled to Half My Business in a Divorce?

During divorce proceedings, all property of the divorcing parties will be categorized as separate or marital. Property that is deemed to be marital will be subject to equitable division. Some property can even be categorized as a combination of marital and separate. For instance, a business may be categorized as separate, marital, or both. This is due to the fact that a business may have been established prior to marriage but increased in value during the course of the marriage. Alternatively, one spouse may have contributed to the business in the form of time or other resources over the marriage and, therefore, at least a portion of the business may then be considered marital.

In order to be divided in whole or in part, a business must be valued during divorce proceedings. This is usually done through employing a professional such as a CPA or a larger organization like the National Association of Certified Valuators and Analyst. In order to value a business, there are various methods that may be applied. For instance, many valuation methods will use an ongoing value estimate. This means that the business will be valued in a way that assumes that it would continue to operate at a profit for a longer period of time. Alternatively, the liquidation method of estimation places a business’s value as being the total value of its liquid assets.

Once the business has been deemed to be a marital asset, separate asset, or both, and it has been valued, the court will determine how it should be distributed. Depending on how all of the other marital assets are distributed, among other factors, a court may divide business interests between the two divorcing spouses. This does not mean a 50/50 split and it is not very common to see a 50/50 split in regards to a business as a marital asset. Additionally, a spouse who founded a business will generally buy out the other spouse of any shares he or she may have received in a divorce.

Florida Family Law Attorneys

To learn more about how assets can be divided during divorce proceedings, talk to the knowledgeable attorneys at Orlando Family Team. We understand that distribution of the marital assets can have a substantial impact on your life and your financial future. Contact us today.

divorcing couple

Does a Divorce Have to Be Filed in the Same State as the Marriage?

There are certain formalities that must be observed in order to successfully file for divorce. Jurisdictional requirements, for instance, will dictate where you are actually able to file a petition for divorce. In order to establish jurisdiction over a divorce, meaning establishing the authority to hear and decide the case, most states have requirements, such as those relating to residency, that must be met before a divorce petition can be filed.

Does a Divorce Have to Be Filed in the Same State as the Marriage?

While there may be requirements that must be fulfilled prior to filing for divorce, Florida does not require that marriage have taken place in the state in order for a divorce to be filed. In fact, most states only have residency requirements in order for a person to seek a divorce in that state. These residency requirements can greatly vary between states. Texas, for example, requires that one spouse establish residency in the state for at least six months and residency in a particular county for a minimum of 90 days prior to filing for divorce. The State of Washington, on the other hand, has no such residency requirements. A person could move to Washington and file for divorce the next day.

Florida Statute Section 61.021 requires a spouse to have resided in the state for a minimum of six months before filing for divorce. The petitioner must be prepared to prove residency before a court will hear the case. Residency can be established by proving actual, physical presence in the State of Florida and proving an intention during that presence to make Florida your primary residence. Proof of making Florida your permanent home may come in the form of:

  • Your own testimony to this fact
  • Signing a lease or buying a home
  • Obtaining permanent employment in the state
  • Joining a church or other community organization
  • Getting a Florida driver’s license
  • Registering your vehicle with the state

Things may get complicated if two spouses live in different states. Hypothetically, either one of you could file for divorce if you meet state residency requirements. You may want to consider being proactive in filing in your state of residence before your spouse can so you can hopefully avoid having to travel out of state for any divorce proceedings. You may also, however, want to consider divorce laws of each state and how they may impact divorce proceedings and the outcome of the divorce.

Florida Family Law Attorneys

When you are looking to get a divorce, jurisdictional issues and other legal complexities are probably some of the last things you want to think about. For trusted legal counsel pertaining to divorce and divorce-related matters and logistics, talk to the dedicated team at Orlando Family Team. We know the weight our clients carry as they approach a new chapter of their lives and we are here to help lighten that load. Contact us today.

two wedding rings on gavel

What Common Financial Mistakes Are Made During Divorce?

Divorce may mark the end of a marriage, but it also marks the start of a new future. During divorce, there will be many issues decided which can have a significant impact on this new future. In particular, be on the lookout for things that will impact your financial security. During the divorce process, there are decisions being made that can have far-reaching consequences on your financial well-being. Prepare yourself for the road ahead. Here we will discuss some of the more common financial mistakes that are made during divorce in the hopes that you can take steps to avoid them.

What Common Financial Mistakes Are Made During Divorce?

First and foremost, one of the most common financial mistakes made during divorce is failing to address or failing to properly account for your expenses. During the divorce process, it is essential to take stock of your expenses and develop a budget based on this calculation. Build out your budget for as far into the future as possible. Figuring out where your money is going every month and what your estimated future expenses may look like will help you develop a realistic plan for how you are going to adjust going from what may be a double income household to a single-income household.

Many going through a divorce also fail to account for tax consequences. There will be a variety of tax consequences for you to consider as a result of a divorce. You may see a shift in your tax bracket and make the move to filing as single. Get a firm understanding of things like how spousal support may impact your taxes. You will also want to consider how distribution of the marital assets will impact your taxes.

Another potentially huge mistake people make during a divorce is failing to understand the continued liability attached to unsecured debt. Unsecured debt usually refers to consumer credit card debt. Should such debt be incurred during marriage, it is most often considered to be a shared liability even if the credit card was only in one spouse’s name. During divorce, debts, including credit card debt, will be divided between spouses. Understand, however, that a credit card company can still come after you or your spouse for collection of this outstanding debt, regardless of how the debt was divided during a divorce. That is why it is often best to pay off all or as many debts as possible prior to the finalization of a divorce.

Last of all, do not fall victim to unrealistic expectations regarding your financial future. Take steps to plan out what financial resources you may and may not have in the long term. For instance, make a plan about what you are going to do when spousal support payments or child support payments end. Consider retaining a financial planner to help you with this as well as help you review any proposed divorce settlement agreement.

Florida Family Law Attorneys

At Orlando Family Team, we want to help set you up for a successful post-divorce life by protecting your best interests during divorce proceedings. Contact us today.

child custody

What Is Joint Custody?

One of the most complicated aspects of divorce, emotionally, mentally, and logistically, is the issue of child custody. Custody will significantly contribute to defining your post-divorce family time and structure. The laws surrounding child custody can be complex and confusing, but understanding them can be critical to helping you understand this part of divorce and what your rights are during the process and beyond.

Overview of Joint Custody

Child custody actually refers to both legal and physical custody, which are two different, but related things. Legal custody is that authority granted by the court for a parent to make decisions regarding the child’s upbringing, including decisions pertaining to the child’s health and education. Legal custody can also involve the right to determine what religion the child will be raised under in addition to what schools he or she will attend and what medical treatment he or she will receive or not receive.

Physical custody, on the other hand, refers to the right granted by the court for a parent to have his or her child live in his or her home. In other words, it is the right of a parent to have the child stay with him or her as well as including visitation rights. Physical and legal custody are both addressed by the court. In Florida, the courts tend to significantly favor joint custody, in the absence of extenuating circumstances such as a history of abuse, so that the child can benefit from both parents playing an active role in his or her life and upbringing.

Joint custody, in the legal custody sense, will mean that both parents will have the right to input regarding decisions impacting the child’s development. In other words, joint custody will essentially mean that the parents will have to cooperate and work together in order to make choices regarding decisions impacting the child’s development. It is in the interest of both spouses to try and make this collaboration successful. If one parent should violate joint legal custody by circumventing the other parent and making a decision without his or her input, the other parent may take the problem to court, which could be time consuming as well as expensive.

With regard to joint physical custody, physical parenting time with the child will be determined by the court depending on a number of different factors. At the center of joint physical custody is the parenting schedule which will set forth when each parent will have the child with him or her. The parenting schedule will develop based on factors such as the child’s school and activity schedule as well as the work schedules of both parents. With joint physical custody, both parents will have a significant amount of in-person parenting time. Commonly, a court will have a child split the week in half between the households of the two parents.

It is important to note that in Florida, the Court no longer generally refers to these types of issues with the terms legal or physical custody. Instead, over time, legal custody has now developed into what the courts now refer to as Parental Responsibility and physical custody is now referred to as timesharing. This is an important distinction to understand when going through a “custody” case.

Orlando Child Custody Attorney

Do you have questions about child custody? Talk to the knowledgeable attorneys at Orlando Family Team. Contact us today.