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Taxes, though not often discussed, are a critical element in almost every divorce, and they are especially important when alimony may be owed. Thanks to the new Tax Code and Jobs Act, everything about alimony and taxes will change, come the start of 2019. Find out how and discover what it could mean for your Illinois divorce in the following sections.
The New Tax Law and Divorce - An Overview
While the new tax law may not affect all divorces, it is likely to have a significant impact on cases involving alimony. Parties who pay support and complete their divorce after December 31, 2018, will no longer receive a tax deduction at the end of the year, and receiving spouses will no longer be required to pay taxes on the alimony they receive. At first glance, this might seem like a benefit for the family, but appearances can be deceiving.
Taking Money Away from Families
Divorce can be a messy and complex process, especially when there is a substantial amount of money involved. Sadly, cryptocurrencies, such as Bitcoin and Ethereum, are further complicating divorce. Some people worry that the digital currencies have also created a bit of a vacuum, where assets can be hidden and extremely difficult to trace, which could lead to an unfair distribution of the marital estate. Thankfully, there are some ways to mitigate the risks. Learn more in the following sections, including how the assistance of an experienced divorce attorney can help improve the outcome of your Illinois divorce case.
When Spouses Use Cryptocurrencies to Hide Marital Assets
Asset hiding is not a new issue in divorce, but cryptocurrencies are an entirely new beast. Like an offshore account, they can be difficult to trace, especially when the owner has transferred them offline to a USB device. To determine which transactions have taken place, digital forensic experts can mine a party’s email account. From there, the uncovered assets can be valued, added to the marital estate (if applicable), and equitably distributed.
Divorce can have a significant and negative impact on the financial aspects of one’s life, especially if they are financially disadvantaged (a non-earning spouse). Thankfully, these parties are often owed a settlement, which they are permitted to use however they see fit. Perhaps one of the most financially savvy moves is to invest the money, rather than spend it. Learn more in the following sections, including how an experienced divorce attorney can improve the outcome of your Illinois divorce.
Investing Can Provide a Lifetime of Income
Disadvantaged parties in a divorce are deemed as such because they lack sufficient income. Some also lack the health, skills, or training to obtain gainful employment right away. Such issues may entitle them to a settlement in their divorce, but it can also place parties at risk for divorce-induced poverty - especially if they fail to plan for the future. Some disadvantaged parties place themselves at even further risk by trying to maintain the same lifestyle that they enjoyed prior to the divorce. Sadly, that can cause them to run through their resources faster than anticipated, and often before a safety net has been created.
Science has long shown that children are vulnerable to experiencing maladjustment issues, such as anxiety, in divorce. How can you detect such issues in your child, and how can you help them cope? Learn more in the following sections, including how the aid of an experienced family law attorney can improve the outcome of your case, thereby decreasing the odds that your child will suffer from anxiety during or after the divorce process.
Understanding the Prevalence of Anxiety in Children of Divorce
Any child can experience anxiety, but the risk is low for the general population. Traumatic life events, including divorce, can increase a child’s risk of developing an anxiety disorder. In fact, in one study that compared the rate of generalized anxiety among divorced Spanish children between the ages of 8 and 12 years of age against the same-aged children who had not experienced a divorce, the rate of generalized anxiety disorder among the children of divorce was notably higher. As such, parents are encouraged to mitigate against the factors that may cause anxiety in a child that is experiencing a parental separation or divorce.
Under Illinois state law, children are entitled to financial support from both their biological parents, regardless of whether the parents were ever married. However, that support is not unlimited. Instead, the state has a specific formula that is used to determine what a paying parent’s support obligation should be. Learn more about the way that child support is calculated, and discover how to determine when the aid of an experienced attorney may be beneficial for parents who are engaged in an Illinois child support case.
Is Child Support Owed?
Before an order for child support can be entered, the courts must first determine if support is owed. This starts with establishing parenthood over the child. In a marriage, this is presumed for both the mother and the father. If the parents were never married, the mother is usually presumed to be one biological parent, but the father must either acknowledge paternity, or they must request a paternity test to verify that they are the child’s biological parent. From there, the courts will examine other factors, such as the income of both parents and the amount of time that each parent spends with the child, to determine the amount of support that may be owed.
As the world becomes more digital, so do the various aspects of our lives; that includes separation and divorce. In fact, there are several phone applications that promise an easier way to manage, coordinate, and track things like support payments, parenting time schedules, and documents. There are even applications that allow you to complete the entire divorce process, right from your smartphone – but can you really trust an app with such a sensitive and complex matter? The following explores the answer to this question, and it provides you with details on how to reduce the risk of costly oversights and mistakes while navigating through your divorce.
Divorce Helper Applications
Divorce helper applications, or those that are designed to help you track, manage, or coordinate certain aspects of your divorce, are rarely a cause for concern. In fact, many divorcing parties have praised these technological tools, saying they stayed better organized throughout the entire divorce process. We recommend apps that offer real-time adjustments and notifications for things like schedule changes and document sharing to ensure you get the most out of your app.
Discussing a legal document that outlines your divorce before you are even married may not seem like the most romantic move. However, experts are now encouraging couples to talk about their finances, as well as the possibility of a divorce, before they wed. Part of this is due to the increasing prevalence of divorce and second marriages among older adults, and the intentional delay of marriage among millennials. The increase in entrepreneurship and small businesses are yet another factor.
Thankfully, a prenuptial agreement can help in these situations (as well as others). Learn more in the following sections, and discover how an experienced family law attorney can help you plan for the worst possible situation without it tainting the joy of your impending marriage.
Step Out of Your Emotions
Falling in love, planning a wedding, and anticipating all that the future may hold can be exciting and it may even leave you feeling a little reckless. Just remember that you will be stuck with your spouse’s financial habits when reality sets in. If they happen to contradict yours (perhaps you prefer to live and spend for the now but your spouse likes to save for the future), that could lead to some conflict down the road. Be rational about it now, while you are still in the blissful stage of your relationship – and be willing to have the hard conversations before you have fully committed to a lifetime of financial habits that drive you insane.
While it is possible to take a divorce case to litigation, settlements are often more favorable for all parties if a settlement can be negotiated. Sadly, divorce often involves a lot of deep and painful emotions, and that can cause people to act in ways that are unexpected or out of character. Money and child-related matters can also turn what might have been an amicable situation into a contentious one, especially if one or both parties try to use hard bargaining tactics to get what they want in the divorce. Learn how to reduce the risk of such issues in your case, thereby increasing your chances of obtaining a favorable settlement in an Illinois divorce.
Leave Your Emotions Out of the Process
It can be difficult to separate your emotions from the legal aspects of your divorce, yet doing so is essential if you hope to successfully navigate the negotiation process. That is because you cannot make rational decisions about your assets or other aspects of your case if you are viewing them through an emotional lens and placing a non-monetary value on them. Most divorcing parties find that therapy and other support systems, such as family and friends, are a great way to process the emotions they experience during the divorce process so that they do not affect the proceedings. Self-care can also be helpful in counteracting negative or painful emotions.
Divorce is a legally complex process with numerous pitfalls and challenges, which is why parties are advised to each seek their own legal counsel. High asset divorce – a case in which one or both parties has a high net worth or has a higher-than-middle-class income – only further complicates matters. Learn more about the risks associated with a high net worth divorce and how to mitigate against them, and discover how an experienced attorney can help protect your interests and financial future throughout the entire divorce process.
Accurate Valuation of the Marital Estate is Critical
Valuation of the marital estate is a critical element in every divorce, but in a high net worth divorce, the importance is further heightened by the complex (and sometimes inconsistent, fluctuating, or changing) assets involved. Keep in mind that many of the assets may not even be in you or your spouse’s name. Instead, they may be listed under the name of a company, or they may be found in overseas accounts, where tax breaks may be more readily available.
When deciding whether or not to file for Chapter 7 or Chapter 13 bankruptcy, often the choice boils down to the immediate finances. Chapter 7 bankruptcy usually requires a higher upfront payment, typically around $1,000 versus Chapter 13 may offer $0 deposit. Throughout the duration, Chapter 13 is more expensive, approximately $3,000, but many debtors are unable to produce the higher initial costs for the alternative, and Chapter 13 often allows the inclusion of the fees in the repayment plan. Unfortunately, for a significant portion of the population, this decision is costly with lasting effects on the credit for only short-term relief.
Debtors Below The Poverty Line Are More Susceptible to Relapse
The low initial costs of Chapter 13 bankruptcy is alluring for many individuals struggling to make ends meet. Armed with the dream of living in a home without collectors calling around the clock and having some money left over at the end of the month, many debtors turn to debt relief options. However, not all bankruptcy options are equal. Chapter 13 operates on a repayment plan, typically about five years in length. So long as payments are kept up to date, collectors are unable to harass clients. However, for the population living under the poverty line and struggling to make ends meet, about half make it through the first year, let alone five years, and the calls begin once more.
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