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Finance and Divorce | Johnsen Wikander P.C. West Michigan Divorce Attorneys

Finance and Divorce

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Divorce can be unexpected, catching either spouse off guard and unprepared for the issues to come. In many relationships one spouse may handle the couples finances, taxes, and other administrative responsibilities, leaving the other spouse completely unprepared to assume those responsibilities after their relationship has ended.

Although the couple’s marital assets and debts may be equally distributed through alimony (spousal support) and child support, a newly divorced spouse may not have the experience to assume control over their own bills, taxes and insurance.

1. If you are facing divorce, it’s important to consult with an experienced divorce lawyer as soon as possible to avoid some of the more common financial problems such as the following:

2. Banking – Checking and savings accounts should be created as soon as legally allowable. Consult with your attorney before removing either spouse from a joint account to avoid legal issues later.

3. Insurance – One spouse will probably take over their own car, renters, homeowners, or health insurance. It’s important to consult with your insurance agent before proceeding with any changes in coverage.

4. Credit Cards –It may be necessary for one spouse to apply for a card in their own name. The other spouse may need to remove additional users from their account and create a new one.

If the card must be used for expenses while the divorce is pending, it may be best to remove the second user from a joint credit card. It’s important to stay protected from any credit card debt incurred by your spouse while a divorce is pending.

5. Financial Management – Find a good accountant and advisor who can counsel you on unfamiliar issues such as taxes and investments.

6. Taxes – If one spouse has been primarily responsible for filing joint taxes, find an accountant who can help navigate important tax issues. It’s better to pay a professional than to risk mistakes and potential penalties.

Aside from the challenges of alimony (spousal support), child support, and the division of assets. There are many other financial implications that must be addressed. If you’re facing divorce, please contact the experienced West Michigan attorneys at Johnsen Wikander and let us help you through your most difficult time.

Divorce and New Tax Laws in 2019

Divorce and New Tax Laws in 2019

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With last year’s Tax Cuts and Jobs Act set to take effect in 2019, many West Michigan couples have rushed to finalize their divorces before the end of the year. The adjustments to the U.S. Tax code, drafted in 2018, will implement changes, including the taxes and deductions related to alimony and spousal support payments.

In the past, the person making the payments was able to deduct the amount when filing their taxes while the person receiving the payments was taxed on the income. Under the new tax code, the payor no longer has the advantage of a deduction, and the recipient does not pay taxes on the income.

In previous years, the deduction may have dropped the payer to a lower tax bracket, incentivizing many to pay spousal support. This major change has driven many people, who may have already been considering divorce, to file before the end of the year.

Though the real impact made by the new tax laws remains to be seen, some professionals argue that the shift in tax liability may eliminate some opportunity for negotiation. By removing the deduction, the spouse responsible for writing the alimony checks may have more reason to push for lower payments. With the deduction no longer providing a potential tax advantage, the payer may fight harder to limit their responsibility.

In the past, the month of January has often seen an increase in divorce filings, since couples who were already struggling with their relationship often waited until the new year to file for divorce to reduce the negative impact on the holidays and related events.

However, the opposite will likely be true for divorce filings in 2019; January may bring a reduction in the number of cases filed since the push to beat the clock, and the new tax guidelines, will likely have run its course. Grand Rapids divorce attorneys, judges, and other legal professionals across the country may get a reprieve from the wave of new cases once the current rush is over.

If you are considering divorce now or in 2019, please consult a divorce attorney before taking your first steps. In Grand Rapids, please contact the experienced attorneys at Johnsen Wikander and let us help you through your most difficult time.

New Tax Laws May Affect Alimony Settlements

New Tax Laws May Affect Alimony Settlements

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The end of a marriage is one of the most difficult and stressful events anyone can go through. Many people have compared their divorce to the death of a loved one or the loss of a limb. Divorce is hard but entering into divorce proceedings unprepared will only make matters more difficult.

With the extra layer of uncertainty provided by our current political climate, it is extremely important to consider the effects that changing laws and tax codes may have on the outcome of a divorce. Any legal changes that affect personal finances, and how they are handled during and after a divorce, can be especially impactful.

Currently, proposed tax changes will end a law that has been in place for more than 70 years. Since 1942, alimony payments have been considered a deductible expense on personal tax filings. At the end of 2018, that law will be cut from the books.

The impact of such cuts on West Michigan couples could be far-reaching. Aside from the increase in cost to the payer, alimony payments from divorce may now become an even more hotly contested issue in divorce cases since it is likely to push either side in the case to disagree with the amount requested.

For the payer, the law means they will carry more expense for years to come. For the payee, the law could mean that they get a lower settlement in their divorce case, potentially affecting their quality of life. This major change has the potential to drive divorce rates up for the remainder of 2018.

For couples already struggling to find even ground in a rocky case, contesting an alimony request could add one more layer of turmoil and difficulty to their divorce proceedings. Before taking steps in any direction, spouses considering divorce should educate themselves on the changing laws and the potential effects.

Anyone considering divorce in 2018 should look to an experienced divorce lawyer for assistance and to become educated regarding the outcome of their decisions. Couples could easily end up fighting over a decision that may have been clear before changes to current laws. This could affect their ability to maintain a civil relationship once their divorce is final, which is an especially disruptive outcome for couples with children.

With any divorce, both parties should consider the importance of education and preparation. Please contact the experienced West Michigan divorce lawyers at Johnsen Wikander for help in understanding current and upcoming changes and how they could affect your case.