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Glen Burnie Family Law Blog

High asset divorce: Don't forget to update estate plans

The topic of divorce was regularly in the year-end news for Maryland and elsewhere around the country. Many reports centered on the changes to how alimony would be treated for tax purposes, starting in 2019, and the possible surge to get divorces finalized before the end of 2018. Whether a couple's divorce is final or the proceedings are just starting, experts remind individuals of the importance of updating estate plans. This is particularly critical for a couple in the midst of a high asset divorce.

Estate plans should include details about how assets will be distributed after one's death. They also frequently establish health care directives or end-of-life decision-making capabilities should someone become incapacitated. Getting a divorce has a major impact on these decisions and plans need to be reviewed and updated accordingly.

Pet custody issues now addressed in many prenuptial agreements

For most Maryland residents and others around the country, pets are often viewed as family members. These relationships with pets can become quite complicated when a couple decides to get divorced. Pet custody issues are now addressed in many prenuptial agreements. Also, several states have changed or proposed legislation that will change the way pets are viewed in divorce deliberations.

Traditionally, pets were treated as property when determining custody. For example, if the pet had been owned by one spouse prior to the marriage, the pet would belong to that spouse after a divorce. If the couple acquired the pet together during the marriage, the guidelines for property division would apply. However, many courts are handling pet custody decisions in a similar manner as child custody.

What will happen if I don't pay my child support?

Life changes are inevitable. An unexpected job loss, medical emergency or other financial hit could severely impact your financial stability, making it difficult to not only keep up with your bills, but also your court-ordered support payments. However, you should not stop paying child support even if you are having financial troubles. 

Child support is a court-ordered payment in Maryland, so you must obtain a modification of the original order to have your payments lowered or changed. If you do not get a modification and instead simply start paying less or not at all, you will fall into delinquency. Failing to keep up with payments might also mean that your child will not benefit from the payment of necessary financial support. 

Property division: Federal appeals court involved in QDRO issue

Maryland couples and others around the nation have a plethora of decisions to make when they decide to get divorced. Property division tends to be near the top of the list of issues to address. Certainly, how to divide retirement funds is one of the more complex questions in the divorce proceedings. Though there are specific governmental requirements regarding division of these accounts, there is still room for interpretation of the regulations. A federal appeals court recently became involved in a case regarding dispensation of a divorced couples' life insurance benefits.

A couple that divorced in 2006 had included in their agreement that their employer life insurance policies would be maintained until their daughter turned 18 years old or graduated from high school.  At the time of the agreement, the husband had a policy through his employer that named his uncle as beneficiary. He failed to name his daughter as beneficiary before his death in 2013.

Some states considering shared parenting laws for child custody

Couples in Maryland or elsewhere who have gone through a divorce may understand that the Christmas season can be particularly rough when there are children involved. It can be difficult to arrange the celebrations of multiple families while taking the specified visitation schedules of the parents into account. Regardless of the time of year, child custody is of utmost concern to many parents, and reports indicate support is gaining for a newer type of arrangement.

Traditionally, courts have often granted custody to mothers, while leaving fathers with more limited visitation rights. In many cases, children would spend every other weekend with their fathers and would also rotate spending major holidays with them. However, studies have shown that it is more beneficial for children to spend a more balanced amount of time with each parent, rather than the majority of time with one.

New tax law regarding alimony goes into effect in 2019

Many Maryland couples and others all around the nation will soon be ringing in the new year on Jan. 1, 2019. While a time for celebration, it will also be a time for change for those divorcing couples who have yet to make alimony or spousal support arrangements. A new law will go into effect that day that has major implications on the taxation of alimony payments prospectively.

A law that is over 70 years old has required those who receive alimony to pay taxes on it. Also, the person paying alimony was allowed to deduct the amount from his or her taxable income. The new law will reverse this, taking away both the tax deduction for the payer and the tax burden for the recipient.

Gray prenuptial agreements on the rise as more older couples wed

Statistics from a leading research company have shown that older Maryland couples and others around the nation are divorcing at a rapid rate. While the divorce rate for all couples is actually decreasing, it has doubled for couples over age 50 and even tripled for those over age 65. The term "gray divorce" has been coined to acknowledge this trend. With gray divorces increasing, there has also been an uptick in the number of gray prenuptial agreements being sought.

Many seniors thinking about remarrying are coming into relationships with children from previous marriages, their own property and retirement accounts. They want to protect these assets as they enter into another marriage in the event a divorce may occur in the future. A prenup would also be instrumental in protecting certain assets for one's children if an individual died after remarrying.

2019 will bring changes to the way alimony is taxed

The Tax Cuts and Jobs Act was passed roughly a year ago and several changes were instituted at the beginning of 2018 for Maryland taxpayers and others around the country. However, one significant revision will be effective until the year is over. Alimony will be taxed differently after the new year and this could cause a rush of activity to get divorces finalized before year end.

Currently, the spouse paying alimony is allowed to deduct that amount from his or her taxable income. The receiver, on the other hand, is required to pay income taxes on the alimony. The new legislation will reverse this, both eliminating the deduction on alimony payments and the tax on the amount received. The tax burden has effectively been shifted from the person receiving alimony to the individual paying it. Supposedly, the government will realize more income from taxes as a result.

Couples cite various reasons for seeking prenuptial agreements

Prior to getting married, most Maryland couples and others around the country have countless issues to discuss. Not only do they have to decide every detail of their wedding ceremonies, they also often ponder what their lives will be after they tie the knot. More and more couples are also adding prenuptial agreements into the mix of topics prior to the wedding date. Over half the matrimonial lawyers in a recent survey stated that they had witnessed an increase in couples requesting prenups.

While the reasons for couples seeking prenuptial agreements vary, many cite the need to protect the finances that they are bringing to the marriage. Some individuals have already amassed an amount of savings, property or business interests and want to safeguard those in the event of a divorce down the line. Others may have inheritances or family heirlooms that they do not wish to see divided in a property division decision by a court.

How does property division work in Maryland?

When getting a divorce, it is normal to want to walk away with one's fair share of marital assets. If a couple is able to work out their own property division agreement, the terms should reflect those wishes. If a divorce case goes to court, a Maryland family court judge will get to decide how property is divided and while the final a settlement should be equitable, it may not grant each party what they want.

Maryland is considered an equitable distribution state. That means that all marital property is up for grabs when a couple chooses to divorce but it will not necessarily be divided in an even 50/50 split. There is some flexibility in how property is divided. For example, say one party wishes to keep the marital home, the other party may get a greater share of monetary or physical assets that equal the same value of the home. The goal is to allow each party to leave the marriage with roughly an equal share of assets.

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