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Glen Burnie Family Law Blog

Changes to tax laws will have major effect on alimony

The recently enacted Tax Cuts and Jobs Act is likely to affect most Maryland residents and others around the country. The law changes how child credits, standard deductions and many other items are considered when doing one's taxes. One significant change regarding alimony will have a major impact on those going through a divorce after the end of 2018.

The new tax law will eliminate a deduction that has been in place since 1942. Beginning in 2019, the person making alimony payments will no longer be able to deduct the amount on his or her tax return. Those receiving payments will not have to pay taxes on the alimony. This essentially reverses the provision set forth 76 years ago.

Marital property division tips

Marital property acquired during a divorce is usually divided up equally between each spouse during a divorce. However, figuring out how to divide everything fairly can seem overwhelming and confusing for many. Maryland couples who are currently navigating through the property division aspect of divorce are advised the law and what is considered acceptable during the process.

Reaching an agreement can be a challenge for many spouses during the division process. A mediator may be necessary -- or required, depending on the state -- in order to work through potentially messy situations before entering the courtroom. Once the courts become involved, a judge will view all assets acquired during the marriage as property and divvy up according to the law. Should any hidden assets be found, legal consequences such as credibility and loss of previously granted assets will be issued along with payment of any legal expenses uncured while uncovering the hidden assets.

Importance of prenuptial agreements

Prenuptial agreements can be complicated as well as physically and mentally straining. They involve honest communication from both parties about the future of a relationship, and can also provide a financial road map to abide by throughout a marriage. When preparing to marry, Maryland couples are advised to understand the reasoning of prenuptial agreements before tying the knot.

Prenuptial agreements can sometimes bring up harsh feelings, especially when both parties are on separate pages. In reality, it can be a great opportunity to get on the same page when it comes to planning your financial future. Some pros of prenups are they can preserve family ties and inheritance, personal and business assets accumulated before marriage are protected, and also control what assets are given to children or other family members in the event of death.

Determining alimony

When going through a divorce, the court considers many aspects such as child custody and support, property division, and the stipulations of any prenuptial agreements that may exist. In some cases, a spouse may be required to provide spousal support to the spouse who earns less after the divorce in order to eliminate any unfair economic limitations. Before requesting alimony, it is important for Maryland residents to understand how these payments are calculated.

Before awarding alimony, the court will consider several factors such as how long the couple was married, the standard of living they shared, and the emotional and physical condition of both spouses. In most cases, alimony is awarded to the spouse who supported the family in a nonfinancial way while putting his or her career on hold. Alimony payments are generally used to help build the spouse's financial independence.

Preparing for a child custody hearing

Entering a court room can feel eerie, especially when the custody of a child is at stake. Despite the constant clashing throughout the divorce battle, most parents dread this aspect and the detrimental effect it may leave on their child or children. Knowing how to adequately prepare for a child custody hearing can hopefully lessen the emotional blow and allow Maryland parents to prepare for the best possible outcome.

Having the right information not only aids in the case preparation, but it also allows the parent to enter the child custody hearing with confidence. Before entering any courtroom, it is advised to have all arguments prepared along with possible answers to any questions the judge may ask. It can also be helpful to bring an entourage of people such as babysitters, teachers or coaches to help support your claims of being a five-star parent.

Prenuptial agreements are not always a bad thing

Marrying the love of your life brings overwhelming feelings of excitement and happiness. You are finally becoming a family and joining as one. Sadly, not every love story has a happy ending, and sometimes marriages fall apart, so it is important for couples to review their assets before saying "I do." With prenuptial agreements, Maryland couples are able to determine the fate of their assets, such as money or property that either person is bringing into the marriage, along with any major financial obligations.

The term "prenuptial agreement" tends to make many couples cringe and is also the beginning of many potentially awkward conversations. Truth be told, they're not always a bad thing. As the big day approaches, couples should evaluate their individual finances and assets and decide together if a prenuptial agreement is needed.

Including retirement plans during the property division process

While few people feel exuberant during a divorce, most feel flat out exhausted. The divorce process is far from a simple walk in the park, especially when property division is involved. Along with the many other assets obtained throughout a marriage, Maryland couples should also include any retirement plans during the division process.

One of the most valuable assets an individual can own is a retirement savings plan, and unless a prenuptial agreement states otherwise, an ex-spouse may be entitled to part of the balance. It may be wise to obtain a Qualified Domestic Relations Order to protect your interest and provide instruction as to how the pension plan will be paid out. A QDRO is obtained through a court order and provides needed protection that a marital settlement agreement does not provide with respect to possible taxes and penalties.

Requesting back and retroactive child support payments

For Maryland families facing divorce, child support is often a touchy, yet necessary issue to resolve. The hardest part is determining which parent will maintain custody while the other is ordered to pay child support. While child support is ordered by the court, parents should be aware of any other alternative child support arrangements.

Failing to pay child support can lead to massive penalties, including possible jail time for the guilty individual. If a person is jailed, the ability to receive an income becomes impossible; therefore, more common penalties may be issued. Those penalties can be passport denial, revoked driver's license, wage garnishment, liens on any real estate or vehicles and frozen bank accounts. Ensuring timely payment of any child support is crucial to preventing any of these possible penalties.

Big changes re alimony tax deductions

Maryland couples who have previously battled through a divorce know that the process is stressful, complicated and time-consuming. For spouses who earn less than their partner, alimony may be granted to address any unfair economic circumstances after a divorce. Appealing for alimony, or spousal support, is sometimes necessary but can also add more stress to an already uncomfortable situation. Unfortunately, Maryland couples in the midst of divorce proceedings may face some confusion with regard to the impact of the new tax laws on alimony.

Just recently, the U.S. Congress approved tax reform legislation that is billed as providing most Americans with a significant tax break. Although this sounds great, it will bring some mighty big changes for future divorce proceedings. The new law does away with the tax deduction granted to those that pay alimony, as well as the requirement for those receiving alimony to report it as income on their tax returns. The change in the law is not expected to be applied retroactively.

Approaching a child custody hearing

Putting the needs of a child first takes high precedence in divorce proceedings for Maryland parents who share children. The last thing children should be exposed to during the divorce of their parents is the ramifications associated with a child custody battle. Having the right information not only aids in the case preparation, it also allows the parent to enter the child custody hearing with confidence.

Many factors are considered in the court's decision, such as the parents' wishes, which parent is the main provider, current custody arrangements and the existing relationship between each parent and the child. It's important for both parents to be supportive and respectful of each one's relationship with the child as well. Courts will also consider the age, any special needs or any other related factors for each child.