Decisions related to finances during and after a divorce can be extremely difficult and often combative issues among couples. Property division is a common factor to consider during the divorce, while financial stability is typically a major concern for many post-divorce.
Financial Considerations during and after Divorce
- In some situations the marital assets are divided, allowing each spouse to obtain a percentage of the marital property. An alternative to dividing the marital assets is for one spouse to receive spousal support in the form of alimony. According to division of property laws, the marital assets that a spouse retains in a settlement are not considered taxable income (although taxable income may be generated when those assets are later liquidated) . By contrast, monthly alimony paid by a spouse is tax deductible by the spouse paying it and taxable income to the recipient. The spouse receiving alimony should plan to make quarterly estimated federal and state tax payments because alimony is considered taxable income to them.
- The court uses guidelines to determine child support Although child support helps maintain daily living costs, such as shelter, food, and clothes, there are additional expenses that children require. It is important for parents to discuss how these costs will be divided. One recurring issue is how medical expenses are not reimbursed by insurance to be paid; as medical insurance has large copays and deductibles this becomes more significant. Divorcing couples need to decide who will claim the children as dependents on their tax returns. It is also important to plan for impending costs, such as who will fund college, to help reduce the possibility of future arguments.
- It is important to consider who is named the beneficiary on each individual’s life insurance policy. If the beneficiary is not the person intended to receive the death benefit, it is crucial to change the policy so it reflects the correct person.
- During the marriage one or both spouses may have contributed to their individual retirement plans. A qualified domestic relations order (DRO) may need to be implemented if the court awards a portion of ones spouse’s retirement plan to the other spouse.
- After the divorce is final, individuals should consider crafting a new estate plan. This could include such things as a will, a living will, and a healthcare power of attorney. An estate plan also allows the court to consider an individual’s written desires related to their children during a contested situation.
Bel Air Divorce Lawyers at Huesman, Jones & Miles are Knowledgeable in all Matters of Maryland Divorce
At Huesman, Jones and Miles, LLC we understand the turmoil that can be created during the divorce process. Our Bel Air divorce lawyers will work hard to find reasonable resolutions to your issues. The Maryland family law firm of Huesman, Jones & Miles is conveniently located in Hunt Valley to serve clients throughout the Baltimore area including those in Baltimore County, Harford County, Carroll County and Howard County as well as residents of Towson, Bel Air, Columbia, Westminster and Essex. To schedule your free confidential consultation today, call us at (443) 589-0150 or submit an online inquiry form.