Month: May 2013

Divorce to Save Taxes? The Marriage Penalty Tax

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On behalf of Ronald H. Kauffman, P.A. posted in Divorce on Friday, May 31, 2013.

Being married comes with joys, sacrifices, tax penalties and . . . wait, tax penalties?

The marriage penalty is the situation where a married couple pays higher income taxes than they would have paid if they were un-married and filed individual tax returns. Should you divorce to avoid this penalty?

The new American Taxpayer Relief Act of 2012 sort of reduced the marriage penalty by making permanent the Bush-era expanded standard deduction and the expanded 15% bracket for joint filers.

But for high income earners, the new law raises taxes on couples making more than $450,000 and individuals making more than $400,000. As it turns out, some couples are discovering they could save over $25,000 a year if they divorced.

Think about that for a second. If a couple could save over $25,000 a year on their taxes, they could take a Celebrity Cruise to Italy, ski Deer Valley, put a little cash away towards Penn, and still have some mad money to spend just by divorcing and turning their marriage into a long term relationship.

There are a lot of risks though, known and unknown. I would encourage anyone – before they even thought about speaking to their spouses – to think about a few things:

  • The impact on your relationship. I don’t know of a good way to ask for a divorce: “Honey, I want a divorce. No, no wait, come back, it’s to save big bucks . . . really!”
  • There is no fake divorce. Once the court signs the final judgment of divorce, you are divorced. Once you’re divorced, your Ex may find someone who thinks marriage is more valuable than 5% adjusted gross income.
  • IRS rules regarding your filing status have something to say. IRS publication 504 warns that if you obtain a divorce just to file as unmarried with the intent to remarry the next tax year, you have to file as married individuals.
  • State law. All no-fault states have minimum requirements for getting a divorce. Florida, for instance, requires at a minimum that your marriage be irretrievably broken before you can get a divorce.

In addition, there are estate planning issues, retirement and social security complications, and many other issues besides the mere tax savings.

Most people who marry do so forever, and with the sincere intention of honoring their vows. Is the money worth it?

A Presumption of Equal Timesharing: Pros and Cons

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On behalf of Ronald H. Kauffman, P.A. posted in Timesharing/Visitation on Wednesday, May 29, 2013.

Florida divorce has tons of legal presumptions. This month Governor Scott vetoed a Senate bill that created another one: a presumption of equal timesharing.

Fifty-fifty timesharing between parents sounds like a great idea, and there are strong arguments for and against a presumption of equal timesharing. Here are some of the pros and cons:

Pro

  • Each year, cases are tied up in expensive litigation to establish a right to timesharing that, had the parents not been divorced, they would automatically have.
  • If we presume children should spend equal time with both parents, it would encourage Florida’s existing policy of frequent contact with both parents after divorce.
  • Equal timesharing reduces the amount of custody litigation that takes place in Florida, sparing children from being dragged into the middle of bitter custody battles.
  • Equal timesharing puts the burden on the parent opposing equal timesharing, changing the dynamics of custody litigation.
  • A presumption of equal timesharing could discourage people from engaging in custody litigation that serves no purpose other than to cause unnecessary expense, and significant unnecessary stress on the other parent.
  • Equal timesharing is consistent with Florida’s existing no-fault concept.

Con

  • Equal timesharing is unworkable in many families;
  • A presumption of equal time can never be implemented;
  • The presumption of equal timesharing creates a uniform rule where the flexibility of ‘the best interest of the child’ is needed.
  • An equal timesharing presumption won’t lead to an increase in the number of equal timesharing schedules;
  • Equal timesharing may force some children into arrangements that is not in their best interests, and focuses the court’s attention on the quantity of parenting time, not the quality of parenting;
  • A presumption in favor of equal time might replace the best interest of the child test in decision-making.

So, will equal timesharing save children from custody battles, and lead to more time with both parents? Or is the presumption of equal timesharing just distracting courts from focusing on the quality of parenting and forcing them to only consider the quantity of parenting?

The text of Senate bill 718 can be read here.

Sex, Marriage and Taxes in court

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On behalf of Ronald H. Kauffman, P.A. posted in Marriage on Thursday, May 23, 2013.

Alright, this post is not as exciting as the title suggests. But, in March our highest court did hear arguments in the Defense of Marriage Act (DOMA) case, and that case has an interesting twist which could impact other divorce cases.

Edith Windsor and Thea Spyer were a lesbian couple in New York, and married in Toronto, Canada where it was legal. Two years later, Spyer died. While New York recognizes same-sex marriages, under DOMA the federal government can’t.

As a result, Windsor had to pay more than $363,000 in estate taxes. Had their marriage been treated the same as an opposite-sex marriage, she would not have had to pay any taxes. Windsor sued the government to get her money back.

A trial judge held part of DOMA violated the equal protection clause of the Fifth Amendment, and that Windsor should be repaid her taxes with interest. The court of appeals upheld the trial judge, and the government petitioned the Supreme Court to grant certiorari.

Then the train went off the tracks. President Obama ordered the Justice Department to stop defending DOMA in federal court. In response, Republicans in the House of Representatives ordered their own Bipartisan Legal Advisory Group (known as BLAG) to defend the statute.

BLAG’s ability to argue the case is a problem. If the parties agree the statute is unconstitutional, how can someone come in and take over the case. Is that really a “case or controversy” giving jurisdiction? This can happen in other family law cases when grandparents, guardians ad litem, attorneys ad litem and government agencies get involved.

So, the three big issues before the U.S. Supreme Court are whether:

(1) DOMA violates the 5th Amendment’s guarantee of equal protection as applied to a legally married same-sex person;

(2) Obama’s agreement that DOMA is unconstitutional deprives the U.S. Supreme Court of jurisdiction to decide this case; and

(3) BLAG can continue with the case after the Justice Department drops it.

You can follow the case here.

What is a Florida No Fault Divorce?

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On behalf of Ronald H. Kauffman, P.A. posted in Divorce on Monday, May 20, 2013.

Florida abolished fault as grounds for filing a divorce. The only ground you need to file for divorce in Florida is to prove your marriage is “irretrievably broken.” But is no fault divorce the reason the United States has a high divorce rate? Many people think so, and want to return to the old “fault” system to promote families.

A new bill in Iowa, Iowa House File 338, would require one of five conditions for a divorce to proceed in a marriage involving children: adultery, physical or sexual abuse, imprisonment, if one spouse is missing more than a year or if the couple has lived apart for more than two years.

The bill’s author, Rep. Ted Gassman, says he will continue to push for banning no-fault divorce if minor children are involved, saying:

This basically is an attempt on my part to keep fathers in the home. I sincerely believe that the family is the foundation of this nation and this nation will go the direction of our families. If our families break up, so will this nation.

There’s a 16-year old girl in this whole mix now. Guess what? What are the possibilities of her being more promiscuous? What are the possibilities of all these other things surrounding her life that a 16-year old girl, with hormones raging, can get herself into?

Despite the attack no fault-divorce laws are under, no fault laws exist in all 50 states to make it possible for one party to get a divorce without proving any bad behavior took place, and without getting the permission of the other spouse.

Before the no-fault divorce era, people who wanted to get divorce either had to reach agreement in advance with the other spouse that the marriage was over, or throw mud at each other and prove wrongdoing like adultery or abuse.

No-fault laws are the result of trying to change the way divorces played out in court. No fault laws have reduced the number of feuding couples who felt the need to resort to distorted facts, lies, and the need to focus the trial on who did what to whom. We will have to see if Florida, like Iowa, will introduce a bill to eliminate “no-faul” divorces.

5 Ways to Lose Your Divorce

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On behalf of Ronald H. Kauffman, P.A. posted in Divorce on Friday, May 17, 2013.

Who would want to lose a divorce?

It seems like a silly topic, but think about it, anyone can tell you what you should do to win your divorce. No one ever tells you what you should not do . . . until the damage is already done. This leaves you muttering afterwards, “I sure wish someone had told me that before I . . . ”

Not to worry; I’m here to warn you about some sure fire ways to lose your divorce, no matter how good your case is. if you want to waste money, look bad, or ruin any hope of a relationship with your spouse afterwards, listen up. What I’m about to tell you is the good stuff, learned over years of bitter experience.

1. Destroy Records

The first thing you want to do is get rid of all your important records. Don’t worry about papers trails. Make the attorneys subpoena them. Not only will your records be re-created, it wastes a lot time, and costs thousands of dollars.

2. Drain bank accounts

Hey, that freeloader deserves to be cut off, and closing the checking account will force him or her to run to court on an emergency basis. And that’s exactly what you want, so you can tell the judge to her face that you’re the kind of person who has no problem leaving their spouse and children penniless in the street.

3. Hide assets

This is a must. It’s not enough to merely drain the bank accounts. What you want to do at the emergency hearing is plead ignorance about why you’re broke. I recommend shrugging your shoulders when asked where everything went. Besides, you’ve already covered your tracks by destroying the records, what could possibly go wrong?

4. Cancel health insurance

Making unilateral changes never backfires, is another sure way to get hauled back into court on an emergency basis, and will definitely increase your legal fees. And what better way is there to spend your hard earned money than on your attorney?

5. Threaten

Hey, this is a divorce after all, not some mamby pamby marriage counseling session. Threatening violence will show the other side you’re not someone to be messed around with. Besides, being reasonable only leads to a quick end to the fun. If you want the flames of divorce to last, you have to stoke the fire a bit.

If you’ve done everything just right – or just wrong I should say – you’ll be receiving a final judgment finding you in contempt of court, or better yet, losing everything in an unequal distribution. Then you can kick off your shoes, pop open a cold one, and start thinking about that appeal you always wanted to file.

Are Second Marriages More Stable?

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On behalf of Ronald H. Kauffman, P.A. posted in Divorce on Monday, May 13, 2013.

Rumor has it that half of marriages end in divorce. The actual number is closer to 41%. But, even that statistic is in doubt. What about second marriages? Most statistics show second marriages fail more than first.

However, one group is claiming that second marriages are less likely to end in divorce. The Marriage Foundation produced a report arguing that second marriages are more stable than first marriages.

Almost half – 45 per cent – of all couples who marry for the first time in 2013 will divorce during their lifetime. However, divorced couples who marry for the second time have only a 31% chance of their marriage ending in divorce, according to Harry Benson, Communications Director at The Marriage Foundation and author of the report.

I don’t trust this report. Then again, it’s a good idea to question all statistics.

  • First off, divorce statistics are misleading. The fact is that divorce statistics have been uneven since the National Center for Health Statistics stopped publishing detailed state divorce statistics back in 1996.
  • Second, different sub-groups have very different divorce rates. For example, couples in which both parties have college or advanced degrees are statistically less likely to divorce than couples without degrees.
  • Third, where you live plays a role. For example, Nevada has one of the highest divorce rates in the country, and New Jersey has one of the lowest. Florida is in the middle.
  • Fourth, careers are big predictors of divorce. Members of the clergy are far less likely to divorce than exotic dancers for example.
  • Fifth, are the ages of the couple at the wedding. The risk for divorce drops significantly when couples wed after the age of 25.

My conclusion: don’t get married to statistics.

Does Adultery Impact Your Divorce?

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On behalf of Ronald H. Kauffman, P.A. posted in Board Certified Lawyer on Wednesday, May 8, 2013.

Adultery can be the cause of a divorce, but can it impact the outcome? Since Florida became a no-fault state, the fact that, “he (or she) is sleeping with a co-worker” doesn’t hold much traction in court anymore. Anyone can file for divorce without proving any reason for it other than the marriage is “irretrievably broken.” Or is it? When is adultery relevant in divorce?

However, there is still a statutory basis for infidelity to be an issue in your divorce proceedings, but not in the way most people think. Here’s a quick review of when adultery can potentially creep into your divorce:

Parenting Plans/Custody

Chapter 61 discusses the “the moral fitness of the parents” as one of the factors the court considers in determining the best interests of a child. So, if one parent can prove that the other parent’s adultery had, or is reasonably likely to have, an adverse impact on the child, the judge can consider adultery in evaluating what’s in the best interest of the child.

Equitable Distribution

Adultery may impact the division of property. Florida is an equitable distribution state, and it is presumed that property should be evenly divided. This presumption may be overcome by proof that one spouse intentionally wasted marital assets. This waste is sometimes known as dissipation. Paying for expensive jewelry, foreign trips, rent, car payments, and dinners for girlfriends and boyfriends is considered wasting marital assets. The court has the power to reduce an adulterer’s equitable distribution to credit the marital estate for waste.

Alimony

Florida law specifically provides that a court may consider the adultery of either spouse in determining the amount of alimony, if any, to be awarded. However, courts have struggled to reconcile the “fault” of adultery with the concept of “no-fault” divorce. The result is a mix of opinions depending on the judges.

Sometimes, evidence of adultery comes into evidence. Sometimes, it doesn’t. A board-certified expert in marital and family law will be able to advise you whether adultery should be a factor in your divorce.

Remember there are two sides to every story. Even though you may not get to tell your side of the story, your spouse will be prohibited from sharing his or her condemnation of you too.

Avoid Selling Your House in a Divorce Fire Sale

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On behalf of Ronald H. Kauffman, P.A. posted in Equitable Distribution on Monday, May 6, 2013.

Divorce and dividing up your property go hand in hand. If you are going through a marriage breakup, you may need to sell your house in order to settle your case. If so, property owners beware!

Smart property investors know that lurking behind many “for sale” signs is a divorce. In fact many savvy house hunters check out court records precisely to find out if a property seller is going through divorce. Investors are keenly interested in this fact because when they hear the word divorce, everyone’s first thought is “Fire Sale!”

Maybe it doesn’t have to be that way. There are a few tips you can follow to help reduce the risk of your house being sold for peanuts in an already tough market. As the New York Times recently reported, there are real estate brokers specializing in divorcing couples.

For most agents, this is an accidental expertise. For others, it is a niche. “We specialize in it,” said Vicki Stout, an agent at Keller Williams Suburban Realty in Livingston, N.J., who proclaims herself to be a “divorce specialist.”

“But it is hard to advertise,” added Bob Bailey-Lemansky, her business partner. “No one is going to go to our Facebook page and ‘like’ divorce.”

There are a few useful tips for divorcing couples:

  • Hire a real estate firm having at least one man and one woman on the sales team.
  • Keep the word “divorce” out of the sale’s process.
  • Make your closets look less bare on one side.

The interesting article can be read in this month’s New York Times.

Florida Alimony Change : The Midnight Battle

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sfsaOn behalf of Ronald H. Kauffman, P.A. posted in Alimony on Thursday, May 2, 2013.

Believe it or not, the law does not change at a fast pace. With that in mind, Florida’s attempt at alimony changes is like watching a NASCAR race!

Last month, the Florida Senate passed bill 718 making major changes to Florida’s alimony law (like prohibiting permanent alimony) and timesharing law (creating a policy that equal timesharing is in the best interest of the child).

A few weeks later, the Florida House adopted the Senate’s bill, by an overwhelming vote.

As the Miami Herald reports, late last night, Governor Scott vetoed Senate bill 718 to everyone’s shock. His veto came only 4 hours before the midnight deadline, after which the bill would have automatically become law.

The HUGE constitutional problems with the bill was that bill applied retroactively (people could rely on the new law to overturn court orders and settlement agreements entered years ago.)

What’s the Constitution’s problem with retroactivity? There are two big problems actually:

1. The legislature can’t make laws impairing existing contracts. Since the alimony bill would overturn agreements entered years ago, the bill is probably unconstitutional.

2. Our constitution separates the three branches of government, and prohibits one branch from exercising the powers of another branch. The alimony bill effectively allows the legislative branch to un-do court orders entered by the judicial branch.

The Governor wrote the Senate President a letter late last night outlining his reasons:

The retroactive adjustment of alimony could result in unfair, unanticipated results. Current Florida law already provides for the adjustment of alimony under the proper circumstances. The law also ensures that spouses who have sacrificed their careers to raise a family do not suffer financial catastrophe upon divorce and that the lower-earning spouse and stay-at-home parent will not be financially punished.

The Legislature now has the opportunity to override the Governor’s veto by a two-thirds vote in each house, or take out the offensive retroactive language and try again.

This is almost as much drama as Vikings. Stay tuned!