Dublin Ohio Family Law Blog

Divorce, children and the new tax law

Tax season is once again in full swing, and there are many questions in light of the new tax law that became fully applicable on January 1. For couples who are considering divorce or separation in Ohio and have young children, one of those questions may be regarding who would get to claim the children as dependents on one's tax return. There are a few factors to consider, and changes to the law that can determine the answer.

The Tax Cuts and Jobs Act, as the law is known, did away with the personal exemption starting in 2018. The personal exemption allowed a person to deduct from his or her adjusted gross income an amount for each dependent a person could claim. While that is no longer the case, the Child Tax Credit has been doubled from $1,000 to $2,000.

Divorce and implications of the new tax law

Happy smiling Ohio couples walk down the aisle to marry, say their vows and walk back along the same aisle expecting to begin a long and happy life together. In many instances this happens, but in many others it does not. Many marriages still end in divorce, and as another tax season has begun with new tax laws that affect the finances of a divorce, it may be beneficial to review the implications of the law on current tax filings.

The timing of the divorce or separation is important. A couple's marital status, for the purposes of the IRS, is determined by whether they were married on Dec. 31. This is important because of how alimony is treated under the new law as of Jan. 1, 2019. If the divorce was finalized by Dec. 31 and alimony is part of the settlement, alimony will be deductible for the payor and taxable to the payee.

Protecting assets in case of a high-asset divorce

America was built on entrepreneurial spirit by people setting out for the new world with the intent of building a new and independent life. That spirit exists today with new businesses coming into existence in Ohio and around the country on an almost daily basis. Few will have the success that Amazon enjoys, a company founded by a married couple who are now involved in a very high-asset divorce. The company was founded after they married and, as such, can be considered community property. How can the value of the property be protected?

Pre-nuptial agreements are becoming more popular as couples consider the importance of protecting property acquired before or during a marriage. It is widely believed that the Bezos', the founders of Amazon, did not have one. The idea for Amazon came after they were married, and they probably didn't foresee the success that Amazon would become. As they are now preparing to divorce, it is possible that Jeff Bezos' share of the company will be cut in half.

Parenting coordination can facilitate child-focused resolutions

Many divorced parents in Ohio benefit from parenting coordination. Not to be confused with co-parenting, parenting coordination is a child-focused dispute resolution process that can be ordered by a court or requested by one or both parents.

During the parenting coordination process, parents work with a qualified coordinator to resolve many types of conflicts that can arise regarding the implementation of court-ordered custody arrangements, parenting schedules or parenting responsibilities. The coordinator is a neutral party appointed by the court, and the coordination process may include an assessment, education, case management, conflict management, coaching or decision-making.

Divorce: Support is available to help achieve amicable settlement

Since the moment you decided that your marriage was no longer viable, you've likely had a million thoughts running through your mind, especially regarding your children. Divorce can be one of the most stressful, challenging situations an Ohio family can experience. By accessing available resources, though, many spouses are able to achieve fair settlements, as well as provide their children with ample support to help them cope with change and adapt to a new lifestyle.

A main priority in most divorces involving children concerns a co-parenting plan. You'll need one. The court typically makes decisions regarding custody, visitation and child support on a case-by-case basis, which is good news because it means you are able to customize your plan with your children's best interests in mind. In fact, you and your spouse may be able to write the terms of your own agreement, then simply seek the court's approval.

High-asset divorce without a prenup can be costly

Couples heading to matrimony are sometimes advised by well-meaning friends and family to get a prenup. Some may argue they have no intention of ever divorcing, or one may feel there are not enough assets to make a prenup worthwhile. These are just some of the reasons given by people who do not have prenuptial agreements in  Ohio. However, one's financial status at the time of a marriage does not preclude the possibility of a high-asset divorce later in life.

Jeff Bezos was one of those who married without having a prenuptial agreement. When he married he had not yet created the company called Amazon. Jeff Bezos is, according to Forbes Magazine, the wealthiest man on the planet. He owns about 16.2 percent of the shares of Amazon with an approximate value of $130 billion. He also owns The Washington Post.

2019 tax law changes can add to stress of divorce

The new year has arrived, and many changes from the tax law passed last year will have an impact on divorces occurring in 2019. Divorce is not an easy process in Ohio. It can be very emotional and stressful to family relationships, and involve copious paperwork. The division of property and other assets can also be difficult. The changes brought on by the tax law could add to the stress.

The changes to alimony are significant. Alimony used to be deductible for the payor and taxable for the recipient. Now, the payor can no longer deduct it, and the recipient does not pay tax on it. While this change does not impact divorces previously settled, if the settlements are modified, they could be subject to the new law.

High-asset divorce can take time

Divorce in Ohio is seldom entered into lightly. When significant time has been put into a marriage, there may also be significant assets involved. Dividing these assets can be complicated and time-consuming. This is the situation occurring in a high-asset divorce in another state involving a fortune worth more than $2 billion.

A couple are divorcing after being married for 58 years. The judge in the divorce case has ordered that the couple's fortune be split into two nearly equal parts. Achieving that goal may involve the auction of some priceless art. The judge ordered that some of the art be sold as the couple could not agree on the art's value. The works to be sold include pieces by Andy Warhol and the sculptor Alberto Giacometti.

Legal separation may pave the way to save a marriage

Marriages, even good marriages, experience ups and downs. Some couples experiencing a down period that could end in divorce may decide to try a legal separation in Ohio to give them space to see if the marriage can be saved. While a legal separation is not as final as a divorce, there are still formal steps that should be taken to protect the individuals involved.

If one anticipates that the separation will last for a few months or more, there are financial considerations that need to be addressed. It is important to maintain or establish a good credit rating. It is a good idea to have one's own credit card and establish a credit history with it. Also, it's important to be aware of joint finances and to have an understanding of how they will be handled during a separation.

Divorce or dissolution of marriage?

Ending a marriage can be a complex and emotional process. In Ohio, couples wanting to end their marriage have two options – divorce or dissolution of marriage.

Both a complaint for divorce and a petition for dissolution of marriage are methods to terminate your relationship, but there are clear differences between the two. Knowing the distinction between them can help you determine which method might work for you.

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Kemp Law Group, LLC

Kemp Law Group, LLC
555 Metro Place North
Suite 300
Dublin, OH 43017

Phone: 614-389-1991
Fax: 614-389-3352
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