Income Taxes and Divorce

March 26th, 2015 at 10:39 am

Illinois divorce attorney, Illinois family lawyer, tax implications, With April 15th just around the corner, many divorcing and recently-divorced people wonder how the divorce affects their income taxes. After all, taxes are highly dependent on a person’s family structure, and divorce is a major change to that structure. Although there may be a variety of subtle impacts divorce can have on taxes, three are particularly common. First, divorce will affect the filing status of both spouses. Second, divorces involving custody disputes will affect the dependency exemptions that filers can claim for raising children. Third, some property transfers during the property division process may have tax implications.

Filing Status

The most direct way that a divorce will affect a person’s income taxes is through their filing status. A person’s tax status depends on whether they are filing as married, single, or head of household. These filing statuses affect which tax bracket people end up in and the size of certain exemptions they can claim. Generally speaking, the choice following a divorce is whether to file as a single individual or as a head of household. The head of household status is available to unmarried people who have a dependent to take care of. It is generally treated better than single status for tax purposes, though every person’s tax situation is unique and requires individual analysis.

Dependency Exemptions

Another way that divorce can affect a person’s income taxes is through the dependency exemption. These exemptions are tax breaks that people get to claim for raising children. After a divorce, people may no longer be eligible to claim it. The general IRS rule is that the dependency exemption goes to the custodial parent, and that in cases of joint custody it goes to the parent who has the child for more of the time, unless there is a multiple support agreement in place. However, the IRS allows parents to decide between themselves who gets to claim the credit as part of the divorce settlement. Consequently, a couple’s divorce decree may end up overriding the IRS rule.

Property Transfers

Property transfers as a result of a divorce may also have important tax implications. The general rule is that property transfers “incident to a divorce” are ignored for income tax purposes. However, there are some exceptions. For instance, the divorce may involve the transfer of appreciated assets, such as stocks or real estate. While the receiving spouse likely does not have to pay taxes on that transfer from the divorce, the later sale of those assets will likely have important tax implications.

Filing for divorce is an important decision that affects many different facets of a person’s life. If you are considering seeking a divorce and want to learn more about the process, contact an experienced Naperville family law attorney today for more information.

The Option of Collaborative Divorce in Illinois

March 4th, 2015 at 9:21 am

Illinois divorce attoeny. Illinois family lawyer, mediation,A new spin on the divorce process may be able to save separating couples thousands of dollars, according to a recent report. People call it collaborative divorce, and it involves focusing on an amicable, negotiated divorce, rather than using the court system. In fact, in some collaborative divorce situations, divorcing spouses can even sign a contract stating that the lawyers who represent them in the collaborative divorce cannot represent them if the negotiations break down and go to trial. This can help spouses work together to find common ground and solutions that they can both live with, rather than having to start over from scratch with new lawyers in the court system. Of course, as with many things, this strategy can work better for some types of people than others.

Parties Who Can Benefit from Collaborative Divorce

The people who can most benefit from a collaborative divorce process are those that can still have a civil relationship. This type of divorce involves working together without the benefit of a judicial referee. Consequently, spouses need to be able to sit down at a table together and speak rationally enough to come to an agreement. Though, this requirement should not necessarily scare off people who are worried they would not be able to do it.

Collaborative divorce involves more than just the couple sitting down alone. They will also have their lawyers present to help keep them focused and on task. Some collaborative divorces can even involve other sorts of counselors who can help the couple work together to build a divorce solution that they can both be comfortable with, rather than relying on a judge to ultimately decide what is best for the two of them.

Parties Who May Want to Use Traditional Divorce

However, not all couples will be able to take full advantage of the collaborative divorce framework. Some spousal relationships are just too far gone for people to comfortably sit down together and talk things out. This is completely understandable given the emotionally-charged nature of many divorces, and those couples may be better served by using the ordinary legal system.

The other set of spouses who may be better off with traditional divorce are those whose relationships have imbalanced power dynamics. There are some marriages where one member is particularly averse to conflict or is unwilling to stand up to the other spouse. In those cases, collaborative divorce may allow the more dominant partner to get the better of the other one, rather than actually producing an outcome that the pair of them could both be happy with.

People considering filing for divorce have a variety of different options available to them. If you are thinking about divorce and want to learn more about the process, contact an experienced Naperville divorce lawyer today for more information.

Cohabitation and Spousal Support in Illinois

March 3rd, 2015 at 8:55 am

Illinois divorce attorney, alimony, Illinois family lawyer,People are often concerned about dating after divorce for a variety of reasons, but something that often gets left out is the effect of dating after divorce on a person’s spousal support. In most states, spousal support, also known as alimony, terminates when the supported spouse gets remarried. Illinois is one of the rare states where spousal support can terminate prior to remarriage. Section 510(c) of the Illinois Marriage and Dissolution of Marriage Act states that if the supported spouse starts “cohabiting” with someone, then alimony terminates. Importantly, the ordinary, everyday definition of cohabitation looks very different than the legal definition, with the legal definition being considerably more expansive.

What Courts Look at

Courts in Illinois have a five-factor balancing test for determining if a couple is cohabiting in a legal sense. The five factors are:

  • How much time the couple spends with each other;
  • How long the couple’s relationship has lasted;
  • How wound together the two people’s affairs are;
  • What sorts of things the couple does when they spend time together; and
  • How the couple spends holidays and vacations.

Importantly, this is a balancing test, not a checklist. What that means is that a couple need not rate highly in all of these categories to count as cohabiting. Instead, the court will look at the situation in its entirety, and balance the different factors against each other. Different courts in Illinois may also weight factors differently, so one court may care very much about how long the couple has been dating, while the other may focus more on whether the couple commingles their finances.

How This Works Out

From a practical standpoint, this rule tends to be viewed as favoring the supporting spouse rather than the supported spouse. Relationships that no lay person would consider “living together” have been legally ruled to be cohabitation. For instance, there was a 2006 case where the couple had been dating for three years. They both had their own homes, and did not financially support each other. But, they lived close to each other, saw each other a few times a week, sometimes spent the night at each other’s homes, and they spent holidays and vacations together. Those facts were enough that the court decided that they were cohabiting. That meant that the supported spouse lost her right to receive her alimony. Of course, not all courts would have come out the same way given the current state of flux surrounding this area of law. Still, spouses receiving spousal support should keep this potential pitfall in mind when they enter into new relationships.

Although divorces are finalized, there may be trailing issues such as spousal support that still need tending to. If you have questions about the ramifications of filing for divorce, contact an experienced Naperville divorce lawyer today.

New Marriage Study: How Happy Is Your Spouse?

February 23rd, 2015 at 10:02 pm

Illinois divorce attorney, relationship study, Illinois family lawyer,“How happy is your spouse?” It turns out that people’s answer to this question can actually be a strong predictor of divorce. Economists at the University of Virginia recently published a marriage study in which they asked spouses how happy they were with their marriage and how happy they thought their partners were with the marriage. The questions were answered as part of a national survey of almost 4,000 couples who each rated how happy they thought they and their partners would be in the event of a separation. It turns out that the answers to those questions had an impact on the couple’s likelihood of divorce.

The Study’s Findings

Unsurprisingly, couples who expected to be happier if they split up were more likely to divorce than average, and those who thought they would be worse off than average were less likely. Yet, that is not what the marriage study actually focused on. The study was more interested in analyzing the divorce rates of people who incorrectly estimated their partner’s happiness. They found that people who were wrong about the happiness of their partner were at a higher risk of divorce.

Couples where spouses were correct about their spouse’s happiness had a divorce risk of a bit over five percent, compared to the general study’s overall divorce risk of just over seven percent. Couples where one spouse overestimated the other’s happiness were at a 10.4 percent risk of divorce. Interestingly, underestimating happiness was also a potential problem. When husbands thought wives were less happy than they really were, the divorce risk was about at the study’s average, but wives who thought their husbands were unhappier than they really were were at an 8.1 percent risk of divorce.

The study also breaks out special numbers for couples with “seriously incorrect” perceptions of happiness, meaning that they missed by more than one point on a five-point rating scale. For these couples, divorce risks were much higher, averaging 12.5 percent overall.

The Economics Behind It

One of the study’s authors theorizes that the reason for this is that people’s perceptions of their spouse’s happiness can have an effect on how they act towards each other at the margins. For instance, a wife who thinks her husband is happy overall may be slightly more likely to work late at the office, thinking that the relationship does not need as much tending. This type of behavior can contribute to relationship problems since the unhappy partner may take that sort of behavior more seriously than the minor inconvenience that the oblivious partner views it as.

Of course, there are many different factors that can contribute to a couple’s divorce likelihood. If you are considering filing for divorce and want to learn more about what the process is like, contact an experienced Naperville divorce attorney today.

Adoption Tax Credits

February 17th, 2015 at 1:45 pm

Illinois adoption lawyer, Illinois family law attorney, family tax credits,Adoption is a big decision that involves weighing many factors. One concern potential parents often have is the expense of the process. Fortunately, the federal government provides a way to lighten that financial burden. The IRS offers an adoption tax credit on the income tax of people who adopt children. Of course, as with any tax credit, it is important to understand the particulars of the rule. People who have recently gone through an adoption or who are considering adopting a child should understand what adoptions qualify for the tax credit, and the amount of credit for which they are eligible.

Qualifying for the Adoption Tax Credit

Parents who adopt a child need only to meet two criteria in order to claim their tax credit. They must (1) adopt an eligible child, and (2) they must pay their qualified adoption expenses out of their own pocket. However, it is important to understand the definition of both an “eligible child” and “qualified adoption expenses.”

The legal definition of eligible children contains two separate categories. First, any child age 17 or younger qualifies as an eligible child. Second, a child of any age may qualify if they are a U.S. citizen or resident alien and they are physically or mentally unable to take care of themselves. Children in either of these categories count as eligible for the purposes of the tax credit.

The set of qualified expenses is a bit more complex. The qualified expenses start out as any expenses “directly related” to the adoption. These can include things like court costs, attorney’s fees, and even travel expenses, among others. Then, to figure out total qualified expenses the taxpayer must subtract out any costs that they were reimbursed by other parties such as employers or government agencies.

Adoption Tax Credit Amounts

Assuming a person is eligible for the tax credit, it is important to understand the amount for which they are eligible. The adoption tax credit is capped at a certain amount that changes year by year. In 2014, the amount was $13,190. For 2015, the amount increased to $13,400. However, people do not necessarily get to claim the full amount of the credit. Instead, most parents get to claim only their actual qualified expenses up to the cap amount. The exception to this is when parents adopt children with “special needs.” Special needs is a specifically defined term for tax purposes that is different from the usual meaning. A children qualifies for a special needs adoption if:

  • The child was a citizen or resident of the U.S. at the start of the process;
  • The state determined that the child cannot/should not go back to their parent’s home; and
  • The state determined that the adoptive family will likely need some form of assistance.

If an adoption meets these qualifications, then parents may claim the full tax credit regardless of their actual expenses.

Adoptions are a big step, with many procedural elements. If you are considering adoption and have questions about the process, contact a Naperville family law attorney today.

Finding Hidden Assets in Divorce

February 10th, 2015 at 10:42 pm

shutterstock_62486356For most divorces, property division is a matter of two honest people trying to unwind a set of shared assets. There may be contentious issues, but people usually play by the rules. Unfortunately, this is not always the case. There are times when one spouse seeks to conceal assets from the other in order to keep them for themselves rather than divide them up in the divorce. In these situations it can be helpful for the other spouse to understand some common strategies for finding hidden assets, so that they can be on the lookout for them. These strategies tend to be about cash flow manipulation, and they fall into two basic categories. Spouses hide assets either by concealing their income or making their expenses look bigger.

Income Concealment

Income concealment is when a spouse makes it appear as though they have less money coming in than they actually do. There are a variety of ways that they can do this. One common method of doing this is through coordination with their employer. For instance, a spouse due for a raise or a bonus can talk to their boss and attempt to defer payment until after the divorce process ends. Then they can keep all that money for themselves, unless the other spouse is paying attention to their financials and asks for an adjustment in their support payments.

Spouses can also use IRS policies to conceal some income. The IRS allows people to have their tax refunds deposited into an individual account, even if the refund is from a joint tax return. Spouses looking to hide these assets may take advantage of this to hide the refund in an account under their own name.

Expense Inflation

Spouses can also conceal assets by inflating their expenses, making it look like more money is going out than actually is. The most basic version of this is just moving money from a joint account into an individual one. However, this tactic is easily uncovered, so many spouses get more sophisticated. Some of them use a friend to open the other bank account, and then they give the money to that friend for the length of the divorce.

Spouses who own businesses also have some more complex expense manipulation techniques available to them. They can decrease the business’ revenue and make it look like they are making less than they are. One way of doing this is simply by altering the company’s records to make it look like the earnings are lower.
These strategies can be caught with the help of diligent investigation. If you are considering divorce and are worried about a spouse who may start hiding assets, contact an experienced Naperville divorce attorney to learn more about the process.

Tips for Divorce Negotiation

February 2nd, 2015 at 9:32 pm

Illinois divorce attorney, marital estate, Illinois family law,Most people think of legal proceedings as places where the two parties come in and the judge decides what to do. However, this is not always the case. Ordinary lawsuits are far more likely to settle than they are to go to trial, and the rise of collaborative divorce and divorce mediation mean that family law cases share this trend. This makes a person’s ability to negotiate much more important. A divorce lawyer may be at the table to help, but understanding basic negotiation strategies can lead to much more fruitful outcomes.

Take Advantage of Different Valuations

One key thing to remember during divorce negotiations is that people have different perspectives, so two people may place different value on the same object. It pays to take advantage of that. For instance, suppose a couple owns an expensive painting and a speedboat. Those two things might be worth the same amount of money on the open market, but if one spouse loves boating and the other spouse bought the painting, then they can be divvied up much more easily.

This principle opens up two new strategies. First, if the spouses can find things that they both value highly, then they can trade them, making everyone happier. Second, if one spouse knows that there is something that they do not care about, but the other spouse greatly wants, then they can make sure to get a lot of value in the exchange.

Go in with Information

Another important thing to do before divorce negotiations is prepare. People who are negotiating need to understand what everything they are haggling over is actually worth. For things like bank accounts this can be simple, but pensions, stock portfolios and houses can be more difficult to value. Still, it is a necessary step. Otherwise, the other spouse can take advantage of the lack of information and work out a better deal for themselves.

Do Not Be Afraid to Move First

This final tip is a bit more controversial, but research bears out that it makes more sense to make the first offer in negotiations. Some people worry that if they make the first offer, they will give away their own position or start too low. That is a risk, but as long as people start with a bold but realistic offer, they can anchor the deal around that figure. That means that a well-researched opening offer can end up capturing a lot of value for the negotiator right at the beginning. There is also some concern among people that an overly-aggressive opening offer will offend the other party. This does happen occasionally, but people have a surprisingly high tolerance for aggressive opening asks in negotiations.

Many people can find divorce negotiations intimidating, but fortunately you can find support by contacting an experienced Naperville divorce attorney today to make sure you have someone on your side.

Mistakes to Avoid in Custody Disputes

January 27th, 2015 at 8:10 pm

Illinois child custody attorney, Illinois divorce lawyer, child custody battle, Child custody issues can be some of the most high stakes and contentious issues in a divorce case. This is especially true in acrimonious divorces where child custody can end up being a long-standing issue, if the parents do not work it out well early on. These strong emotions can make custody disputes difficult, and they can also prompt people to make mistakes. These mistakes can be costly, and end up being the deciding factor in a custody case. Consequently, it is important for parents in these disputes to stay civil, stay honest, and stay persistent, so that they can have their best chance at the custody arrangement that they want their kids to have.

Stay Civil

Staying civil is one of the most important parts of the child custody process, and all too often parents fail to do it. While this is understandable in light of the important issues being decided, rudeness will do more harm than good. Illinois law gives judges a wide range of discretion to decide custody issues in the best interests of the child. A judge seeing one parent being uncivil to the other is going to think worse of that parent, especially if the other parent stays above it. There is also a special warning here not to be uncivil about the other parent to the children. Judges are especially poorly-disposed to that, and many even issue legal orders forbidding it.

Stay Honest

Dishonesty with the court is another mistake that can land a parent in hot water during a custody dispute. Courts and lawyers have a strong set of tools to ferret out dishonesty, and a person having their credibility damaged like that is a sure way to make the judge discount their statements in the future. Similarly, people should be sure to obey a judge’s orders completely, and not try to hide any disobedience. First, there could be legal consequences just for violating the order, and second, it is a surefire way to put the judge in the other parent’s corner.

Stay Persistent

Finally, parents in custody disputes need to stay persistent. Being civil and honest is not the same thing as being a doormat. Parents can find custody disputes emotionally draining, especially when dealing with a spouse who is not following these tips. However, calm, polite, firmness can often be the best tactic to show the court a reasonable parent who it would be in the child’s best interests to live with.

Divorce cases are not always easy, and issues of child custody can be especially difficult. However, people do not have to go through this process alone. If you are considering filing for divorce, contact an experienced Naperville divorce attorney today to make sure you have someone on your side.

To Grandmother’s House We Go: Grandparent Visitation Rights

January 19th, 2015 at 10:50 pm

Illinois family law attorney, Illinois divorce lawyer, visitation,When the relationship between mother and father becomes strained, grandparents often get caught up in the tension. Sometimes this results in a parent refusing to allow a grandparent to spend time with the child. While there is a general presumption that parents know best when it comes to visitation, there are exceptions. In Illinois, grandparents are permitted to request that the court allow them visitation with their grandchild. Keep in mind that a grandparent’s demand to see his or her grandchild, against the parents wishes, is a privilege and not a right. This means the court may not recognize grandparent visitation rights if it sees fit.

How to Seek Visitation

Visitation can mean face-to-face interaction between grandparent and grandchild, or it can simply mean communication by phone, email, or text message. The process of seeking visitation with a grandchild begins with a petition to the court. According to the Illinois Marriage and Dissolution of Marriage Act, a grandparent must show that he or she has been unreasonably denied visitation; essentially that he or she is not harmful to the child. Additionally, a grandparent must show at least one of the following:

  • The parent is deceased or has been missing for at least three months;
  • The parent has been deemed legally incompetent;
  • The parents are divorced or separated and one of the parents does not object to grandparent visitation; or
  • The parents were not married at the child’s birth and the petitioner is a maternal or paternal grandparent.

If one of these factors is established, the court will evaluate whether visitation is in the child’s best interest. Unless it is proven otherwise, Illinois courts assume that the parents’ decisions regarding visitation is in the best interest of the child. Thus, it can be difficult for a grandparent to be awarded visitation rights.

Revocation of Visitation Rights

The situation of a parent refusing to allow a grandparent to spend time with his or her grandchild can arise in many different situations. For example, where one parent has had parental rights terminated, the custodial parent may be hesitant to let the grandparents of that parent visit with the child. If the grandparents do allow the non-custodial parent to visit with the child during “grandparent visitation,” their rights could be permanently revoked. Termination of parental rights is done by court order and therefore it would be a violation of court order to try to abuse grandparent visitation in this manner.

If you are a grandparent seeking to establish or continue a relationship with your grandchild and you are facing difficulties, contact our experienced Naperville family law attorneys today. We understand how important family relationships are and how strained relations can take a toll on your life. Our experienced team is ready and able to help you repair these family ties today.

Supreme Court Decides International Child Custody Case

January 13th, 2015 at 9:51 pm

Illinois child custody attorney, Supreme Court decision, Illinois family law attorney,Family law is an area of law that is almost always left to the states to develop, and it rarely involves serious constitutional questions. Consequently, it is uncommon to see the U.S. Supreme Court take a family law case. However, it does happen occasionally, and the Court recently issued a decision in just such a case, Lozano v. Alvarez. The issue in the case was one of child custody, but it was unique because it had to do with international parents. This left the Court interpreting an international treaty on child custody issues, which would decide how this international child custody case should be decided.

Lozano v. Alvarez

The Lozano case had to do with two parents from England who had a young daughter. In late 2008, the mother left the husband and took the daughter with her, alleging that the husband had been abusing her. The mother and daughter came to New York to live with some of the mother’s relatives. The husband attempted to track them down, and he eventually did so, 16 months later. After finding them, he petitioned the U.S. courts to return the child to England, so that English courts could make a decision on child custody.

The husband made this petition under The Hague Convention on the Civil Aspects of International Child Abduction, an international treaty that, among other things, lays out rules for how to handle situations where one parent wrongfully takes a child to another country. In most instances, the treaty automatically requires courts to compel the return of the child for a proper custody decision. However, there is an exception to that rule if the child has been living in another country for more than a year. The husband argued that that time limit should not apply to him because the mother hid the child, and it took him over a year to find them.

Competing Interests

The Supreme Court took this case, and had to deal with two competing interests. Sticking strictly to the time limit may have been the best thing for the daughter. That limit exists because moving a child from country to country can be a disruptive experience, and it is likely that after a year the child would have adjusted to life in the new country. Uprooting them again would be difficult. However, sticking to the limit would also encourage parents to take their children to another country since they would simply need to run out the clock in order to keep them. Ultimately, the Court did decide to stick to the stringent time limit, citing the fact that the treaty made no exception in cases where a parent conceals the child.

Child custody disputes, even purely domestic ones, can still be high stakes. If you have questions about your child custody dispute, contact an experienced Naperville divorce attorney today.

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Roscich & Martel Attorneys has provided high-quality legal representation in divorce, family law, real estate, estate administration, probate, wills, Advance Health Care Directives (living wills), powers of attorney for over 60 combined years to residents of Naperville, Aurora, Bolingbrook, Wheaton, Warrenville, Winfield, Downers Grove, Lisle, Kendall County, DuPage County, Kane County, and Will County in Illinois.

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