By Jennifer M. Paine
Although the holiday season is here, now is not the time to stop working on your case. In fact, the end of the year is a crucial time to complete three essential tasks that can impact your divorce.
Take some time to do these now, and you will have more time to enjoy the holidays.
Under most alimony orders, for tax purposes the payments you make are deductible from income and the payments you receive (if you are one of the few, but increasing, number of guys you receives alimony) are includable in your income.
Generally, the alimony payments must be from the date of your final order until December 31st of the tax year, i.e., New Year’s Eve. Except for certain state-payment schemes, the government does not monitor these payments – which means you are responsible for monitoring and, if audited, providing documentation for them.
Take this time at the end of the year to gather your payment records, such as receipts and bank statements, to reflect them when tax filing time comes around. That, too, will be here sooner than you know it.
If you have a retirement account, at this time of year your plan should provide you with a year-end summary of your account and the plan, your fourth quarterly statement and, if your plan allows, options for changing your investments, contribution level or both.
Keep these documents, as you will likely need to provide them to your soon-to-be-ex, her divorce attorney, and your attorney.
Also, review your balance and determine whether any of it is pre-marital, meaning accrued before the date of your marriage, or due to passive appreciation, meaning you did not actively trade or invest to make that pre-marital amount grow.
Finally, consider whether it is appropriate to change your contribution levels – but be careful!
If you have an order in place restraining your accounts don’t do it. If you intend to stop or lower contributions to avoid sharing them with your soon-to-be-ex, don’t do it since most judges determine that conduct to be fraudulent in anticipation of litigation.
However, if you are looking to free up cash to pay down marital debts, or the cost of litigation, and you and your wife can generally agree to same, then consult with your financial advisor and your divorce lawyer.
Now is the time you will receive year-end statements for bank and credit card accounts, mortgage accounts, retirement accounts, etc. Keep these handy, as you will need to produce them during your case.
You should also contact customer service on each statement and request statements from the date of inception of the account or the date of your marriage, whichever occurred first, as you will likely also need to produce these to show which amount is marital and which is pre-marital separate property.
Waiting to complete these tasks can be costly. You and your attorney will have to send subpoenas for account statements you could have duplicated when you received them, track down paperwork in a filing cabinet because you cannot locate them, or talk to your wife’s attorney about who needs what and will get what when.
And most, if not all, of which is on your time and your dime.
Cordell & Cordell:
Jennifer M. Paine is a Michigan Divorce Lawyer with Cordell & Cordell. She is licensed to practice in Michigan, and has been admitted pro hac vice in Illinois, Ohio, and the United States Court of Federal Claims.
Ms. Paine received her Bachelor of Arts in English and Mathematics from Albion College and graduated Summa Cum Laude. She received her Juris Doctorate from MSU College of Law and graduated Summa Cum Laude.