DIVORCE - PLANNING IS MONEY WELL SPENT
When a couple has made the decision to end a marriage, often times the reason involves finances. It seems that how we were brought up and the value we place on money, makes "for richer or poorer" inevitable. But before we proceed to the same courtroom that joined us together in the first place, we should consider taking a different route.
Let's face it; getting divorced can end up costing you more than it did to get married. And if you consider the length of time you were married and the involvement of children, it is no wonder bankruptcy or destitution results.
As a practitioner, my advice to you is to plan your destiny. No one wants to see their spouse suffer or their kids living in poverty. By proper planning, you reduce the time spent in the courthouse and ultimately develop an amicable relationship with all involved.
Here are some factors to consider when contemplating divorce:
- Child Support: Every state is different when establishing the criteria for child support. Minnesota recently passed legislation that provides for a) consideration of both parents income when determining support and b) credit for significant involvement of the noncustodial parent.
- Alimony: There are times when one parent (homemaker) may give up his/her career in order to raise a child. This may result in inexperience or education when having to re-enter the workforce. In order to determine what is right, fair, and just, an analysis should be done to the satisfaction of both parties involved.
- Property Settlement: While this division of property may vary depending whether it is considered community property, often times it is beneficial to review the tax aspects of the transaction before making a final decision. This is especially true when considering retirement plans and business assets.
- Income Tax: Most often, it is more advantageous for a married couple to file a joint income tax return prior to dissolution. However, in order to accomplish this, proper planning must be considered. Should a refund be due or a tax liability payable, a couple should consider well in advance to work out payment arrangements.
- Valuation of a Closely Held Business: Couples where one spouse has built a business, and now sees it's value diminish due to the trauma and stress brought on by dissolution, needs to consider ways to minimize the loss for the benefit of all. Perhaps younger children are involved in the business and will suffer a hardship should a sale or abandonment occur.
Couples spend thousands of dollars bickering and fighting over issues that, if worked out before-hand can reduce stress and make for a more positive dissolution.
As a means to help reduce costs and stress, couples should see a CPA to develop a work plan and consider what direction should be taken to save as much of their marital assets as possible for their future and that of their children.
