Divorce brings about a seismic shift in virtually all aspects of your life. Amidst heated disputes over assets, rights, and custodial issues, it’s easy to overlook the lasting impact of divorce on your estate plan. However, beyond the finalization of the divorce, it’s crucial to grasp how your estate plan will be affected and make necessary adjustments. Doing so not only guarantees the safeguarding of your loved ones after your death but also ensures that your wishes will be respected. Consider consulting the seasoned Ohio divorce attorneys at Heban, Murphree & Lewandowski, LLC for expert advice on estate plan adjustments post-divorce.
Even though divorce initiates a few statutory changes, they’re typically insufficient to reshape your entire estate plan to reflect the new circumstances. Hence, a comprehensive review of all estate planning documents is recommended post-divorce.
Alimony, or spousal support, is a financial provision paid from one spouse to another during or after a divorce. The intention is to help the recipient maintain a lifestyle comparable to the one experienced during the marriage. It’s crucial to note that alimony isn’t automatically granted—the recipient must request it, or both parties must agree upon it.
Alimony amounts can be ordered by the judge to be paid periodically for a specific duration or indefinitely until the recipient remarries. However, the final amount is influenced by several factors, including:
Post-divorce, alimony may also be adjusted based on specific circumstances.
The tax implications for alimony payments differ depending on whether your divorce was finalized before or after December 31, 2018. For divorces finalized before this date, alimony payments are generally tax-deductible for the payer. However, alimony payments are typically not tax-deductible for those completed after; the recipient doesn’t have to report alimony as income.
To be classified as alimony for tax purposes, payments must meet several IRS stipulated conditions:
The key difference between alimony and child support lies in the intended purpose of the payments. Alimony is paid for the spouse’s benefit, while child support covers the children’s basic needs, such as food, clothing, housing, and medical care.
Contrary to alimony, child support isn’t considered taxable income for the recipient, and it isn’t tax-deductible for the provider since it’s meant to benefit the children, not the spouse.
Regarding tax implications, the parent with whom the child lives most of the year can generally claim the child as a dependent. However, the specifics of child support payments, including amount and duration, will be determined by the finalized custody agreement or court order by state law.
In most states, laws exist to protect spouses from disinheritance, meaning you can’t simply write your spouse out of your will. Instead, if you’re seeking to maintain control over your estate, particularly if you’ve recently started a long-term relationship, consider a prenuptial agreement (or a postnuptial agreement, if already married). This formal agreement with your spouse helps you retain control over your assets, safeguarding them from state laws that would otherwise govern estate distribution upon your death.
Prenuptial agreements may sometimes be viewed as controversial, but they are practical in several circumstances:
A prenuptial agreement may be a wise move in any of these scenarios. While often associated with divorce protection, prenups can also offer clarity and consistency in estate distribution, ensuring the security of your heirs.
Prenuptial agreements come with their own set of advantages and disadvantages that need careful consideration before proceeding.
By establishing a prenuptial agreement, you can sidestep financial disputes in the event of a divorce and protect your family after your demise. In addition, a prenuptial agreement clarifies financial matters and may offer couples peace of mind, knowing that economic discord won’t interfere with their relationship.
State laws exist to protect each spouse, and bypassing these laws could lead to complications. Therefore, before proceeding with a prenuptial agreement, ensure that you and your partner understand the implications, including what you’re agreeing to and asking each other.
We urge you to take control of your future and ensure that your estate plan accurately reflects your post-divorce circumstances. Taking action now will eliminate complications and uncertainties in the future. Don’t let the effects of divorce destabilize your estate plan; instead, harness this opportunity to reassess, revise, and reaffirm your intentions.
Act now, for peace of mind tomorrow. 419.662.3100