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Post-Divorce Estate Planning Issues

Sunday, July 26th, 2015

After going through a divorce, one has to figure out how to navigate life as a single person again. This often includes a new home, new budget, new schedule and new family dynamic, particularly if there are kids involved. One important item that should not be forgotten post-divorce is to make changes to any estate plan to make sure it reflects your wishes as a non-married person.

It is imperative that you revise your will shortly after your divorce is final. If you don’t, your assets may not go to whom you would like. In Georgia, if your ex-spouse is a beneficiary of your will but you do not revise your will before you die, your spouse will be treated as if he/she predeceased you and any amount bequeathed to him/her will go back into your estate to be distributed according to the rest of your will and/or estate plan. On the one hand, it’s great that the state of Georgia recognizes that you would not want your ex to remain a beneficiary of your estate. However, on the other hand, the solution that the portion bequeathed to your ex will go back into your estate for distribution may not be what you desire. For example, imagine a woman’s will bequeaths her entire estate to her now ex-husband, with her stepdaughter (the ex-husband’s daughter) as secondary beneficiary. If this woman does not revise her will after the divorce, her stepdaughter may end up getting all of her estate, when she would rather it had gone to a blood relative. Even if you would be satisfied with this outcome, it is still prudent to revise your will after divorce to make sure it is in line with your wishes.

It is also very important that you revise the beneficiaries of any life insurance and retirement accounts. A divorce will not invalidate the beneficiaries on these accounts/policies so, if you pass away before you change it, your ex could get a windfall. Contact the particular institution for each account/policy and make sure you fill out the proper form to change beneficiaries. Each institution may have a different form so it is important to be thorough.

In the end, it is important to revisit any estate plan post-divorce to make sure it complies with your wishes. You may find that an estate tax that applied when you were married no longer applies to your smaller post-divorce estate. Or vice versa – the estate tax may now apply to you with more assets in your individual name. Contact an estate planning professional with any questions and to make any revisions to your estate plan, as appropriate.

I Want to Enforce my Divorce Order. Can I Represent Myself?

Sunday, May 17th, 2015

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As Atlanta divorce attorneys, we are often contacted by former clients who, now that their divorce is final, are having problems getting their ex-spouse to comply with the court’s orders concerning child support, child custody and alimony. “How can she get away with that?” “What can I do to make him pay?” and “Do I need an attorney to enforce my Divorce Order?” are questions that we often hear.

The very brief answer to those questions is there is a process available to enforce you divorce decree, and you may undertake that process yourself. But, it is most prudent to seek the assistance of a Georgia divorce attorney to assist you with enforcing your child custody, child support or alimony order.

Georgia courts have the power to enforce their orders and judgments. Thus, if your former spouse has failed to adhere to the court’s order regarding child support, child custody, or alimony, he or she may be found in contempt of courtSee generally O.C.G.A. § 19-6-28. In order to enforce your divorce order, you must file a Motion for Contempt in the appropriate jurisdiction. Generally, to prevail in a contempt action, you must show the court that your ex-spouse has failed to comply with the court’s order and that the failure to comply was willful. For example, if your ex-spouse was ordered to pay child support, but has failed to do so despite having the financial ability to do so, you may prevail in a contempt action.

However, as with many issues concerning divorce and post-divorce issues, the facts of most cases are not that clear cut. For example, in cases where the offending party claim his or her failure to abide by the court’s order was not willful, the court may require additional evidence or proof that the offending spouse’s claim in without merit before issuing a contempt citation. The legal analysis necessary to determine whether certain defenses to contempt are meritorious is very complex. Thus, although it is possible to seek and obtain and order of contempt on your own, seeking the help of a divorce attorney will greatly increase your likelihood of success.

Wondering What to do with Your Wedding Ring Post-Divorce?

Wednesday, April 29th, 2015

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Throw it in the ocean. Bury it. Flush it down the toilet. Mail it to his new girlfriend. These are all potential answers to the question of what to do with your wedding and/or engagement ring post-divorce. Realistically though, the most prudent thing to do with your ring post-divorce is to sell it.

Attorney’s fees, debt, fees associated with the transfer of property and child support and alimony obligations are all costs associated with divorce that many are left to cope with once the divorce process is over. The return received in the sale of your ring may substantially mitigate or even completely satisfy these costs post-divorce.  Not only can selling your ring post-divorce help ease financial pressure, but selling the ring can also help your rid yourself of the past emotional attachment the ring symbolizes. When making the decision to sell your wedding/engagement ring post-divorce, the first place to contact is the broker or store where your ring was purchased. If that particular diamond broker does not re-purchase diamond jewelry, ask them about a reputable diamond professional who will.

 

What is Dormancy and How Can it Impact My Georgia Divorce?

Wednesday, February 18th, 2015

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In Georgia, judgments entered by a court generally go dormant, meaning they are no longer enforceable, if seven years elapse, and the party entitled to enforce the judgment does not seek enforcement. See O.C.G.A. § 9-12-60. Basically, section 9-12-60 of the Official Code of Georgia places a limitations period on how long individual may take to enforce their judgment.

Dormancy is relevant to Georgia divorce, because like in general civil suits, divorce matters are resolved when the presiding court enters a Final Order and Decree. In many divorce cases, these final orders often award parties money and/or interests in property. If a former spouse is awarded a sum of money that must be paid by the other former spouse, and the obligated former spouse fails to pay as ordered, the entitled spouse may seek enforcement of the court’s order. However, if the entitled party fails to seek enforcement in a timely manner (within the 7 year limitations period) the judgment may become dormant and unenforceable. See Corvin v. Debter, 281 Ga. 500 (2007).

Allowing a judgment to become dormant may have disastrous, and potentially irreversible results. It is important to seek the assistance of an Atlanta Divorce attorney in the event your ex-spouse fails to comply with the court’s order post-divorce in order to protect your rights.

 

 

Child Custody: The Standard for Modification of Visitation Rights

Wednesday, August 6th, 2014

Some of the most important questions parties to a divorce will ask are “who will make important decisions for my child and how much visitation should my spouse have?” These questions fall under the purview of child custody. Even if the issue of child custody is resolved when the divorce is finalized, what is in the best interests of the child now may not be in the best interests of the child later on. Therefore, parties will sometimes seek to modify their child custody order. Nevertheless, modifying child custody orders is often not as simple as it sounds. In Georgia, there are specific rules and standards that must be observed for a modification to be proper. A recent Georgia case analyzed these rules and standards and set forth some guidelines for us to follow.

In Cannella v. Graham, the trial court originally awarded the parties joint legal custody and awarded primary physical custody to the Mother and visitation to the Father. Cannella v. Graham, 325 Ga. App. 596 (2014). Approximately one year after the trial court’s order, Mother filed to modify child custody, seeking sole legal custody of the child and asking that Father’s visitation be supervised or eliminated. Id. After Mother presented her evidence, the trial court granted Father’s motion for a directed verdict. Id. Mother subsequently appealed. Id.

The Court of Appeals of Georgia noted that “[v]isitation rights of non-custodial parents are subject to review and modification upon the motion of either parent every two years without the necessity of showing a material change in circumstances.” Id. (quoting In the Interest of R. E. W., 220 Ga. App. 861, 862 (1996)). However, when determining whether to modify visitation rights, the “best interests of the child standard” shall be considered. See Id. (citing In the Interest of R. E. W., 220 Ga. App. 861, 862 (1996)). The court noted that the trial court granted Father’s motion for a directed verdict because Mother “failed ‘to show a substantial change of condition affecting the minor child which would justify a modification of custody.’ The order does not mention the child’s best interest. The order therefore reflects that the trial court applied the wrong standard.” Id. at 597. While the trial court orally announced that they made a “best interests of the child” determination, they neglected to mention any such determination in their written order. Id. “[A] trial court’s oral pronouncements are not binding because, while they may provide insight on the intent of the subsequent written judgment, any discrepancy between the written judgment and oral pronouncements is resolved in favor of the written judgment.” Id. (quoting In the Interest of J. J., 317 Ga. App. 462, 463 (2012)). Accordingly, the court vacated and remanded the case so that the “the best interests of the child standard” could be applied. Id.

By: Jason W. Karasik, Associate Attorney, Meriwether & Tharp, LLC

Severing the Credit Connection during Georgia Divorce

Saturday, July 5th, 2014

Divorce is a complex maze of emotional, financial and familial issues. With that being said, it is not uncommon for some issues to receive more attention than others. For example, many going through the divorce process fail to give the proper attention to credit and debt issues until those issues turn into big problems post-divorce. Below are a few tips and things to consider regarding how to safely sever the credit connect to your soon-to-be ex-spouse to ensure that credit problems don’t hinder you from moving on financially after divorce.

1. Check your credit report. Even if you are not going through a divorce, checking your credit report annually is a good idea. In the context of divorce though, checking your credit report is essential because doing so will not only remind you of where you stand as it relates to making major purchases like a home or a car, but it will also give you a listing of all of your open accounts. Armed with this list of both individual and joint accounts, you can then take advantage of the tip listed immediately below.

2. Pay off joint lines of credit and close joint bank accounts. If possible, it is advisable to pay off all joint lines of credit and close joint bank accounts either prior to initiating the divorce process, or do so during the settlement phase of your case. Closing all joint accounts is advisable because it eliminates confusion over who will pay which account and how each account will be paid post-divorce. Closing all joint accounts will also eliminate the possibility that one former spouse’s credit will be negatively impacted due to the other spouse’s failure to pay an account he or she was ordered to pay. Alternatively, if it is not possible to pay off all joint lines of credit, negotiate which spouse is to pay which account, and then contact the credit account holder to have them transfer or refinance that account into that spouse’s name solely.

3. Anticipate potential problem areas when drafting your divorce settlement agreement. As mentioned above, if it is not possible to close all joint credit accounts prior to divorce, effort should be made to refinance any jointly held debt into the name of the spouse obligated to pay that debt. Once the parties agree how the joint debt should be apportioned, this agreement should be memorialized in the Marital Settlement Agreement. Additionally, the settlement agreement should clearly state each party’s obligation to refinance debt for which they are obligated into their name solely. Another safety precaution that may be taken is to include a contingency clause in the settlement agreement addressing what should be done in the event one former spouse’s plan to refinance marital debt is unsuccessful.

4. Divorce decrees are between you and your ex-spouse, not the bank. A divorce decree is an order of the court that finalizes a divorce between two parties and outlines each party’s obligations post-divorce. This decree is legally binding on both ex-spouses. However, it is not legally binding on former spouses’ lenders. Put another way, even if a divorce decree states that husband is obligated to pay the couple’s joint mortgage, if husband fails to pay the mortgage, the mortgage company may go after both husband and wife for payment. Thus, it is absolutely important for both spouses to either completely sever the credit connection, or put into mechanisms in place in their settlement agreement to protect themselves in the event one former spouse defaults on a joint obligation.

Engagement Ring May Be Viewed As Irrevocable Gift by Courts

Monday, May 19th, 2014

 

Who gets the engagement ring after a broken engagement?” This is a question that we as Atlanta divorce attorneys hear on a fairly regular basis. Generally, courts treat engagement rings as conditional gifts. This means that a certain condition must occur before the gift is deemed completed or irrevocable. In the case of engagement rings, most courts consider the marriage as the condition that must occur before the giving of the engagement ring is considered a completed gift. What this means practically is that in most instances of broken engagements, the man (or the giver of the engagement ring) is entitled to its return.  This is a general rule however, and as one New York man learned, there are instances in which an engagement ring may be viewed as an irrevocable or completed gift.

Recently, New York State Supreme Court Justice Russell P. Buscaglia ruled that in the matter of Louis J. Billittier Jr. vs. Christa M. Clark, Clark was entitled to keep the engagement ring given to her by Billittier. Billittier, who ended his three year engagement to Clark via text message, filed a suit seeking the return of the $50,000 ring in late 2012. Despite Billittier’s unorthodox method of ending his engagement to Clark, he would have legally been entitled to the return of the 2.97carat ring but for a statement he made in the text message conversation with Clark regarding the broken engagement. According to The Buffalo News, in response to Billittier’s initial message in which he indicated his desire to break the engagement, Clark responded: “Your doing this through a text message????” Billittier followed up his initial message by replying: “Plus you get a $50,000 parting ring. Enough for a down payment on a house.”

As it turns out, this one message cost Billittier $50,000. Justice Buscaglia ruled that the message sent by Billittier referring to the ring as a “parting ring” transformed the engagement ring from a conditional gift – conditioned on marriage – to a completed gift. According to the court in this case, Billittier’s reference to the ring as a “parting ring” instead of an engagement ring evidences Billittier’s intent to give Clark the ring as a parting gift. Because Billittier’s intent regarding the purpose of the gift has changed, the ring was no longer viewed as a conditional gift under the law, but a completed irrevocable gift.

 

Who Gets the Dependency Exemption & Child Tax Credit Post Divorce?

Wednesday, May 14th, 2014

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Generally post divorce, the parent who was awarded primary custody of the child or children is entitled to claim the dependency exemption and child tax credits for the children in their custody. However, there are some exceptions to this general rule. Below is a brief discussion of the caveats regarding the Federal dependency exemption and child tax credit.

Child and Dependant Care Tax Credit

As mentioned above, the custodial parent is generally the parent who may claim the dependency exemption and the child and dependant care tax credit (usually referred to as the child tax credit). Although in some situations the non-custodial parent may claim the dependency exemption, only the custodial parent may claim the child tax credit. The non-custodial parent may not claim this credit, even if that non-custodial parent may claim the dependency exemption for a particular child. Conversely, even if a custodial parent may not claim the dependency exemption (for instance, if the custodial parent agrees to allow the non-custodial parent to claim the exemption), that custodial parent may still claim the child tax credit on his or her return as long as all other requirements are met. For more specific information concerning the requirement that must be met for a custodial parent to take advantage of this tax credit, see IRS Publication 503, Child and Dependant Care Expenses.

Dependency Exemption

Unlike the child tax credit, there are some situations in which a non-custodial parent may enjoy the benefit of this exemption. The most common is when both parents agree, either during divorce settlement discussion or post-divorce, to allow the non-custodial parent to take this exemption. In matters where more than one child is involved, the parent may agree for the non-custodial parent to claim all of the children, or just one.  Once a divorced or divorcing couple has agreed to allow the non-custodial parent to take this exemption, the custodial parent must sign a written statement that the custodial parent will not claim the child as a dependent for any tax year beginning in that calendar year. The non-custodial parent must attach that declaration to his or her tax return. This release must be made either on a completed IRS Form 8332, or on a statement conforming to the substance of Form 8332. For additional information regarding the dependency exemption or other divorce related tax issues, see IRS Publication 504, Divorced or Separated Individuals.

Who Gets the Medical Expenses Deduction Post Divorce?

Wednesday, May 7th, 2014

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Although much attention is often paid to the child and dependent care tax credit or the dependency exemption during and after divorce proceedings, there is another often overlooked Federal tax deduction that deserves a similar level of attention: the Medical Expenses Deduction.

What is the Medical Expense Deduction?

The medical expense deduction is a Federal tax deduction that may be utilized by certain individuals to reduce their Federal income tax burden. Generally, in order for an individual to take advantage of the medical expense deduction, the amount of medical and dental expenses must be more than 10% of their AGI. Additionally, Schedule A on Form 1040 must be completed in order to take advantage of the medical expense deduction.

According to the IRS, deductible medical expenses are the costs associated with the “diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes.” Medical expenses also include “Medical expenses that are not deductible include “expenses that are merely beneficial to general health, such as vitamins or a vacation.” IRS Publication 502, Medical and Dental Expenses.

Medical expenses also include health insurance premiums paid to cover medical expenses. Health insurance premiums paid for a spouse and children are also considered medical expenses for the purposes of the medical expense deduction. This is why it is important to consider this deduction both during and after divorce.

Why is it important to consider this deduction during and post-divorce?

For many, especially spouses who were responsible for paying medical expenses and medical insurance premiums for  the other spouse and their children during marriage, and ex-spouses who are responsible for paying medical expenses and insurance premiums for their children post-divorce, the medical expense deduction may constitute a fairly significant itemized deduction on their federal income tax return.

Post-divorce, it is possible for both former spouses to potentially take advantage of this deduction if the qualifying medical expenses were paid from a joint checking account during the marriage. For example, a couple filing taxes in the year immediately following divorce may both take advantage of the medical expense deduction if medical expenses were paid out of their joint account during the marriage by allocating the deductible expenses equally between the spouses. In other words, each former spouse may claim half the expenses. Alternatively, a former spouse may deduct any medical expenses paid separately for him or her, for the other spouse, and for children. However, a former spouse may only deduct medical expenses paid on behalf of a spouse (or former spouse) if the spouses were married at the time the medical services were received or when the expenses were paid. Thus, former spouses ordered to continue providing medical insurance coverage for their ex-spouse post-divorce via COBRA or other insurance options may not deduct these costs. Such payments may be deductible as alimony however. On the other hand, non-custodial parents who continue to pay insurance premiums and medical expenses for a child or children post-divorce may deduct those costs of their federal income tax return even though the other former spouse may have custody of the children.

For more information on this deduction and the other deductions and exemptions that may be beneficial to divorced and divorcing individuals, see IRS Publication 502, Medical and Dental Expenses, and IRS Publication 504, Divorced or Separated Individuals.

Don’t Forget to Adjust Your Tax Withholding Post-Divorce

Tuesday, May 6th, 2014

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Completing a new W-4 form is something that many people only think of when starting a new job. However, because several things such as filing status and the amount and type of exemptions and deductions you are allowed to take advantage of changes post-divorce, it is very important to adjust tax withholdings after divorce. This may be done by completing a new W-4 form and submitting it to your employer. Generally, completing this task is as simple as requesting a new W-4 form from your employer, making the necessary adjustments, and returning it to your employer’s payroll or human resources department.

It is important to adjust your tax withholding post-divorce because married individuals who file joint federal income tax returns qualify for lower tax rates and other deductions.  Divorced individuals loose those tax benefits and many deductions. Thus failing to make the necessary withholding adjustments could cause an underpayment of taxes throughout the year resulting in a large and unexpected tax liability at tax time. It is also imperative for divorced individuals to adjust their withholdings post-divorce because according to IRS rules, in the event of divorce, individuals must submit an updated W-4 form to their employer within 10 days after the divorce becomes final. For more details regarding when and how to change tax withholding see IRS Publication 505, Tax Withholding and Estimated Tax.