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What Is Spousal Maintenance?

What Is Spousal Maintenance?

by | Oct 22, 2020 | Alimony

DEFENDING THE PEOPLE OF ARIZONA

MORE THAN 100 YEARS COMBINED EXPERIENCE

What Is Spousal Maintenance?

The end of a marriage does not necessarily mean that the two parties no longer have responsibilities to one another. They may still have responsibilities to fulfill if they share custody or if paying spousal maintenance is ordered by the court.

Whether or not you pay spousal maintenance is part of a settlement and how much is owed by one party are often points of great contention during divorce proceedings. It can be a struggle for both sides.

You need to know all about this topic ahead of divorce proceedings to ensure that you’re not getting the raw end of the deal. Learn more about spousal maintenance, when it becomes necessary, how they calculate it, and several other related topics by continuing with this article.

What Is Spousal Maintenance?

Spousal maintenance is known by a few other names. You may have heard it referred to in the past as spousal support or as alimony. Regardless of how it’s called, the goal for spousal maintenance remains the same.

That goal is to give both parties a chance to land on their feet following the end of the marriage.

So, let’s say that only one of the parties involved had a career throughout the marriage while the other stayed at home to watch the kids. Should the two of them separate, the spouse who remained at home most of the time and did not pursue a career will obviously have a tougher time finding a good job following the end of the marriage.

It would be unfair to that spouse if they suddenly ended up with no means to make money because of the sacrifices they made throughout their marriage.

Furthermore, the state of Arizona also regards the accomplishments reached during the marriage to be the results of the two spouses working together. As such, the contributions of both sides will count following the divorce.

spousal maintenance meeting

Differentiating Spousal Maintenance from Child Support

Before we go deeper into the topic of spousal maintenance, it’s worth taking the time to discuss an important distinction first. Maintenance is not the only financial support you may be required to provide post-divorce. In some cases, you may also be required to pay child support.

So, how do those two differ?

Child support is only for goods or services that your child or children need. They are not for any personal purchases.

Spousal maintenance is different because your former partner can decide how to use it. They can use it on personal purchases if they so desire.

It’s important to make that distinction whether you’re sending or receiving the payments. You could end up running into trouble with the law if you fail to make that distinction.

When Does Spousal Support Become Necessary?

One of the parties involved in the divorce requests spousal support. Even before the matter reaches the court, the two sides may already decide that spousal maintenance is necessary and will include that in their divorce.

However, there are also cases wherein one side will request alimony while the other will object. In that case, the court will be the one to decide if the provision of alimony is indeed necessary.

The court generally considers a few factors when deciding whether paying spousal maintenance is needed.

The Party Seeking Maintenance Lacks the Means to Cover Their Reasonable Needs

First off, the court may order the payment of spousal maintenance if the party seeking it lacks the means to cover their daily needs. If the party requesting support does not have a steady income, the court may order the other side to pay maintenance.

The Party Seeking Maintenance Is Unable to Secure Employment Due to a Lack of Skills or Due to Their Child’s Needs

Maintenance also becomes a necessity if the court sees that the party requesting it cannot find work so easily.

The reason they struggle to find work could be because they don’t have the requisite skills and/or experience. After many years spent staying at home, the party in question may not have had the opportunity to develop their skills. Spousal maintenance will help make up for that.

There are also cases where the party requesting support is the primary parent of a child who cannot be left alone due to their age or condition. The regular support payments will help those parents out.

The Party Seeking Maintenance Contributed to Their Former Partner’s Education, Career, or Training

Let’s say that you helped pay for your spouse’s college education earlier in your marriage. Now that the two of you are separating, they must compensate you for those earlier contributions via spousal maintenance.

The Party Seeking Maintenance May Struggle to Find Adequate Employment Due to Their Age and Long Marriage

If a marriage lasts long enough and the party asking for spousal support is at an age where securing adequate employment becomes hard, the courts may grant their request. Note that there are no set guidelines for what constitutes a long marriage in the eyes of Arizona law. That matter will be left up to the court to decide.

The Party Seeking Maintenance Gave Up Career Opportunities or Steady Income for the Other Spouse

One of the parties in a marriage may have sacrificed career prospects for their spouse. They could have decided to stay at home to watch over their kids and put their career on pause because of that. Spousal maintenance is supposed to compensate the party who made that sacrifice.

How Are Alimony Payments Calculated?

Spousal maintenance payments are not determined randomly. The court will first take into consideration a variety of factors to come up with the right amount that one party has to pay. They consider numerous factors when calculating the total amount of spousal support to be paid, and they are below. The standard of living established throughout the marriage

  • The length of the marriage
  • The status of the party seeking maintenance accounting for their age, wellbeing, earning ability, and employment history
  • The ability of the party to provide spousal support to sustain themselves and the party requesting maintenance
  • The finances and earning abilities of the two parties
  • The contributions made by the party seeking maintenance to the other spouse’s earning ability
  • The sacrifices made by the party seeking maintenance to benefit the other spouse
  • The abilities of both parties to pay for their children’s education
  • The resources of the party seeking maintenance and their ability to self-sustain
  • The time the party seeking maintenance will need to find adequate employment and whether they need further education or training
  • Excessive expenditures, the concealment, destruction, or fraudulent disposition of community, and properties held in common
  • The cost of health insurance the party seeking maintenance will need to pay, and the reduction in payment the other spouse will pay if they change their health insurance plan following the divorce
  • Damages resulting from the criminal conviction of either party that resulted in either the other spouse or their children being victimized

Can the Amount of Spousal Maintenance Payments Change?

How much you receive as spousal support or how much you pay can change over time.

Spousal maintenance payments could increase if the party receiving them lost their job. Other changes to the job market could also be cited as reasons why the payments should be increased.

On the other hand, the payments could decrease if the party on the receiving end has landed a higher-paying job. The court may also decide to lower the payments if the party charged with making them lost their job.

One side will typically ask the court to make changes to the spousal support payments before they can take effect.

spousal support payment

How Long Are Spousal Support Payments Supposed to Be Made?

No law sets a specific length of time for spousal maintenance. The courts will decide how long they will need them on a case-by-case basis. They will continue until such time that the prescribed payment period ends.

However, spousal support can terminate for a few reasons. If the party receiving the support dies, the other spouse will no longer make the payments. Support can also end if the party on the receiving end gets married again.

Do note, though, that getting married again does not automatically put an end to spousal support.

For instance, the court may decide to re-evaluate the payments after the party receiving the support remarries. Upon doing so, the court may check if the new marriage has improved that party’s financial situation. If their financial status has not improved significantly, the court could rule that spousal support must continue even after the party receiving the payments is married again.

The court could also find that the party receiving spousal support’s financial status has at least improved to some degree. Citing that, the court may opt to lower the payments that the other spouse has to send.

Spousal support can also continue through remarriage if the party receiving the payments made significant contributions to their former spouse’s education or career. They must still compensate for their previous contributions so their new marriage will not impact spousal support.

How Are Spousal Maintenance Payments Made?

The process of paying alimony will depend on the paying party’s employment.

If the party in question is an employee at a company or business, the courts can place an Income Withholding Order on their paychecks. The order instructs the employer of the paying party to deduct the amount corresponding to the spousal maintenance payments from their employee’s paychecks.

The employer will then send those deducted amounts to the clerk of the superior court. The clerk of the superior court will then record the payments and send them to the other party.

If you’re self-employed, you will send the payments to the clerk of the superior court yourself. The same holds true for unemployed individuals who make spousal support payments.

Can You Send the Spousal Maintenance Payment in a Lump Sum?

For those tasked with sending spousal support payments, having to make regular trips to the clerk of the superior court can become tedious and bothersome. The good news is that lump sum payments are permitted.

How Do You Request Alimony?

You should request spousal maintenance early in the divorce proceedings. When exactly you should make your request depends on whether you are the petitioner or the respondent to the petition for dissolution of marriage.

As the petitioner, you should request spousal support when you file the petition initially. Make it known as soon as possible to both the court and your former spouse that you need that financial support.

As the respondent, you should mention spousal support in your response to the petition. Don’t forget to mention that right away so they can consider it during the divorce proceedings.

Do You Need to Worry about Taxes When It Comes to Spousal Maintenance?

There are no blanket responses regarding taxes and spousal maintenance payments. They will need to consider the specifics of your situation first to determine your potential obligations.

Do note, though, that the party sending the payments may sometimes be allowed to deduct those from their tax obligations. On the other hand, the party receiving the spousal support may also report the payments as additional income.

Divorce could end up being one of the hardest ordeals you’ll ever go through. It could be even tougher if you lack the resources necessary to re-establish your life following the end of your marriage.

Make sure that you receive the support you’re entitled to by requesting spousal maintenance. Partner with us at the Schill Law Group if you want to receive the compensation you deserve.

9 Common Factors of Divorce in Arizona, from Start to Finish

9 Common Factors of Divorce in Arizona, from Start to Finish

by | Jul 20, 2020 | Alimony, Child custody, Child Support, Divorce, Legal Seperation, Parenting, Visitation

Defending the People of Arizona

With more than 100 Years of combined experience

9 Common Factors of Divorce in Arizona, from Start to Finish

Many people who decide to divorce have never been in court and are unfamiliar with what to expect. If you want to end your marriage, you will have to go through the divorce process. While there are certain exceptions through which you might be able to get an annulment, most people will need to go through the divorce process to terminate their marriages.

In Arizona, this process is called a dissolution. When you go through the dissolution process, you will need to make decisions about many different issues, including community property, debt and asset division, spousal maintenance, child custody and visitation, and child support. By understanding the divorce process, you might be able to anticipate what to expect.

The attorneys at the Schill Law Group can help to guide you throughout the process and demystify it for you. Here is an overview of the stages of a divorce from its beginning to the end.

1. Filing the Petition for Dissolution

The first step to take when you want to get a divorce is to file the petition for dissolution. Under A.R.S. § 25-311, people must make sure to file their petitions for dissolution with the court that has jurisdiction to hear the matter.

Under A.R.S. § 25-312, one or both of the parties must have been domiciled or serving in the military in Arizona for at least 90 days at the time that the petition is filed. Your petition will be filed along with a summons and other documents, including a preliminary injunction, request for temporary orders, and others that apply to your situation. In your petition, you will list what you are requesting about property division, spousal maintenance, child custody and visitation, child support, and attorney’s fees and costs.

2. Service of Process and the Response

After your petition and other documents are filed, the court will issue a notice and summons to respond. You must serve copies of the petition, the summons, and any other legal documents that you have filed in the case of your spouse. You will be called the petitioner, and your spouse will be called the respondent. You can hire a private process server or use the sheriff’s department to serve your spouse.

However, if you can get your spouse to agree to waive service of the documents, he or she can sign a waiver that can be filed with the court. Once your spouse has been properly served with notice of your divorce, he or she will have time to file the response. If your spouse lives in Arizona, he or she will have to respond to your petition within 20 days of when he or she was served. If your spouse lives out of the state, he or she will have 30 days to file his or her response. Under Arizona law, the only defense to a petition for dissolution in a regular divorce is that the marriage is not irretrievably broken under A.R.S. § 25-314. If your spouse fails to respond to the petition after being properly served, the court can grant a default divorce decree after 60 days from the date of service.

3. Temporary Orders

In some cases, people will file requests for temporary orders or preliminary injunctions at the time that they file petitions for divorce under A.R.S. § 25-315. Either party can ask for temporary orders, including the respondents. These orders establish the rules for how different things will be handled while the divorce is still pending.

For example, you might ask for temporary orders for child custody and visitation, child support, who will remain in the house, who will be responsible for paying the bills, and spousal maintenance. A preliminary injunction might be issued by the court to restrain both you and your spouse from spoliating or disposing of the property before the divorce is completed.

It can take a few months before temporary orders are issued. If there is an emergency, a spouse can request emergency temporary orders that can be heard much faster.

4. The Discovery Process

Once the petition and response have been filed, the divorce case will move into the discovery phase. Both you and your spouse are entitled to receive information from each other about your assets and other relevant factors about your case.

The process for obtaining the needed information is called discovery. It can be a straightforward process in some cases. In others, it can be time-consuming and expensive. In most cases, the size and value of your estate and the length of your marriage can impact how much discovery is necessary.

The discovery phase might involve several procedures. Your lawyer will submit and receive information for you, but you will also need to provide input. Interrogatories are written lists of questions that you can send to your spouse. Your spouse can also send interrogatories to you. If you receive interrogatories, you must respond with written answers within a set period.

If you need certain documents that have not been provided to you, your attorney can file a request for the production of documents to secure them. Either you or your spouse can schedule a deposition. This is an out-of-court proceeding during which you, your spouse, and other witnesses may be asked questions under oath and in person. When a deposition is held, a court reporter will be present and will prepare a transcript of what occurred. The attorneys will ask the questions at a deposition.

In some cases, attorneys can complete discovery without resorting to the formal processes that have been described above. This is almost always less expensive and more efficient than going through a more formal process.

5. Negotiating a Settlement

Other than in cases that involve domestic violence, drug or alcohol abuse, child abuse, or people who are possibly hiding assets, it is often best to try to resolve a divorce case by negotiating a settlement agreement. People who can negotiate divorce settlements are often happier than those who leave the decisions up to the judge.

Negotiated settlements give the parties greater control and privacy. Spouses who reach negotiated settlements are likelier to comply with them than they are with orders from a court. If you reach a negotiated settlement with your spouse, you can file it in court. As long as the judge finds that your agreement is fair and conscionable, your settlement agreement will be a part of your final divorce decree.

Judges may sometimes order mediation to try to encourage the parties to settle their cases. In many cases, people can resolve many of their outstanding legal issues during mediation. Your lawyer can represent you during mediation. While he or she may recommend that you reject or accept a proposal to settle, the decision will be yours.

6. Divorce Trial

If you cannot reach a settlement agreement with your spouse, your divorce case will go to a divorce trial. At your trial, you will each be provided with the opportunity to present evidence, call witnesses, give testimony, and submit exhibits. You and your spouse will likely have to testify and to submit to cross-examination by the opposing attorney.

If your case does go to trial, it will likely be more expensive. In some cases, it might be the only way to reach an end to your marriage. You should keep in mind that trials are risky. Your attorney cannot predict the outcome for you. The judge will issue his or her orders as he or she understands the case. The judge will not know you or your spouse but will be given the power to tell you how to live your life after your divorce.

In some cases, a trial will not be the final step of a case. If you or your spouse are unhappy with what happened, either of you can file an appeal. If an appeal is filed, more time and expense will be involved. Appeals are also difficult to win.

7. Divorces with Children and Custody Issues

If your divorce will involve child custody issues for the minor children that you share with your spouse, you will have to file a petition for dissolution with minor children. For this type of divorce, you and your spouse will need to try to negotiate a parenting plan. If you cannot reach an agreement, you will each need to submit a proposed parenting plan to the court.

Child custody and visitation issues are frequently among the most contentious issues in divorce. They can also present added challenges for your attorney. While your lawyer is loyal to you, he or she also must keep the best interests of the children in mind.

Your parenting plan will include information about legal decision-making authority and parenting time for you and your spouse. Legal decision-making authority refers to which of you will have the ability to make decisions for your child’s religion, education, and medical care. Parenting time refers to where your child will reside and how much visitation time he or she will have with the other parent.

Legal decision-making authority and physical custody may both be either sole or shared. Your attorney can explain how this might look and advise you on the types of custody that might be most appropriate in your situation. Parents who are divorcing, with minor children, will also be required to attend parenting classes.

8. Determination of Child Support

Another issue that will be at play in a divorce with children in Arizona is child support. Under A.R.S. § 25-501, both parents are expected to contribute financially to the upbringing of their child. Arizona has child support guidelines for courts to use to determine the amount of support to order. This can help to make the amount of child support that you might have to pay or might receive more predictable.

9. Keeping the Best Interests of Your Children in Mind

If you cannot reach an agreement with your spouse about child custody issues, the court will follow the factors that are outlined under the best interests of the child standard in A.R.S. § 25-403. Regardless of whether you take your child custody issues to trial, you should conduct yourself in a way that will minimize the emotional harm to your children during and after your divorce.

Always put your children first. You should never try to use them as a weapon against your estranged spouse. Do not talk badly about your spouse to your children or in front of them to others. Encourage your children to spend a lot of time with your spouse. Remember that divorce is just as hard on children as it is on the adults.

However, children are less equipped to deal with the emotional conflicts and fallout that divorce can bring.

You should not introduce your children to your new romantic interest until they have had plenty of time to adjust to their new reality. You should also not take your children with you to your attorney’s office or the court. Be flexible and try to stick to the schedule that has been ordered or that you have created with your spouse.

Talk to your spouse about discipline issues and try to reach an agreement so that there can be continuity between both of your homes.

Complete Help from the Phoenix Divorce Lawyers at the Schill Law Group

Getting divorced is not easy for most people. If you want to end your marriage or have been served with a petition for divorce, contact the Schill Law Group for help and guidance through difficult times. Call us today at 480.525.8900 to schedule a consultation.

 

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High Net Worth Divorce in Arizona

High Net Worth Divorce in Arizona

by | May 4, 2020 | Alimony, Annulment, Divorce, Legal Seperation, Parenting, Paternity

Defending the People of Arizona

With more than 100 Years of combined experience

High Net Worth Divorce in Arizona

When younger couples get divorced in Arizona, the process may be fairly straightforward because they may not have had much time to accumulate very many assets. However, if you have been married for a long time and have built substantial assets during your marriage, you may have to go through a type of dissolution called a high net worth divorce.

This type of divorce can be very complex because of the different types of assets that may be involved. High net worth divorces may involve complex asset classes and holdings worth hundreds of thousands up to millions of dollars. People who go through these types of divorces will likely need to get the help of a competent family law attorney who is experienced in handling high net worth divorce cases.

The Schill Law Group understands complex asset and debt division matters and is prepared to help.

How is a High Net Worth Divorce Different from a Regular Divorce?

A high net worth divorce will frequently involve complex legal and business issues that are not involved in regular divorces. High net worth couples may have vastly more extensive assets, including businesses, real estate holdings, art collections, trusts, stocks and bonds, investment accounts, retirement accounts, jewelry, and more. All of these types of assets may need to be identified, located, and valued to accomplish an appropriate division of property.

Under A.R.S. § 25-211, Arizona is a community property state.[1] This means that all of the assets that you have accumulated during your marriage that are not deemed separate property are considered to be equally owned by both spouses and subject to equal division. In many high net worth divorces, however, there may be antenuptial agreements in place.

High net worth divorces are likelier to include disputes about whether certain assets should be considered to be separate or community property.

How are Trusts Handled in High Net Worth Divorces?

Some wealthy couples have trusts established to hold substantial amounts of their assets. The handling of the assets of a trust can be crucial for the outcome of the property division in a high net worth divorce. When a spouse funds a trust with community property, it can transform the assets in the trust from being considered to be the separate property of that spouse to being considered to be the community property of both spouses to be divided in the divorce.

Normally, a trust that was created by a third party to benefit one spouse but not the other will be considered to be the beneficiary spouse’s separate property. The other spouse might argue that the court should consider the trust when it determines the amounts of spousal and child support that the other spouse should be granted.

When a trust is involved in a divorce, an attorney will need to seek disclosure from the trust. This can be hard because trust accounts may be located outside of the U.S. Trustees for U.S. trusts will normally send disclosures in response to a request. Offshore trusts might have trustees that fail to respond. When that happens, you might have to file a petition with that country’s court to seek an order for the trustee to provide disclosures.

How are Businesses Handled in Divorces?

Many high net worth divorce cases involve private businesses. When a private company is owned by one of the spouses, multiple complex issues will need to be addressed. The business will need to be properly valued. If the company has assets that are spread around the world, the valuation will be more complex. Often, business valuations will require significant investigations and the work of forensic accountants.

After a business valuation is completed, the divorcing couple will then need to determine how to distribute it in the property division portion of their divorce. One spouse may not be willing to give up his or her interest in the company. The spouse that wishes to keep control of the company might need to give a larger portion of the other assets to his or her spouse to retain control of the business.

How is Real Estate Handled in a High Net Worth Divorce?

While a regular divorce might involve dividing the marital home, high net worth divorces may involve real estate holdings beyond the home. Wealthy couples might have rental properties, commercial properties, and vacation homes. An appraisal of each of the various properties that are owned will need to be completed to understand what their fair market values are.

Some of the real estate properties might be the separate property that one spouse brought into the marriage. Other properties might be community property. Finally, some separate real estate might become community property if marital funds were used to make improvements. All of these issues will need to be addressed to ensure a fair division of the property.

Types of Complex Valuations in a Divorce

There are multiple types of complex valuations that might be necessary for a high net worth divorce. Some of the types of valuations that might need to be completed include the following:

  • Retirement accounts
  • Investment accounts
  • Stocks and bonds
  • Jewelry
  • Art collections
  • Intellectual property
  • Real estate
  • Businesses
  • Yachts
  • Other valuable assets

Different experts might have to value the assets from within their fields and submit written appraisals. In some cases, each spouse will hire his or her experts to testify about how they arrived at their valuations.

Spousal Maintenance in High Net Worth Divorces

Under A.R.S. § 25-530, spousal maintenance is a type of support that may be ordered by the court in cases in which the divorcing spouses have a large income disparity. Spousal maintenance is in addition to any child support that might be ordered, and it is frequently at issue in high net worth divorces. However, some cases involve prenuptial agreements through which the lower-earning spouse may have waived his or her rights to spousal maintenance.

In those types of cases, the lower-earning spouses might challenge the prenuptial agreements’ validity and claim that he or she signed under duress. A lower-earning spouse might also claim that the wealthy spouse failed to disclose all of his or her assets, meaning that the lower-earning spouse could not understand the rights that he or she was waiving.

Managing tax implications involved with asset division

Many tax implications might be involved in high net worth divorces. Both spouses will need to consider credits and deductions that might be lost after divorcing. Spouses who will have to pay spousal maintenance are not able to deduct the payments on their taxes any longer, and spouses who receive spousal maintenance are required to report the payments as income on their tax returns.

Transferring certain assets in divorces can trigger tax consequences. Some of the illiquid assets that might involve tax issues include the following:

  • Brokerage account funds
  • 403(b) accounts
  • 401(k) accounts
  • IRAs
  • Stock options
  • Annuities
  • Thrift savings plans

To prevent tax consequences when transferring some of these illiquid assets, a qualified domestic relations order may need to be prepared. This might help people to avoid penalties and taxes on what is transferred.

Concealment of Assets During a Divorce

Unfortunately, some spouses try to conceal or hide assets to prevent their spouses from getting their rightful share in divorces. They might try to transfer assets to family members or friends, hide them, or spoliate the assets. Others simply do not disclose all of their assets. For example, they might have accounts that are not disclosed and transfer funds from disclosed accounts to make it appear as if they have less. They might also move assets to offshore locations or place community assets in trusts.

Whenever a spouse believes that the other spouse is concealing or hiding assets, he or she will need to get help from an experienced attorney. A lawyer might work with a forensic accountant to find assets that have been spoliated, hidden, or concealed. If it is not possible to determine the extent of the person’s actions, the court can draw an adverse inference against the spouse who has engaged in this type of behavior.

Schill Law Group Experienced High Net Worth Attorneys

If you have accumulated substantial assets during your marriage and want to get divorced, getting help from an experienced high net worth divorce lawyer at The Schill Law Group is important. Our experienced property division and divorce lawyers understand how to handle the complex issues that are frequently involved in these types of divorces.

Contact us today to schedule a consultation by calling us at 480.525.8900.

 

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How Could the New Tax Reform Bill Impact Alimony Deductions?

by | Jan 22, 2018 | Alimony, Divorce, Legal Seperation, Tax Reform

Defending the People of Arizona

With more than 100 Years of combined experience

How Could the New Tax Reform Bill Impact Alimony Deductions?

All Americans will be impacted by the new tax reform bill in one way or another. For those who are going through the divorce process, however, the bill could make its mark in the immediate future. We’ve been keeping our eye on the Tax Cuts and Job Act and the ways in which it has promised to play a role in spousal support awards in 2018 and into the future.

Arizona Spousal Support 101

Frequently referred to as “alimony,” spousal support is sometimes awarded to one spouse in a divorce by an Arizona judge. This typically happens when one spouse has been the primary “bread winner” for the family throughout the years while the other spouse has taken time away from work to raise the family or care for the home. Here, a judge will order the spouse with a higher income to make support payments to the other party for a limited period of time, thus encouraging him or her to become financially independent. In other instances, spousal support may be ordered for a longer period of time, such as in situations where one spouse is disabled or unable to work.

The amount of spousal support awarded by an Arizona judge will depend on a number of different factors. A judge will consider the income of both spouses, the education and work experience of the spouse who will be awarded spousal support, the length of the marriage, etc. Ultimately, the intent of spousal support is to ease the process of transitioning into a new post-divorce life. Schill Law Group has worked on a number of Arizona spousal support cases and has pushed for fair and reasonable judgments that allow for a smoother divorce or separation.

Tax Laws and Arizona Spousal Support

Traditionally, the spouse who has been ordered to pay spousal support has received some benefit for doing so. This benefit has come in the form of tax deductions. While the paying spouse is entitled to a tax deduction on annual income tax forms, the receiving spouse is required by law to claim it as income and pay taxes on it. Unfortunately, the IRS has reported that there have been many problems with this system. In fact, the IRS claims billions of dollars worth of discrepancies between the amount of money that payees are claiming as alimony deceptions versus the amount of money that recipients are claiming as income and paying taxes on.

The New Tax Reform Bill and Arizona Spousal Support

The new tax reform bill has made an effort to correct these disparities by completely axing the alimony deduction from income taxes beyond 2017. While the idea is to help the national economy and the IRS, many Arizonans – and people throughout the country – have concerns about what the implications may be for divorces in 2018 and beyond. Critics are worried that both payers and recipients of spousal support may be negatively impacted. Obviously, those ordered to pay spousal support will no longer be able to enjoy the tax break each year, thus causing them to lose more money to the government. On the flip side, critics say that recipients may receive less spousal support because the payers will be giving more of their money to Uncle Sam.

Because the tax reform bill will only impact those getting divorced after January 1, 2018, we will only start to see the true implications of the law on spousal support cases in the weeks and months ahead. Regardless of what happens, you can count on the fact that Schill Law Group has what it takes to fight for your best interests and for what’s fair. Give us a call for a free case consultation to get started today.

Common Links Between Divorce and Bankruptcy

by | Oct 3, 2017 | Alimony, Child Support, Divorce

Defending the People of Arizona

With more than 100 Years of combined experience

Common Links Between Divorce and Bankruptcy

When going through a divorce, one of the last things you want to think about is filing for bankruptcy. Unfortunately, it’s actually not all that uncommon for Arizona residents to be forced to consider the bankruptcy option, and that can make things difficult. After all, both filing for bankruptcy or for divorce entails complex financial issues, and when the two legal scenarios intersect, the issues grow even more complicated. To further explore this topic, we’ve broken down three of the common links between divorce and bankruptcy in the state of Arizona.

Financial Obligations

Generally speaking, there are two types of financial obligations that come out of a divorce that have the ability to impact a bankruptcy: (1) child or spousal support, and (2) the division of marital property. In the event that one or both spouses file for a Chapter 7 or Chapter 13 bankruptcy, it is likely that any support obligations will remain enforceable. When dealing with any outstanding obligations that are tied to property division, however, a Chapter 13 bankruptcy filing could make a significant impact. Your Schill Law Group attorney can help you determine specifically how your divorce obligations may be affected by a bankruptcy.

Timing

If you and your spouse have been considering bankruptcy, you will likely have questions about when to file. Is it better to file for bankruptcy before filing for divorce or after? Making the decision to file jointly for bankruptcy prior to filing for divorce may result in your ability to save money on court costs, and the process of dividing assets and debts may be simplified. Additionally, if you choose to file for divorce more than 180 days after filing for bankruptcy, you’ll find that any property that is awarded in the divorce will be inaccessible to creditors.

There are, however, benefits to beginning the divorce process prior to filing for bankruptcy. There is a chance that doing so could allow for more options regarding the type of bankruptcy that you pursue. While a Chapter 7 filing can be completed within a few months, making it simple for you to quickly complete the process before divorce, a Chapter 13 takes much longer to complete and will complicate the divorce process. Consequently, it’s usually better to file for divorce before bankruptcy if you plan to go the Chapter 13 route.

Working Together 

The financial aspect of any divorce is stressful, but when a bankruptcy is involved, it puts a lot more pressure on both parties. If you hope to file for both a divorce and a bankruptcy during the same window of time, it’s imperative that you and your spouse have the ability to work together in order to make the process go as smoothly as possible. In many cases, this means that you should both hire attorneys who understand the legalities of both divorce and bankruptcy filings. This will allow you to communicate constructively and to ensure that you are treated fairly.

No one looks forward to filing for bankruptcy or for divorce, but these processes don’t need to be as stressful as you may imagine. In order to avoid any negative impact on your bankruptcy or divorce filing, you’ll need to be willing to offer full disclosures to all professionals who may be involved with your cases/filings. If you are planning on filing for bankruptcy, you should advise your bankruptcy attorney about the likelihood of your divorce. Similarly, your divorce attorney should be told that you are considering filing for bankruptcy.

Do you need help with your divorce or bankruptcy in Arizona? The attorneys at Schill Law Group have experience in both of these areas, putting us in the unique position to be able to handle your case. Give us a call to learn more today.

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