A different take on prenuptial agreements

A great many articles focus on the need to secure a prenup prior to walking down the aisle. These pieces are usually written from the perspective of the more moneyed partner, who is looking to shield his or her wealth from loss due to a Florida divorce. This is an understandable approach, but in many cases the application of prenuptial agreements is somewhat heavy-handed. The party who comes into the relationship with fewer assets should gain his or her own legal counsel to make sure that the document is fair and balanced.

For example, business interests are often among the most common reasons for seeking a prenup. However, even if one party enters into marriage with a business already in place, that is not to say that his or her spouse will not make significant contributions to that business as the marriage moves forward. If he or she signed a prenup that excludes any and all business assets from the property division portion of a divorce, then that spouse could be unfairly excluded from wealth that he or she played a role in creating.

A more balanced approach would be to gain a professional estimation of the value of the business at the time a prenup is drafted. That would allow the business owner to designate a dollar amount that would be protected from loss during a divorce. Any increase in value over the years would become subject to the rules of property division, giving the other spouse a chance to share in the increased worth that he or she helped to create. This approach would effectively protect the business owner from losses based on a very short marriage, due to the fact that the value of the business is unlikely to experience substantial gains in such a short period of time.

Prenuptial agreements are becoming more and more common, and being asked to sign one should not be a cause for concern. However, both parties should take the time to obtain legal advice on the provisions spelled out within the document, and should be aware that negotiation is always an option. No one should sign an agreement that would effectively strip them of the rights they are entitled to by Florida law.

Source: The Huffington Post, “5 Reasons For a Prenup–Even if You Aren’t a Celebrity“, Kyung Dickerson, June 24, 2016

Is the timing right to file for a high asset divorce?

Far too many Florida couples live together in misery for many years after it has become clear that the marriage is doomed to fail. It can be hard to know when to throw in the towel and file for divorce. Those who are facing a high asset divorce often dread the process and all of the uncertainties that will follow. However, there are certain signs that indicate that the time has come to move forward with a divorce.

One scenario that can indicate the need to file for divorce is when one or both spouses are experiencing elevated levels of stress. It is well-documented that stress can contribute to a wide range of serious health issues, many of which can be life-threatening. In cases where marital strife or unhappiness has led to a significant amount of stress, calling an end to the marriage is the best thing for all involved.

Another sign that the timing is right for a divorce is after the sale of certain high-dollar assets. Many couples fight bitterly over who will retain the family home. For couples who have recently sold a home or second home, that can reduce the number of items that must be negotiated during the divorce.

A high asset divorce can be an intimidating challenge to face. For many Florida spouses, however, the fears surrounding the unknown are far worse than the realities of the divorce. Spouses should make an effort to identify when the time is right to seek a divorce, and they should take advantage of favorable circumstances to move forward in that process. There are plenty of bright horizons ahead, but reaching those destinations requires initiating the process sooner rather than later.

Source: The Huffington Post, “7 Reasons You Can’t Afford NOT To Get Divorced“, Jason Levoy, June 20, 2016

Alimony is not the only tax impact of divorce

When preparing to end a marriage, many Florida couples consider how the change in their marital status will affect their taxes. Most understand that alimony is both a tax-deductible expense for the paying party, as well as a tax-triggering form of income for the recipient. However, there are a range of other ways that divorce can impact taxes, and savvy spouses will consider the timing of their divorce to minimize additional expense.

One of the most basic ways that divorce will affect taxes is through each taxpayer’s filing status. In many cases, filing as a married couples will reap tax benefits. As such, some couples will postpone finalizing their divorce until after the new year rolls around. Another way that divorce will bring about tax changes has to do with which parent will receive the right to claim a child or children as dependents. This does not always directly correlate to the living arrangements for each child, so it is best to consult with an attorney to decide if tax deductions should become part of the overall divorce negotiation strategy.

Spouses should also think about the mortgage tax deduction, and how they would be taxed should they decide to sell the home and divide the proceeds. This is an area where no two couples will have the same outcome. It is important to work through the issue with a family law attorney or financial advisor who specializes in tax matters.  

Finally, Florida spouses should know that there are certain divorce expenses that are tax-deductible. Fees that are related to collecting alimony qualify, as do expenses for advising services for tax purposes or those related to income-producing property. If those situations apply, both spouses should ask their attorney for an itemized breakdown of charges, so that the proper amount can be included in next year’s tax return.

Source: nasdaq.com, “8 Ways To Make Divorce Less Taxing“, June 7, 2016

Chris Martin and Gwyneth Paltrow complete high asset divorce

Anyone in Florida who is going through the end of a marriage should be grateful not to hold celebrity status. Having the ins and outs of one’s high asset divorce made into national news could not be easy, even for those who have made a living courting the attention of the media. One of the latest celebrity couples to go through a divorce is comprised of musician Chris Martin and actress Gwyneth Paltrow.

This is one celebrity divorce that has been overwhelmingly positive. The couple shares two children, and both parents have gone to great lengths to remain amicable as they worked through the details of their divorce. Many readers are familiar with their approach to divorce, which is known as “conscious uncoupling.” While not their own invention, Paltrow and Martin have certainly brought awareness to the approach.

Through conscious uncoupling, the pair have put their children at the center of their divorce, and have made decisions that will support and nurture their kids. They continue to do things together as a family, and have found a way to share parenting time that works for all involved. Of note, there have been no reports of struggle or strife as the couple moved through the divorce process, which is a difficult feat given the fact that the media is constant within their lives.

For those in Florida who admire Martin and Paltrow’s unusual approach to divorce, it is important to understand that a similar path is available through the collaborative divorce process. By placing an emphasis on shared goals and what is best for all involved, it is possible to move from married to single with grace. Whether in or out of the spotlight, an amicable high asset divorce is a worthy endeavor.

Source: upi.com, “Gwyneth Paltrow, Chris Martin divorce finalized“, Marilyn Malara, May 26, 2016

Property division should prompt a review of insurance needs

Having various types of insurance policies has become part of the American way of life. Often, we take on more types of insurance as we grow into adulthood, and as our responsibilities increase. When a divorce and subsequent property division takes place, the landscape of those insurance needs often shifts. The end of a Florida marriage is a perfect time to reevaluate one’s current level of coverage and to determine what changes are appropriate.

Consider, for example, the need for homeowner’s insurance. If only one party will retain the family home, that party should also assume responsibility for insuring the property. On the other hand, if a party is moving out of the home and will be renting for a period of time, it may be worthwhile to think about renter’s insurance to protect belongings that will be stored inside the new home.

Life insurance is another area that should be reviewed during and after a divorce. Most spouses have very little interest in providing a windfall to their former spouse when they pass away. However, if changes are not made to life insurance beneficiary designations, that is exactly what could take place. On the other hand, a spouse who is tasked with making child support payments might also need to purchase life insurance as part of that support.

In many cases, there are savings to be had by making a comprehensive assessment of one’s insurance needs following a divorce and property division. Some Florida residents will find that such a review is long overdue, and that there are better and more affordable coverage options available. This is one area of divorce where the financial outcome might be positive, rather than negative.

Source: Forbes, “5 Crucial Insurance Changes After Divorce“, Barbara Marquand, May 25, 2016