It is tax season again which makes us think about all the tax issues that we raise in divorce mediation. In divorce mediation, we guide divorcing couples through child support, spousal support and division of assets, and tax issues arise during all of these discussions.  At Westfield Mediation, LLC, we always advise our clients to speak with their accountants during the divorce process to make sure that the clients understand the tax benefits and obligations in their agreements.

First, we explain that spousal support or alimony counts as income to the recipient, and is deductible by the payor. It is important to know this so that if you receive alimony, you are prepared to meet your tax obligations when they come due. It may also factor into your decision about whether or not to opt for alimony or instead select a greater share of the marital assets or a smaller share of the marital debts.

Taxes are also a concern in child support. The amount of child support may vary depending on which parent is claiming the children as dependents. Sometimes, parents alternate which one will be able to claim this deduction, and sometimes if they have multiple children, they divide the dependents between them.

Finally, the topic of taxes arises in the division of assets and liabilities. Some assets are taxable while others like retirement accounts are tax–deferred. In addition, if one party keeps the marital home, he or she may also get the tax benefits of home ownership. Sale of the marital home may lead to taxable income depending on how long they have owned the residence and how much money they earn from the sale.

In divorce mediation, we help couples ask and answer important financial questions. This way, they know that the agreement will work for them going forward.

For more information about Divorce Mediation, please call Randi M. Albert, JD or Michelle Weinberg, LMFT at Westfield Mediation, LLC at 908-913-0373 or email us at info@westfieldnjmediation.com. You can also visit our website www.westfieldnjmediation.com

A lot of people feel stuck when it comes to dividing up the assets and monies during divorce.  One person may want no part of a risky stock portfolio and more than 50% from the sale of the marital home or vice-versa.  Another person may be okay sharing their investments, but not their pension. These issues can be negotiated between husband and wife in mediation.  Divorce mediation allows you to divide up your marital assets according to your needs post-divorce.  But what is a marital asset?  There are a few limited exceptions, but generally a marital asset is everything you and your spouse accumulate during the marriage, regardless of who did the accumulating.  Items in one person’s name, like a 401K, IRA, car, bonus money, stock purchase plan are marital assets, as are jointly owned investments such as a house or stock portfolio.

Mediation requires that each party is forthcoming about all of their marital assets.  Mediation works because people are honest about their finances and are able to put it all on the table to be divvied up.  If one spouse suspects the other spouse of hiding assets, he or she can hire a forensic accountant and attorney to find the missing money.  This can be time consuming, expensive and emotionally draining.   It also harms the post-divorce relationship because the trust building relationship that can be fostered during mediation is dissolved during litigation.  During litigation the missing monies will be found by the forensic accountant or the attorney through depositions, interrogatories and notices to produce documentation.   The hiding spouse is going to get caught anyway, so he or she might as well be honest from the start.  The pot of monies to divide up will be larger if the couple does  not have to spend  all that money on the lawyers and accountants to get to the same place, exposed. 

During divorce mediation you can amicably decide how to best meet your financial needs for your post-divorce future.  We often find that one person is more informed about the couple’s finances than the other.  Our job as a mediator is to help both parties understand their current financial picture, figure out their financial future, and help each party develop a feasible individual financial plan for that future. 

For more information about Divorce Mediation contact Randi M. Albert, JD, or Michelle Weinberg, LMFT, at Westfield Mediation, LLC, at 908.913.0373.  View our website at www.westfieldnjmediation.com or email us at info@westfieldnjmediation.com