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Bye-bye Tax-deductible Alimony. Hello New Child Tax Credit

As you most likely already know, as of January 2019, alimony laws are changing drastically. One might say the law about it has been turned upside down.

Since the Revenue Act of 1942, alimony has been a tax deduction for the payer and income to the payee. No longer.

Now and for the foreseeable future, in any divorce granted after January 1, 2019, the alimony payer will shoulder the tax burden. And the payee will no longer pay taxes on that income. So, we expect to see happy payees and unhappy payers.

Our gov expects an increase in tax revenue of more than $6 billion from the move. They base that on the fact that typically, the higher earner alimony payer will be liable for more in tax payments, compared to collecting from the alimony payee who typically earns less.  

We unfortunately foresee alimony fights all over the country for high-income divorcing couples.

Those paying will try to pay as little as possible since they can no longer deduct it from their taxes. The payee might be the winner here since alimony is now tax-free income.

Experts say that the new tax law will most likely result in smaller alimony payments because payers will fight tooth and nail to pay as little as possible. But, in the end, it’s not up to the payee, but up to the judge presiding over the divorce. We’ll watch this issue with interest as it develops.

Furthermore, as if to add insult to injury, the legal fees paid to an attorney for securing alimony will no longer be tax deductible either.

DIVORCE ALREADY GRANTED?

Note that this new law does not affect alimony payments from divorces granted right up to December 31, 2018. Nothing will change for past divorces, only for divorces granted after January 1, 2019. That said, if you go back to court to have those alimony payments adjusted, you might well be subject to the new ruling.

 

WHAT ELSE IS CHANGING?

Besides the new alimony laws, the child tax credit is changing, and this could affect a divorce. It’s a concern. We can’t help wonder if fights over child custody and who gets the child credit will escalate given that the child tax credit is doubling! The 2017 tax reform bill is taking the child tax credit from $1000 to $2000 for every child under the age of 17.

Now, note that this is a credit, not a deduction. It means that, if say, you owe the gov $3000 in taxes for 2019 and you’re getting a credit of $2000 for your child of 17 years of age and under living in your household, you will write a check to Uncle Sam for $1000, not $3000.

And say you only owe the gov. $1500 in taxes, you’ll get your credit of $2000 against it. Yes, in this scenario, you’ll get a tax refund check for $500.

 

WHAT CAN YOU DO?

The best thing for you to do is to meet with your divorce attorney and CPA before you even go into the divorce negotiations.

Your divorce attorney can tell you what you’re most likely to be liable for, or receive, alimony-wise. She or he can also tell you how the child tax credit thing is likely to go.

If you’re sure you’ll be the payer of alimony, see if there is anyway you can offset alimony payments with property, or with say, a 401K or an IRA.

If you’re the payee, you might not want that because it means you’ll shoulder the tax burden on those accounts once retirement time comes around.

Of course, as we always say, figure out a way to compromise by entering a divorce mediation. This way, a solution or compromise might be found so that neither party suffers unduly.

 

5 Important Tips on How to Cope with a Divorce during the Holidays

 In our busy law office, clients who come to us during the holidays always seem a bit more distressed or upset than at other times of the year. We understand. They are going through one of the most difficult and stressful period of their lives at a time of year where everyone is expected to give more, love more, and forgive more. They feel confused and wonder how to find it within themselves to do all of that in the face of a divorce. If children are involved, this time period can become even more difficult and emotional to navigate.

No doubt you need a plan.

One thing to remember is that oftentimes, our emotional state is attached to familiar actions and surroundings. So, the very first thing to do is to change that.

 1.     If possible, venture out of your usual holiday surroundings. Visit out-of-state family, for instance. If this is not possible, see below.

 

2.     Start a new tradition, on your own or with your children if you have them, rather than continue with the ones you followed with your spouse. This will keep you focused on the positive and new rather than distressing over what’s been lost. For the kids, it could be fun and take their minds off what’s now different, namely, that for the first time in their lives, they are only with one parent at a time for this year’s holiday.

Tom had always wanted to take the kids ice-skating around the holidays, but his soon-to-be ex-wife didn’t like it at all, so they never went. He decided to make it a new holiday tradition to spend an afternoon at the ice-skating rink with the kids, and take them for hot chocolate afterward. It turned out to be a hit with them and gave everyone hope that the holidays could still be a happy time for them despite the divorce.

3.     If your children will be with your ex on the holiday itself, plan ahead of time to do something to help others. It’s a well-known fact that helping others lifts us in turn. Volunteering your time to a shelter on that day, for instance, would take your mind off your own suffering and warm your heart as you help others even less fortunate than you. Or find other single parents whose children will be with their other parent that day and celebrate together, doing something none of you usually does on that day.

Karin reached out to two other friends whose children were going to be with their other parent for the last day of Hanukkah. She arranged ahead of time for them to visit residents of a nursing home who didn’t get visitors or whose families lived out-of-state. They bought several low-cost gifts and wrapped them in bright paper and delivered them to these residents with good wishes, bringing tears of joy to the eyes of many of them. By the end of the visit, the women were thankful for the blessings they still had in their own lives. They followed this up with a special dinner at a restaurant none of them had ever visited. They vowed to do it again the next time their children were with their other parent for a holiday.

4.     Your children need love from both parents during this time. The goal is to keep them from thinking they’re being pulled between their parents and made to feel guilty for being with one or the other parent on any given day. If you’re still working out the holiday visitation schedule, be sure that the children have ample time with each parent and vary it up, from year to year if the children have to travel some distance between you and your ex-spouse.

If a certain holiday is very important to both you and your spouse, make it so that you both get the children for a portion of that, but be sure and do it in a way that is enjoyable to the children too. If you live far apart, it would most likely be best to agree to an alternate-year holiday visitation schedule.

Robert and Diane, who live 500 miles apart, agreed that their two children should spend all of the holidays with one another at least until their late teens, and made it so that the children spent the December holiday with Diane during odd years and with Robert during even years.  

Having to fly or take a bus to another state or country, or even city, to get from one parent to another on a holiday to meet a visitation schedule would most likely make your child dread that holiday rather than look forward to it.

5.     Lastly, but most importantly is, do NOT become a recluse. Even if you’d rather pull a double shift at work, or stick your hand in fire,  force yourself to go out and mingle with good friends or family (stay away from those who constantly bring up negative things about your ex, or ask them to stop). Your spirits will lift from your new activities! We are social creatures and even when feeling low, we derive happiness and comfort from being around others.

Have You Made Out Your Divorce Checklist?

We have lists for grocery shopping, for what to pack when we go on a trip, for camping, and for all sorts of other things. Yet, when it comes to some of the most important events of our lives, we often don’t make a list.  We read forums and check out social media to see what others in our situation have done.  But the thing is, none of those people know you. They don’t know your life, your situation.

The only way to do divorce right is for you to put the time into it. Sit down and make a divorce checklist so that you miss nothing when you sit down at the negotiation table, whether that be directly with your spouse, or during a professionally-led mediation.

As you’re creating your checklist, write down your preferred terms for everything. You’d be surprised what can fly out of your head when you’re having an important discussion with high stakes. It doesn’t mean you’ll get it, but at least you will feel you’ve done a good job covering all the angles.

WHAT SHOULD BE ON YOUR LIST

If you have children, you should add the following items to your divorce checklist:

  • Child custody: do you want to share physical custody with your spouse, or will one of you have primary custody and the other visitation?
  • Parenting Plan: on what days are the children with you? On what days with your spouse? How will the holidays be split?
  • Child support: In Nevada, this is pretty much set in stone except for certain allowed deviations. You can see those here: https://nevadadivorce.org/divorce-with-children/
  • Who will get the tax credit when you have a child? Sometimes a judge will order that one parent get the tax credit during even years, and the other parent gets it during odd years.
  • Religious upbringing: do the children currently attend services? Will that change after the divorce?
  • College education: who will pay for this, or will neither party pay. This isn’t mandatory in Nevada.

Whether or not you have children, you should cover these items too:

  • Alimony: are you entitled to it? Or do you have to pay it? There is nothing set in stone regarding alimony in Nevada. It basically comes down to any large discrepancy between the incomes of both parties, and the expenses each will have after the separation or divorce and how much each has contributed the marriage.
  • Property: In a divorce, property is more than just real estate. It covers anything of value owned by the parties. And remember, it doesn’t matter whose name it is in.

Property consists of:  

  • Any business you own together or separately
  • all bank accounts in both your names, or in your individual names. In a community property state, except for few exceptions such as in certain trusts, it makes no difference in whose name the accounts are held.
  • cars
  • furniture
  • art collection or any kind
  • any valuable collectibles (baseball cards, antiques, etc.)
  • jewelry bought during the marriage
  • vacation homes
  • timeshares
  • anything else of value that was bought during the marriage.
  • Note that some property purchased before the marriage such as a house for which no community funds were used to pay the mortgage or for maintenance is exempt from community property. It’s best to consult with your attorney on this one. Sometimes, this is like splitting hairs.
  • 401K accounts
  • Pensions (if this is to be split, it only occurs at the time of retirement. The terms are handled through a Qualified Domestic Relations Order, commonly referred to as a Q.D.R.O.
  • Any type of recreational vehicles: boats, RVs, four-wheelers, etc.
  • Health Insurance: typically, in a divorce, if health insurance has been provided through the employer of one of the parties, it will be lost to the spouse who is not employed by the company. That spouse can remain on the insurance for the same cost for 18 months under COBRA, https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/cobra
  • Supplemental health insurance, such as dental and vision.
  • Life Insurance: do you wish to change your beneficiary? If it’s your spouse who has a policy and you are the current beneficiary and you wish for it to remain that way, it need to be in your decree of divorce
  • Do you have pets? Who will keep them, or will you share custody?

 

DEBTS

In a community property state, the same holds for debts as it does for property. It doesn’t matter in whose name the debt is listed, both spouses are responsible for repaying them.

  • auto loans
  • mortgage
  • utility bills for the marriage household
  • furniture loans
  • credit card debts
  • personal loans
  • any other debts that have been incurred during the marriage

 

WHAT TO BRING TO THE MEDIATION TABLE      

Whether you are discussing the terms of your divorce directly with your spouse or with a mediator, be sure to have the following on hand.

  • Bank statements
  • 401K statements
  • Pension statements
  • Mortgage statements
  • Credit card bills
  • Utility statements
  • All of your wishes regarding anything to do with your children (see the list above)
  • Any paperwork related to this Divorce Checklist.
  • Anything you feel is important even if not listed here.

This certainly will seem overwhelming to you, but it IS your future. Love yourself enough to do the work to protect yourself and your children if you have them.

7 Steps To Take for Future Financial Success When Divorcing in Nevada

If you’re reading this article, chances are high that you are looking into divorcing in Nevada. People too often end up with a messy financial life because of a divorce, but it doesn’t have to be that way. With some planning and patience, you can come out of it with your bank account in relatively decent shape.

There are many ways people and lawyers choose to go about the process of divorcing in Nevada. Based on our twenty-five years of experience representing clients in their Nevada divorce, however, the single most-important factor that can most affect your finances during a divorce is how you file a divorce. There are essentially three ways to file:divorcing in Nevada

  1. Employ the services of a mediator (this can be your divorce attorney) to mediate issues of property, debts, and children, then file a joint petition divorce.
  2. Agree on all the terms between yourselves and without a mediator, and file a joint petition divorce.
  3. You disagree on many of the terms and one of you files a one-signature divorce (complaint for divorce).

Number 1 is the best solution to divorce affordably and fairly. It’s a terrific option if you are uncertain about what is fair for your situation, or if you have been in a longer-term marriage and your property and debts are completely linked together (or you live in a community property state like Nevada).

Number 2 is the most economical and least acrimonious way to go about it. This is provided you feel that you can still trust your spouse with this, if not with other things, and you feel you are getting a fair settlement based on your own research. Some couples with few financial assets opt for this solution.

Divorce is never free, and you must share your current assets between the two of you, so your net worth will decrease, of course, but either of the above solutions will leave your wallet relatively intact.

Number 3 is the kind of divorce that can shatter your finances. If it goes as far as a divorce trial, it becomes the kind of divorce that makes some lawyers richer than their clients will ever be again. In a few cases, this type of divorce is necessary when there are millions or billions at stake, but otherwise, no. If your combined net worth is $500,000 and under, it is pure folly to engage in this type of divorce unless the other side is being highly unreasonable.

Going for Numbers 1 or 2 will leave a ton more money in your wallet. Because of this, mediation is our Step #1 to shelter your finances from as much damage as possible during and after a Nevada divorce.

Here are seven things we recommend you look at seriously when divorcing in Nevada.

  1. Select a divorce lawyer willing to mediate.

Mediated divorces are also known as collaborative divorces. If you are divorcing in Nevada, find a divorce attorney who is willing, first and foremost, to attempt to mediate your case with your spouse’s divorce lawyer.  It’s best to make sure that this attorney is a certified mediator. Divorce attorneys are offered continuing education classes in mediation. Some are also certified court arbitrators which gives them even more settlement experience.  Going to court instead of mediating is costly and acrimonious.

Of course, if you are dealing with a highly volatile and unreasonable Defendant (your spouse), you might end up having to go to court anyway, but it’s best to start with mediation. Things might be different in other states, but in Nevada, when one party files for a divorce and the other party responds by filing an Answer and Counterclaim, the court automatically sets a date for a Case Management Conference. Guess what that is? It’s essentially a mandatory mediation. The attorneys’ jobs at that point is to try and get their clients to settle rather than having to go to trial.

  1. Order your credit report.

Before you get into any sort of negotiations with your spouse, it’s best to check your, and your spouse’s, credit, so you know what obligations are on there.  Especially in a community property state like Nevada, spouses are responsible for debts incurred by either of them during the duration of the marriage. You want to know if your spouse took out a loan recently for instance. You don’t want to end up having a collection agency after you once the divorce is over because your spouse is not paying on the loan. If you were married at the time the loan was obtained, they can come after you for payment if your spouse defaults. Yes, we know how you feel about this. So, when divorcing in Nevada, avoid it by pulling your credit report.

  1. Make a list of your assets and liabilities.

Do you know what you own and how much you owe? Make a list right now

  • Download all your bank statements for the past year
  • Download your latest credit card statements
  • Download any brokerage accounts statements
  • Download your latest retirement account statements
  • Get the latest mortgage statements on all real estate you own, together or separately
  • Make a list of any valuable assets you have around the house, like jewelry, art collections, silver, high-worth china sets, classic cars, baseball card collections, anything of high value.
  1. Discuss tax consequences of any settlement with your tax accountant.

In some cases, you might be better off taking a lesser, or different, settlement if your income taxes will be affected negatively. For instance, sometimes a couple will agree on less child support (in cases where the paying party can pay more than the statutory requirement)  with the lesser amount balanced by more alimony. This might be a  smart move on the part of the one paying alimony, which is tax deductible, however, the one receiving the alimony will have to pay taxes on it, so it’s not very beneficial to him or her. Since child support is not taxed, but alimony is taxed as income, it’s not a wise move.

Be sure to discuss any proposed alimony scheme when you are divorcing in Nevada with your divorce lawyer and your accountant. If you decide to pay more alimony at the outset in lieu of property division and you deduct it from your income taxes, it could come back to bite you later. Agreeing to a larger alimony amount for the first few years after the divorce in lieu of property division is a big no-no with the IRS. They have become wise to that, and they might audit you if you reduce the amount of alimony you pay by several thousands after the first couple of years.

  1. Be sure to protect future child support and alimony

Though it’s not likely in most cases, the unexpected death of the spouse paying alimony and child support is possible. Therefore, it’s wise to have a life insurance policy in place with the spouse receiving these benefits as the beneficiary. It’s also a good idea to insist on a disability insurance policy in  the event that again, the payer of alimony and child support becomes unable to work.

  1. Update your estate documents and other accounts’ beneficiaries

When divorcing in Nevada, be sure to check to see who you have listed as “pay upon death” beneficiaries on all your bank accounts, as well as who you have listed as beneficiaries of your retirement accounts. If you have a will or a living trust, be sure to update those as well. If you don’t have a living trust, this is a really good time to set one up so that all of what is now your separate assets is distributed the way you want them to be.

  1. Do you have significant assets?

If so, it is best to retain a divorce lawyer and even an accountant to discuss these issues, rather than trying to go the Do It Yourself route. If you fear that your soon-to-be ex might prove unreasonable when dealing with you one-on-one about these issues when divorcing in Nevada, ask for divorce mediation. This allows you to discuss all pertinent information with qualified professionals who know how to keep tempers down during what can often be touchy subjects.

 

Divorce in Nevada

5 Things to Know about Divorce in Nevada

There are many rumors about eligibility and about how to file a divorce in Nevada. I hope to dispel at least some of them here by addressing the most important points.

1. Nevada residency.
To be able to file a divorce in Nevada, one of the parties to the divorce must have resided in Nevada for a minimum of six weeks before filing, and have the intent to remain in Nevada. (Nevada Statutes – Chapter 125 – Sections: 020). The divorce documents will state this:

 That Plaintiff (or Joint Petitioner if both parties sign the divorce papers before the case is filed) is a resident of the State of Nevada, and for a period of more than six weeks immediately preceding the commencement of this action, has resided and been physically present in the State of Nevada, and now resides and is domiciled therein, and during all of said period of time, Plaintiff has had, and still has the intent to make the State of Nevada her home, residence and domicile for an indefinite period of time

2. Nevada residency for children
If you have children with the spouse you are divorcing, the children must have resided in Nevada for a minimum of six months before divorce in Nevadathe court will take jurisdiction over physical custody and visitation. If the children have not resided in Nevada for six months at the time of the filing of the divorce, and you and your spouse still want to go ahead and file right now, you can enter into a separate legal Parenting Agreement which can be filed at the same time as the divorce. This type of agreement is enforceable in any court with competent jurisdiction, as well as enforceable in here in Nevada after the children have resided in Nevada for six months.

It’s better if you know whether your spouse agrees to sign the divorce documents before you file or not. It’s less expensive to file a divorce when you both agree on everything and both sign before the divorce is filed. If you’re ready to do that, you can get started here.
If your spouse won’t sign the divorce documents, the only route to go is filing a complaint for divorce (one-signature divorce), which costs more and takes longer to be granted. If you feel that this is the best way to go for you, you can get details here.

3. What property will each of you keep? 
In a divorce, anything of value you have purchased together is considered property, such as cars, furniture, art collections, jewelry, tools, sports equipment, etc. Nevada is a community property state, so, aside from some exceptions (see below) most property is owned by both husband and wife, regardless of whose name it is recorded under.

Exceptions to the above:
Inherited property—your parents left you a sum of money in their will and you have not co-mingled it with community funds, for example, deposited it into a joint account with your spouse, or used the inherited money to make house payments on a house you own with your spouse.

If you bought a house before the marriage, and have not used community funds to make payments on it or to make improvements (for example, your salary or your spouse’s salary), then the whole house belongs to you.  If you did use community funds to make payments on it or to make improvements, then you would have to share in the equity increase from the time of the date of your marriage. You would keep all equity from before the marriage as well as your down payment.

4. What debts will each of you keep?
Like property, when you file a divorce in Nevada, you share the debt you have both accumulated since the date of the marriage, no matter whose name the debt was incurred under.

5. Who will have physical custody? If you have children together, decide whether the children will share their time between both of you, or if they will live with only one of you and visit with the other parent.

At the time of this writing, courts in Clark County, Nevada, favor joint custody unless one of the parents lives at too far of a distance from the children’s schools to make it feasible to transport them there several days per week. One arrangement that works well in such situations is for the parent who lives far away from the school to pick up the children after school on Fridays and drop them back off there on Monday. This is still considered joint physical custody because the parent who has the children on the weekend is spending pretty much equal time with them as the parent who has them from after school on Monday until beginning of school on Friday since the weekend parent is with them all day Saturday and Sunday, as well as rest of the day Friday.

If you think you will have difficulty making the above decisions with your spouse, consider divorce mediation for your divorce in Nevada; many hard decisions can be made easier with a mediator than when made on your own.

What to Expect at Your Case Management Conference at Family Court in Nevada

When a Complaint for Divorce is filed in Family Court in Nevada and the other party responds by filing an Answer and Counterclaim, the first thing Family Court does is set a mandatory Case Management Conference (CMC). This sets the case on either a litigation track, meaning a trial date will be set, or final resolution during the Case Management Conference itself. Both parties are expected to attend.

How judges handle a Case Management Conferencecase management conference

Not every family court judge handles the Case Management Conference the same way. Just know that items #1 through #4 on the list below are things that usually do happen, and that items #5 through #8 are things that might  or might not happen.

Things likely to happen during the conference:

Item #1: By the time of the case management conference the Judge expects that Plaintiff and Defendant will have filed financial disclosure forms on the Court’s form indicating that their respective income, expenses, assets and debts are. This give the Judge a financial picture of the parties which will help the Judge administer the case.

Each side has to attach 3 pay stubs or income statement to the FDF. So this is item number 1 and the Judge could sanction you if you do not have this document completed and filed at the time of the hearing.

Item #2:  Applies only to parties with minor children:
If you have children the Judge is required to send you to mandatory mediation in order to try to formulate a parenting plan with the help of one of the Court’s counselors, therapists or mediators. The Judge will then set a date about 1-2 months from then for you to come back court to ask if either a partial or full parenting plan has been agreed upon between you and your spouse.

NOTE: To speed up your case, you can submit a request for mediation right after an Answer and Counterclaim is filed. This way, perhaps you can have your return from mediation hearing at the same time as your case management conference.

Item # 3: Next comes setting the case down for either trial or a status check. One main reason for the CMC is to move the case along as the Judges want to be able to conclude the case within a year after it has been filed. Therefore, the Judge will want to know how long the parties need for Discovery and when can they, or their lawyers, will be ready for trial.

Item #4: There is a mandatory initial disclosure of witnesses and exchange of documents between the Plaintiff and Defendant. While it is possible that both parties have the same copies of documents, e.g., income tax returns, bank statements, credit card bills, title to cars, 401(k) statements, etc., the Court nevertheless wants an exchange of documents which might be used at trial. The rule is that if you don’t disclose the document up front, you cannot use it later at a hearing.

Also, the names, numbers, addresses, and expected testimony of witnesses must be disclosed. You obviously list your spouse, but also be sure to add teachers, accountants, friends, coaches, and any other individual you might want to later call as a witness.  If you don’t list someone, you cannot later call him or her as a witness.

Things that may or may not occur during a case management conference:

Item #5: Some Judges will, even if no motion has been filed by either party, make temporary orders during the Case Management Conference.

These include orders for temporary custody, visitation, child support, alimony, exclusive possession of the home or car, etc. Be prepared to address these issues.

Item #6: Another discretionary item the judge might address is misbehavior of the parties during the period of time leading up to the case management conference. Whether there has been a violation of the joint preliminary injunction, interference with visitation, refusal to pay bills, overspending, threats or abuse, etc. The judge might address the issues and admonish the parties or provide them with guidance.

Item #7: A third discretionary item judges may address at the Case Management Conference is whether to send the parties to a settlement judge or financial mediator to work out the division of debts and liabilities before the Judge actually sets the case for trial.

The judge might also make referrals to outsourcers, e.g., counselors, psychologists, private mediators, etc. This can be a good thing if it helps in the case, but if it does not,  it could delay your eventual trial date.

Item #8: Finally, the case management conference is used by some judges to try to settle as many issues as possible right then and there. The Judge will sometimes either resolve the entire case during the CMC,  or just set the matter down for a hearing on one or two issues, like the amount of support, or the division of the personal property.

After the Case Management Conference, the Court will prepare an Order setting forth what was discussed and any dates for future hearings including the divorce trial, if applicable.

Feel free to contact us with any questions regarding obtaining a divorce in Nevada. Or call 702-420-7052

 

How are Community Property and Debts Divided in a Divorce?

community property and debts in Nevada divorceYou are about to get started with a divorce and wonder. How are community property and debts divided in a Nevada divorce?

Because Nevada is a community property state, the name under which the asset is held is not determinative of who has an interest in that asset. What is important is whether that asset was purchased during marriage and what source of funds were used to purchase that asset.

And of course, if you have a pre-nuptial, or post-nuptial agreement that addresses all of this, then what we say here does not pertain to you. Your pre or post-nuptial agreement would prevail. This article assumes that you live in Nevada and do not have a pre-nuptial, or post-nuptial, agreement.

Let’s say you purchased your home before the marriage and once married, you make the mortgage payments from a joint account. If you live in Nevada, this would give your spouse a right to half of any equity increase in the home since the date of the marriage. Before the equity would be distributed to you and your spouse, however, your down payment would be returned to you.

Let’s follow John and Mary for a simplified example of the above.

  • Mary purchases a home on her own before her marriage to John.
  • She puts $10,000 down on the home.
  • Once married, the couple opens a joint bank account and makes the mortgage payment with funds from that account.
  • After five years of marriage, they decide to divorce.
  • Since the date of the marriage, the home has increased in equity by $30,000.
  • They sell the home as part of their marital settlement.
  • Mary gets her $10,000 down payment back
  • The remaining $20,000 in equity is divided between them.
  • Any equity from before the date of the marriage belongs to Mary.

The same goes with any other property purchased after the marriage, such as a car or fine art, or jewelry. This is true even if the property was put in only one of the parties’ name.

Let’s go back to John and Mary.

  • A year after they married, the couple decides to buy a vintage car.
  • They use funds from their joint account to pay for it, $16,000 in cash.
  • John has the car registered in his name only because it was just easier at the time, Mary having been out of town.
  • When they divorced, John gave Mary $10,000 to compensate her for her share of the car which could have been sold for $20,000 at the time of the divorce.
  • It didn’t matter that the car was only in John’s name.

Earnings reaped by either party during the marriage are community property in Nevada. If one of you makes considerably more money than the other party and money has been put away in that party’s sole bank account, the spouse would still be entitled to half of those savings, in most cases.

If you keep ownership of real, or other, property and bank accounts separate and don’t use community funds to augment them or to pay for maintaining them, such as maintaining a house you owned before the marriage,  then said property and accounts will remain your separate property.

The only property that never comes under Nevada community property is inherited property. For example, John’s mother passed away two years into the marriage and left him a house owned by her free and clear, of a value of $200,000. No community assets were ever used for upkeep as John’s mother also left him some money for that purpose. John has never comingled those funds. That house belongs to John only and Mary has no rights to it whatsoever.

The parties share any debt entered into during the course of the marriage, no matter whose name the debt was entered into.

We find that commingling of funds, mixing separate property with community property, transmutation such as say, John paying to fix the house his mother gave him with funds in a joint account, and creating joint accounts with your spouse, are the usual ways separate property becomes community property.

Regarding transmutation, there is a presumption that when you donate separate property to community property that it is a gift.

The bottom line is that Nevada is not a title state but a community property state.  For the purposes of a divorce, a community is like a partnership with each party reaping benefits for both partners or incurring debt for both of them.

If you have questions about how to divide your property in your divorce, read more here

 

5 Things You Should Do With Your Finances During a Divorce

finances during a divorce

When you get a divorce in Nevada, a community property state, you generally divide all property and debts down the middle. This means everything you own and everything you owe, either together or even separately, gets divided pretty much down the middle, unless there is a good reason as to why it shouldn’t be, and unless the property in question falls under an exemption.  Below are five things you should do with your finances during a divorce.

1.       Know what property belongs to the community assets and which is exempted
For instance, if you inherited a sum of money, no matter its size, that’s yours alone. 

Other things to consider, regarding your finances during a divorce are as follows:
If you bought the house in which you and your spouse resided before the marriage, and you never co-mingled funds to pay the mortgage, or to pay for its upkeep, the house is yours alone. If you already owned it, but you used your current salary to make mortgage payments, or your spouse helped make the mortgage payments after the marriage or paid for upkeep and updates, then your spouse is entitled of one half of the equity increase that has occurred since the marriage, minus the down payment you made at the time of the purchase.  

We once had a divorce case where Husband had added Wife to a savings account he had with his parents. The judge said that the funds in that account were now a community asset and he ordered that Wife be given one-fourth of the monies in that account even though she had never contributed to it. 

Also,  if you use separate property funds to pay community marital debt, it is presumed to be a gift from your separate assets to the community assets.

If your Uncle John gave you a $50,000 (or any gifted amount), for any reason whatsoever, it’s yours alone, as long as you don’t deposit it into a joint account. Then, it becomes part of the community assets.

2.       Pay down your community debt before you file, or at least before the divorce is granted
It’s always best to pay off as much of your debt as possible before the divorce is granted. The fewer joint debts you have, the easier it will be to negotiate and divide them, not to mention being able to put them out of your mind completely. Because even if your ex-spouse is responsible for a joint credit account as part of the divorce settlement, you’re still liable for that debt if your ex-spouse doesn’t pay.

Third parties (such as creditors) are not bound by the rulings of a family court. Most creditors will honor what it says in the final decree of divorce, but only as long as the payments are being made. So if the judge says that Mary must make payments on the car she’s driving, but John is also on the loan, if Mary doesn’t pay, the credit company is likely to come after John to make the payments. Should this happen, the only recourse for John is to go to Family Court to try and resolve the issue. A family court judge is likely to hold Mary in contempt of court if she doesn’t make the payments ordered in the decree of divorce.  

3.       Credit reports
The best thing to do here is to obtain your credit report, and that of your spouse, from all three credit agencies and scrutinize them for all monies owed by you and your spouse. Unless an account was just opened very recently, all credit accounts are bound to appear on there. If you suspect your spouse might have recently opened new accounts without discussing it with you, get updated credit reports about a month later. You want to be certain that there are no surprises after the divorce.

A man we know vaguely (we didn’t represent him, or we would have told him how to care for his finances during a divorce)   discovered after the divorce that his wife had purchased a 72” television and put on the electronics store’s credit card he had opened with her.  Bottom line here, is that unfortunately, he was just as liable for that debt as she was; it turned out that she paid the debt, but it could just as easily have gone the other way.

To be sure you know all that’s going on with your credit during this time, consider credit monitoring. Some banks offer this service for free if you have a credit card with them, so start there. Having your credit monitored means that you are less likely to find new debts you knew nothing about after the divorce is finalized.

4.       Freeze or close joint credit accounts
To take things one step further with your finances during a divorce, and assure that nothing can be added to your joint accounts, consider simply closing or freezing all joint credit accounts. As you know, you should immediately close all joint bank accounts.  

Freeze your accounts by calling all credit card companies and telling them about the divorce and asking for them to no longer allow new charges on the account. Note that this will mean that you also won’t be able to charge anything on those cards.

Your attorney is likely to file an injunction to prohibit your spouse from taking large sums of money from your accounts and to prohibit him or her to in any way encumber the community estate with debt, but it’s easier to freeze and close as many accounts as possible, as it will take you more time and energy to try and recoup what is spent if your spouse doesn’t abide by the injunction

5.       Be sure to complete all financial tasks as soon as possible after the divorce is granted
Taking care of finances during a divorce doesn’t end when you get your final decree.  There are still often tasks left to perform to protect yourself and your credit standing.  If you are keeping the marital home as part of the divorce settlement, be sure to file the quitclaim deed as soon as possible. What you don’t want is for your spouse to still appear to own the house and use it as collateral for any type of loan. Same with any other property, such as cars and bank accounts.

And if your spouse is the one to keep the house, and is supposed to refinance it in her name only, follow through until you see proof that it’s been done. You are still responsible for that mortgage until it’s paid off.

Lastly, when it comes to finances during a divorce, many people neglect to  review their living trust and will. Your priorities there are sure to have changed based on the divorce, so don’t neglect this very important task.

If you have more questions about this, or you want to get a divorce started, you can find us at http://nevadadivorce.org

How to Choose a Divorce Attorney in Las Vegas

How to choose a divorce attorney in Las Vegas

I understand your dilemma when looking for a divorce attorney in Las Vegas. There are a ton of them. Which one should you choose?  Most people only go through a divorce but once or twice in their lives, and have little experience when it comes to dealing with it.

The one thing you want to avoid is hiring the wrong attorney and have to switch as this increases the overall cost of your divorce.divorce attorney in Las Vegas

I aim to give you good general advice and not just get you to choose me as your divorce attorney.  These are guidelines you can follow with any attorney you consider retaining for your divorce.

  1. First know what kind of divorce you are getting into.

Does your spouse agree to a divorce? Does he or she agree to sign the divorce documents? The answer to this question is important and it will affect what type of attorney you should look for to represent you in your divorce.

If you already know that your spouse agrees to sign the divorce papers, you’ll need one kind of divorce attorney, and if your spouse refuses to be reasonable and plans to fight you every step of the way, you’ll need another.

  1. What kind of divorce attorney do you need?

Of course, you need a divorce attorney whether your spouse signs or not, but they come in different flavors too. To determine which type of lawyer is best for you, you need to first know the answer to the question posed above; will your spouse contest the divorce or not?

If your spouse is reasonable and you both agree on all the terms of a divorce on your own, you can file a joint petition divorce.  You can bring all your terms to your attorney and he or she will include them in the divorce pleadings.

That said, if you have been married for a number of years and own property together, have children together, and pensions are involved, and even if you think you agree on all the terms, it would be a good idea to go through mediation just to be sure that you are treated fairly. There are guidelines a divorce mediator can follow to ensure that you are both getting what is fair for your particular situation, finances, and length of marriage.

If your spouse won’t sign the documents, and will contest the divorce once filed, you’ll need a much more aggressive attorney than if your spouse agrees to terms you set together or through divorce mediation.

If your spouse is intent on fighting everything to the end, your best option is to find a divorce attorney who specializes in litigation.

Before you retain your divorce attorney in Las Vegas, be sure that he or she is open to alternatives, rather than choosing a divorce lawyer whose typical strategy is to plan on going to court from the very beginning of the procedure.

Whether children and finances are involved or not, it’s always best to try mediation first before you enter litigation, either through an attorney who offers collaborative divorce as a part of his or her divorce practice, or through a certified and licensed non-attorney divorce mediator.

  1. Find at least three attorneys

This would be a good strategy to follow:

  1. Ask for referrals from friends and acquaintances who got divorced before you
  2. Look at online reviews
  3. Keep looking until you find three attorneys you think you will like
  4. Interview the three attorneys.

Many divorce attorneys in Las Vegas will give an initial consultation at no cost for divorces that are bound to be contested. I do.

If your case is very simple and uncontested, you can simply talk to the attorney or his staff on the phone. In such a case, you just need information on divorce procedure rather than legal advice.

If your case is to be contested, it’s probably best to meet all three potential attorneys in person. You want to see for yourself how these divorce attorneys look and what demeanor they have. This person might end up standing up for you in divorce court. You want to be sure that he or she is a proper reflection of you.

Ask the following questions:

  • What is your experience with (contested or uncontested) divorce?
  • Do you specialize in any particular type of divorce (litigated, collaborative, uncontested)?
  • Do you favor collaborative divorces over litigation whenever possible?
  • Do you offer flat fees for uncontested divorce matters?
  • What is your fee if my divorce becomes contested? Typically, a divorce attorney in Las Vegas charges an hourly fee. Usually, a retainer fee is paid and the hourly fee is charged against it. The attorney is bound to deposit any retainer into a trust account and will then take portions of the retainer out as they are earned.
  • How long have you been practicing divorce law in Las Vegas?
  • How often go you go to family court here?
  • How familiar are you with the judges currently sitting on the bench?
  1. Make your choice.

After interviewing all the lawyers, retain the divorce attorney with whom you feel most comfortable.

Be sure that he or she is highly-experienced divorce attorney in Las Vegas, in other words, he or she is a local attorney, not a lawyer who, say, just moved to Las Vegas from Reno.

Be sure that he or she regards divorce in the same way you do. For instance, if you favor a joint petition divorce, meaning you want to come to an agreement on all the terms of the divorce and you want both you and your spouse to sign the divorce papers before filing, choose an attorney who will do his or her best to promote mediation if you hit a road block, rather than immediately pushing for court.

Of course, if your intent is to go to court to fight for everything you want and you have no intention to compromise, then choose a strong litigator with a good track record for winning tough divorces.

Be sure you know all the fees you will be charged up front and what it could cost down the road.

If you follow this guidance, you should end up with a professional and highly-experienced divorce attorney in Las Vegas, one who cares as much as you do about the outcome of your divorce.

5 Tips to Survive Divorce During the Holidays

divorce during the holidays

Divorce clients who come to us in December often seem a bit more distressed than they are the rest of the year.  We get it.  A divorce scores 73 on a 1-100 stress scale with 100 being the most stressful event in a lifetime. Add to this the holidays and expectations to give more, love more, and forgive more. They feel confused and wonder how to find it within themselves to do that in the face of a divorce during the holidays. If children are involved, this time period becomes even more difficult and emotional to navigate.

1.  If you’re in the middle of a divorce during the holidays,  you need a plan.

The first thing you can do is to remember that our emotional state is attached to familiar actions and surroundings. Therefore, the first thing you should do to make the holidays easier and even enjoyable for you and your children is to change those actions and change those surroundings. 

If possible, take yourself out of your usual holiday surroundings.Visit out-of-state family, for instance. If this is not possible…

2.  How about starting a new tradition? Do this on your own or with your children if you have them. It’s probably best for your emotional well-being to not continue with the traditions you followed with your spouse. Having your very own traditions will keep you focused on the positive and new rather than distressing over going through a divorce during the holidays. For the kids, it could be fun and distract them from what’s now different, namely, that, possibly for the first time in their lives, they are only with one parent at a time for this year’s holiday.

Justin had always wanted to take his children ice-skating around the holidays, but his  soon-to-be ex-wife didn’t like it at all, so they never went. He decided to now make it a holiday tradition to spend an afternoon at the ice skating rink with the kids and then take them out for hot chocolate after. It turned out to be a hit with them. It also gave everyone hope that the holidays could still be a happy time for them despite the divorce.

3.   Are you single? Or are your children scheduled to be with your ex during this holiday season? Plan ahead to do something to help others when going through a divorce during the holidays. It’s a well-known fact that helping others lifts our own spirits. Volunteering your time to a shelter, for instance, would take your mind off your own suffering and warm your heart as you help others even less fortunate than you. Or find other single parents whose children will be with their other parent that day and celebrate together, doing something none of you usually does on that day.

Karin reached out to two other friends whose children were going to be with their other parent for the last day of Hanukkah. She arranged ahead of time for them to visit residents of a nursing home who didn’t get visitors or whose families were out of state. They bought several low-cost gifts and wrapped them brightly and delivered them to these residents with good wishes, bringing tears of joy to the eyes of some. This made the women feel very happy inside and thankful for the happiness they still had in their own lives. They followed this up with a special dinner at a restaurant none of them had ever been to before.  They vowed to do it again the next time their children were with their other parent for a holiday.

4.  No matter what, make sure that your children feel loved by both parents during this time. Make sure they don’t feel pulled between you and made to feel guilty for being with one or the other parent on any given special day. If you are still working out the holiday visitation schedule, be sure that the children have ample time with each parent and vary it up, from year to year if the children have to travel some distance between you and your soon-to-be ex-spouse.

If a certain holiday is very important to both you and your spouse, make it so that you both get the children for a portion of it, but be sure and do it in a way that is enjoyable for the children too. If you live far apart, it would most likely be best to agree to an alternate-year holiday visitation schedule.

Robert and Diane, who live 500 miles apart, agreed that their two children should spend all of the holidays with one another at least until their late teens, and made it so that the children spent the Christmas holiday with Diane during odd years and with Robert during even years.

Having to fly or take a bus to get from one parent to another on an actual holiday to meet a visitation schedule would most likely make your child dread that holiday rather than look forward to it.

5.  Lastly, but most importantly, do NOT become a recluse if you are going through a divorce during the holidays. Even if you’d rather  pull a double shift at work, or stick your hand in fire,  force yourself to go out and mingle with good friends or family (stay away from those who constantly bring up negative things about your ex or ask them to stop). Your spirits will lift from your new activities! We are social creatures and even when feeling low, we derive happiness and comfort from being around others.

Happy holidays to all!

 

P.S. If you haven’t retained an attorney yet and want a more affordable solution, visit our divorce website, NevadaDivorce.org

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