Husband could pay wife in retirement benefits

A husband could satisfy a $120,000 installment payment he owed to his ex-wife under their divorce agreement by transferring some of his retirement benefits to her, a Virginia court recently ruled.

The wealthy couple’s divorce decree required the husband to pay the wife a total of $1.2 million in 10 annual installments.

To make his first installment payment, the husband transferred to the wife $120,000 from his rollover IRA and 401(k) plans.

The wife argued that this violated the divorce decree because, due to taxes and penalties, she would net only $61,000 if she cashed out the retirement benefits right away.

But the court sided with the husband. It said the installment payment was okay because the property he transferred to his wife had a value of $120,000 at the time of the transfer.

Postnuptial agreement must be ‘fair’ at the time of divorce

A postnuptial agreement is similar to a prenuptial agreement – it sets out what each person is entitled to if the marriage fails. The difference is that a postnuptial agreement is signed after the wedding has taken place.

Postnuptial agreements are increasingly being accepted as legally valid. But they’re not foolproof, and sometimes a spouse can avoid their terms – especially if those terms just don’t seem particularly fair.

For instance, the Connecticut Supreme Court recently refused to enforce a postnuptial agreement that a couple had signed back in 1989.

Under that contract, the wife had agreed to accept $75,000 as a cash settlement of any alimony claim if the couple split up, and gave up any rights to her husband’s car-wash business. [Read more…]

Couples must obey divorce agreement – even if circumstances change

A typical divorce agreement may include a division of property, alimony, and child custody. In many cases, the alimony and custody rules can be modified at a later date if circumstances change. However, a property division usually can’t be modified – even if unforeseen circumstances mean that one spouse got a much better (or worse) deal than anybody expected.

For instance, when an Alaska couple split up, they had to figure out how to divide some stock that they jointly owned in two companies. They decided that the husband would get the stock, and he’d pay his wife a total of $50,000 for it in a series of installments over time.

Eventually, the husband fell behind on the payments, and the wife sued. [Read more…]

Who’s getting married? Who’s getting divorced? Census numbers tell the tale

The U.S. Census Bureau has gone back through its data from the 1940s to the present, and has compiled a new report analyzing marriage and divorce in America. Who’s getting married? Who’s getting divorced? And how are the answers changing over time?

One of the most interesting findings is that the divorce rate has started to level off and decline. But that’s not necessarily because couples are more likely to stay together for life. Rather, a lot of couples are simply not getting married in the first place, so that when they split up, it doesn’t result in a divorce.

Here’s a closer look at some of the findings:

People are waiting longer to get married. Back in the 1950s, the median age for a first marriage was 23 for men and 20 for women. By 2009, though, the median age had risen to 28 for men and 26 for women. [Read more…]

Smartphone app helps workers prove they weren’t paid properly

The U.S. Department of Labor has launched a smartphone application that makes it easier for employees to track the hours they’ve worked and figure out the wages they’re owed.

The free app, which is available in both English and Spanish at the agency’s website, provides a timesheet for workers to track hours independently of their employer. They can also add comments related to their timesheet; view a summary in daily, weekly and monthly formats; and e-mail the summary as an attachment.

The app is compatible with the iPhone and the iPod Touch. The government plans to make it compatible with other smartphones, such as the Android and the BlackBerry, and to add new features to track tips, commissions, bonuses, deductions, holiday pay, weekend pay and shift differentials.

Federal officials say the app will be highly useful during wage-and-hour investigations where employers haven’t kept accurate records.

Employer sued for retaliating against former employee

Employers can face serious legal consequences if they retaliate against an employee for calling attention to discriminatory practices. But in some cases, the same is true if a company retaliates against a former employee.

Take the case of a magazine editor in Massachusetts who was a part owner of the company that published the magazine. He lost both his job and his shares in the company after an ownership dispute.

As part of his termination agreement, the company agreed to pay him $14,000 each quarter for four years.

Sometime after he left, another former employee sued the company for disability discrimination. The editor filed a court document supporting her claim. [Read more…]

Tip policy gets Applebee’s restaurant chain in trouble

Under federal law, workers can be paid as little as $2.13 an hour as long as they’re earning enough in tips to make up the difference between that amount and the federal minimum wage.

However, if employees spend more than 20 percent of their time performing non-tipped duties, they’re supposed to be paid the full minimum wage for that time.

Recently, the Applebee’s restaurant chain was sued by more than 5,000 current and former servers and bartenders, who claimed they were required to spend more than 20 percent of their time doing cleaning and maintenance, for which they received no tips.   [Read more…]

Feds crack down on companies that call employees ‘contractors’

The federal government is cracking down on businesses that call people “independent contractors” when they’re really entitled to be treated as employees.

In particular, the U.S. Department of Labor and the IRS are stepping up their auditing and enforcement efforts. The IRS has begun a three-year auditing initiative to investigate as many as 6,000 employers, large and small, and nail those who are misclassifying their workers.

Many state governments are also beefing up their enforcement efforts.

If you’re an employer and there’s a possibility that you’ve been misclassifying your workers – or if you’re a worker who’s considered a contractor, but you function more like an employee – you should speak to an attorney. [Read more…]

Can companies use social media to screen job applicants?

Social networking sites such as Facebook and Twitter, and Internet search engines such as Google, can provide a lot of information about someone you don’t know well. For that reason, many employers are using them to screen job applicants, hoping to learn more about a person than what they can see on a resume.

But this can pose legal problems – because these sites can easily give an employer information that is supposed to be off-limits when making hiring decisions.

For example, an employer might discover:

  • A Facebook post where an applicant discusses his religion. [Read more…]

What are the tax implications of a short sale?

Additional Information:

I am considering a short sale on my home in Sherborn.  What are the resulting tax implications of a short sale?


Because a short sale involves the forgiveness of debt (in this case the unpaid balance of the mortgage) the seller may get a 1099-C for the amount of the mortgage deficiency.  There are options available which include bankruptcy or relief if you can be considered insolvent.  Also the Mortgage Forgiveness Debt Relief Act of 2007, may provide relief from debt forgiveness taxation for certain owner occupants until December 31, 2012.  These are fact intensive determinations and tax and/or legal counsel should be involved in the transaction.  [Read more…]

Sellers could sue after buyer’s deposit check bounced

A man agreed to buy a house on New York’s Fire Island for $1.2 million. He wrote a deposit check for $120,000, and signed a contract saying it was a cash deal and wasn’t contingent on his being able to arrange financing.

However, the man told the seller that he needed some time to deposit the $120,000 in his account, and asked that the check not be cashed right away.

The seller verbally agreed. After 12 days, though, the seller signed the contract and deposited the check. It bounced. [Read more…]

Must landlords allow tenants to use medical marijuana?

As more and more states allow medical marijuana use, landlords face the question of whether to allow tenants to smoke pot for medical reasons.

On the one hand, even if medical marijuana is legal under state law, it’s still technically illegal under federal law – even if the federal government is doing little or nothing to block the drug’s medical use.

On the other hand, landlords are generally required to make reasonable accommodations for disabled tenants, such as allowing grab bars in showers or service animals in an otherwise “no pets” building. Some tenants are arguing that allowing medical marijuana use is a type of reasonable accommodation.

However, this argument suffered a blow recently when the U.S. Department of Housing and Urban Development issued a memo stating that medical pot is not a reasonable accommodation of a disabled person.

The memo applies to landlords who accept “Section 8” subsidized housing. It says that these landlords cannot treat medical marijuana as a reasonable accommodation. However, it stopped short of saying that landlords have to evict such tenants – it left that decision to the individual landlords.

As more states move to decriminalize the drug, this question will likely only become more complicated.

Buyer’s right to cancel was valid regardless of his ‘real’ motives

A New Jersey man agreed to buy a $4.5 million house, and put down a $400,000 deposit. The agreement said that the buyer had a right to conduct a radon test, and to cancel the deal if the results showed radon readings above a certain level.

The radon readings came back above that level. The sellers agreed to lower the price and to install a radon remediation system. However, while the radon system improved matters, some readings continued to be above the level in the contract.

The buyer cancelled the deal and demanded his $400,000 back. [Read more…]

Protect yourself if you’re buying a house with an unmarried partner

Back in the old days, the typical homebuyer was a married couple. But today, there’s a huge increase in the number of unmarried couples who are buying a home together.

It might not sound very romantic, but it’s a good idea for such couples to think about what their financial obligations will be regarding the home, and what would happen if they were to split up at some point in the future.

For instance, you might want to consider signing a “cohabitation” or “domestic partner” agreement. [Read more…]

Be careful if you’re asked to sign a ‘letter of intent’

If you’re involved in the sale or lease of commercial real estate, very often you’ll be asked to sign a “letter of intent.” A letter of intent isn’t a formal lease or purchase agreement; rather, it’s a signed statement that the parties plan to negotiate a deal later that involves certain elements.

Because a letter of intent doesn’t seem like a contract – it seems more like a simple handshake acknowledgement that the parties hope to hammer out a formal agreement later – some people sign them without giving them a great deal of care.

This can be a mistake. Letters of intent are contracts in themselves, and can have serious consequences. [Read more…]

U.S. makes large home mortgages harder to get

Starting October 1, 2011, large home mortgages on expensive houses are harder to get – because the U.S. government is trying to gradually play less of a role in the mortgage market.

Currently, government-related entities such as Fannie Mae and Freddie Mac guarantee or purchase the majority of home mortgages in the U.S. Lenders are much more willing to provide mortgages if they know the loan can be backed by these entities.

However, the U.S. doesn’t guarantee all mortgages – it only backs mortgages that meet certain criteria. In particular, there’s a size limit to how large a mortgage it will guarantee. [Read more…]

Do I need to amend prior years tax returns if I discover an error?

Additional Information:

While preparing our 2011 taxes I realized that there has been an error in the past few year’s MA tax returns (in the government’s favor) related to our Waltham home’s property tax.  What’s the likelihood we will get audited?  What’s our obligation to amend the prior year’s taxes and  how would we go about doing it?


The likelihood of audit is hard to judge, but States have been getting more aggressive as revenues have fallen.  Also, states now get more information from all sources and in lieu of full blown audits rely increasingly on return adjustment notices.  There are even situations where the taxing authority can look beyond a three year statute to adjust tax due in more current years.  Obviously, there are a lot of variables and a professional should be consulted to discuss the potential exposure.  [Read more…]

Note these tax deadlines

  • February 15 – Deadline for providing 2011 Forms 1099-B and 1099-S to recipients.
  • February 28 – Payers must file 2011 information returns (such as 1099s) with the IRS. (Electronic filers have until April 2 to file.)
  • February 29 – Employers must send 2011 W-2 copies to the Social Security Administration. (Electronic filers have until April 2 to file.)
  • March 1 – Farmers and fishermen who did not make 2011 estimated tax payments must file 2011 tax returns and pay taxes in full.
  • March 15 – 2011 calendar-year corporation income tax returns are due.

Resolve to put your tax and financial house in order this year

The only way to achieve financial security is to monitor your tax and financial affairs throughout the year. And what better way to kick off the new year than to tidy up your financial and tax house. Here are some tips to get you started.

  • Take control of your credit cards. Over-reliance on credit cards hurts you in several ways. With interest rates typically in double digits, it’s the most expensive way to borrow money. Think of those monthly interest payments as draining off dollars that you could be investing in a home or saving for your retirement. And too much debt can hurt your credit score and make other borrowing more difficult. It takes time and discipline to reduce credit card debt, but it’s well worth the effort. [Read more…]

Use adjusted tax numbers for your 2012 tax planning

Each year the IRS adjusts certain tax numbers for inflation and tax law changes. Here are some of the adjusted numbers you’ll need for your 2012 tax planning.

  • Standard mileage rate for business driving remains at 55.5¢ a mile. Rate for medical and moving mileage decreases to 23¢ a mile. Rate for charitable driving remains at 14¢ a mile.
  • Section 179 maximum first-year expensing deduction decreases to $139,000, with a phase-out threshold of $560,000.
  • Transportation fringe benefit limit decreases to $125 for vehicle/transit passes and increases to $240 for qualified parking. [Read more…]