Law revoking beneficiary status didn’t apply retroactively

A new decision from a federal appeals court should give every divorced person incentive to look over his or her insurance policies and other financial documents to make sure beneficiaries have been changed. This holds true even in states with laws that automatically revoke a now-ex-spouse’s beneficiary status upon divorce.

The federal appeals court case concerned Minnesota couple Mark Sveen and Kay Melin, who got married in 1997. Mark had two children from a prior marriage and these kids were the primary beneficiaries on a life insurance policy that he had in place. But once he got married, Mark made Kay his primary beneficiary, with his kids as beneficiaries of a different policy.

The couple divorced after 10 years. Mark never removed Kay as the beneficiary after the divorce, although Kay claims that Mark agreed to keep her as the beneficiary in exchange for giving him a better property settlement. [Read more…]

Spat between parents may constitute ‘change in circumstances’

It’s never easy for a kid to be shuttled back and forth between two divorced parents who cannot communicate constructively. But it can get even worse for a child as he or she gets older and becomes more aware of the hostility between his or her parents. If a recent decision out of North Carolina is any indication, this growing awareness of the parents’ hatred toward one another may even be grounds for modifying a custody order.

In that case, a couple divorced in 2012 and a judge awarded the father primary physical care and custody of the couple’s young daughter “Reagan.” The judge apparently made this decision based on the couple’s “utter inability” to work together for their daughter’s benefit as well as the mother’s repeated, unsubstantiated allegations that the father was abusing Reagan.

Two years later the mother asked the court to modify the custody order, claiming that the father’s new girlfriend was acting as Reagan’s primary caregiver. A trial judge granted the motion, citing “changed circumstances” and giving the mother primary custody.  Specifically, the judge found that the parents still couldn’t communicate effectively and that Reagan, who was getting older and becoming more aware of the situation, was experiencing increasingly higher anxiety as a result. He also noted that the father and his girlfriend were keeping Reagan away from other family members and that the mother was no longer making false abuse allegations. [Read more…]

Husband held in contempt for non-payment despite waiver

A husband could be cited for contempt of court for failing to make agreed-upon payments to his ex-wife even though she had waived the right to “spousal support” in their divorce decree, the Virginia Court of Appeals recently decided.

In that case, as part of the property settlement the husband agreed to make a $40,000 lump-sum payment, to be satisfied in 16 equal monthly installments.

The divorce agreement contained a section entitled “alimony” in which both parties stated that they were waiving any right to receive alimony or “spousal support” payments in the future. The husband also agreed to pay for his wife’s health insurance for the next year and a half. The final decree created some confusion by stating that the amount of “periodic support” was expressed in fixed sums (presumably meaning the $40,000 lump sum) and set out a schedule for payment of “periodic spousal support” (presumably meaning the 16 installments). [Read more…]

Adult child’s ‘failure to launch’ doesn’t justify child support

In most states, the obligation to pay child support ends when the child turns 18. In some states it may end when the child graduates from high school, if that comes first. Minor children also generally can become “emancipated” through a court proceeding if they can support themselves, if they join the military, or if they get married. At that point, the obligation to pay child support ends. But the obligation to pay support can continue past age 18 if the money is used to pay for the adult child’s education or if the adult child is disabled.

What about an adult child who’s still living with one of the parents and just hasn’t figured out a way to support himself? Is the other parent required to pay support in that case?

A recent decision from an appeals court in New Jersey indicates that the answer is “No.” [Read more…]

Will you get credit in property division for footing household bills during divorce?

An issue that frequently arises when a marriage breaks up is who pays the household bills while the divorce is pending. A lot of times the spouse who paid the bills during the marriage will continue to pay utility bills and homeowner’s association or condo fees while making mortgage payments on the marital home. If you’re the one making those payments, you’re probably wondering whether a divorce judge will give you some sort of credit for it when dividing up the marital property. In other words, will you get a bigger share of the remaining property in consideration for the bills you’ve paid or be saddled with a smaller share of marital debt?

The answer is that it depends on the situation and the laws where you live.

Take, for example, a recent case from North Carolina, where it all came down to the concept of “active” versus “passive” decreases to marital debt. [Read more…]

Taxes and virtual currencies: What you need to know

Virtual currencies are all the rage lately. Here are some tax consequences you must know if you decide to dip your toe into that world.

The IRS is paying close attention
The first thing to know is that the IRS is scrutinizing virtual currency transactions, so if you live in the U.S. you’ll have to report your transactions in Bitcoins and the like to the IRS. Despite some early misconceptions, virtual currency transactions can be traced back to their owners by governments and other cyber sleuths.

If you decide to use or hold virtual currencies, carefully report and pay tax on your transactions. Act as if you are going to be audited, because if you don’t, you just might be! [Read more…]

Tips for when your employees are family members

Working with family can be a pleasure. It can also be a pain, especially if you have to terminate a family member’s employment. Here are tips to help you ease the strain of mixing your family and employee relationships.

Hire for the right reasons. Make your hiring and firing decisions based on the skill sets needed to keep your business operating effectively. Hiring your son because he’s struggling to find a job is not a good business reason for bringing staff on board.

Set clear expectations. Communicate the job’s performance requirements to your family member right from the start. Clearly define company policies for promotion, compensation and termination. Make it plain that unethical conduct will not be tolerated. [Read more…]

New 2018 capital expense rules

There are many provisions in the tax reform bill passed in late 2017 designed to benefit small business owners. There are also a variety of new tax tools affecting how small businesses account for deducting the cost of capital purchases under the new tax law. Here’s what you need to know:

Tool #1: Section 179 deduction
The new law increases the amount of business property purchases that you can expense each year under Section 179 to $1 million (from $500,000 previously). Normally, spending on business property (machines, computers, vehicles, software, office equipment, etc.) is capitalized and depreciated so that the tax benefit is spread out slowly over several years. Section 179 allows you to get the tax break immediately in the year the property is placed into service.

Tips:

  • There is an eligibility phaseout for Section 179 that ensures it’s only used by small businesses, but that was also raised to $2.5 million (from $2 million) by the new law. If you spend more than $2.5 million on business property in total during the year, your ability to use the $1 million Section 179 deduction is reduced dollar-for-dollar above that amount. [Read more…]

Tax filing reminders

February 28 – Payers must file most other Forms 1099 (except certain Forms 1099-MISC due Jan. 31) with the IRS. (April 2 if filing electronically.)

March 1 – Farmers and fishermen who did not make 2017 estimated tax payments must file 2017 tax returns and pay taxes in full.

March 2 – Automatic extension deadline for employers and health care providers to provide Forms 1095-B and 1095-C to individuals. [Read more…]