Anticipating The Financial Consequences Of Divorce
Payment of spousal support may result in a tax deduction to the payer and income to the recipient; or the spousal support may be structured so as to avoid a taxable event.
The law also provides that no gain or loss is recognized on a property transferred to a spouse or former spouse so long as the transfer is made incident to a divorce or dissolution. The recipient spouse will assume ownership on a carryover basis, which is the transferor’s basis at the time of the transfer.
After the business and the family residence, the benefits in a retirement plan may be the largest single asset in a divorce. Retirement benefits may be used to equalize values in a property settlement or to make a lump-sum payment through the withdrawal of funds by the employee-spouse and payment of those funds to the nonemployee spouse. There is a special provision which provides that an individual retirement account may be transferred after a divorce without creating a taxable event for either party.
Divorce And Dissolution Lawyers Serving The Columbus Area
Under the Retirement Equity Act, the administrator of a retirement or pension plan can be required to pay to a nonparticipant a certain percentage of the participant’s monthly benefit payment. To accomplish this, the attorney must carefully draft what is known as a Qualified Domestic Relations Order (QDRO). A copy is then given to the plan administrator, who must be sure that the Qualified Domestic Relations Order meets all of the requirements of the particular plan. However, the nonparticipant cannot receive his or her portion of the benefits until the participant either has retired or is eligible to receive those benefits.
Finally, under the Social Security Act, a divorced spouse who was married at least 10 years to a worker qualified for Social Security benefits is entitled to benefits provided, with some exceptions, that he or she has not remarried. 42 U.S.C. Section 402(b) and Section 416(d).