Many marital settlement agreements require one party to maintain a life insurance policy on his or her life naming the former spouse as the primary beneficiary. While this provides some financial security for the former spouse, it may also result in an adverse unintended tax consequence for the insured spouse’s estate.
For example, if the…
It has been estimated that more than one half of all first marriages end in divorce; the number of failed marriages is even higher for second marriages. One major issue in most divorces is the division of property. Commonly, a large portion of the marital assets consist of rights in or payments from one or more pension plans.
Pension Plans and ERISA
Divorce and division of property are generally controlled by state law. However, when state law contradicts or is inconsistent with federal law, the federal law "preempts" the state law; federal law controls the outcome. In 1984, Congress passed the Employee Retirement Income Security Act (ERISA), which governs most private pension plans (government and some other plans are not covered).
Federal law prohibits the assignment of pension benefits in ERISA plans. This appeared to include transfers to a spouse during divorce, regardless of a state court decision on division. To remedy this, the Retirement Equity Act of 1984 (REA) established an exception to the rule through use of a "QDRO."
Continue Reading Qualified Domestic Relations Orders and Divorce Settlements
Prior to filing for divorce, various federal tax considerations should be reviewed due to their potentially profound implications. Among the major issues commonly covered in a divorce decree or agreement are: alimony, sometimes referred to as "spousal" or "separate maintenance" support; division of property; and child support. Each has its own tax treatment and implications.
Continue Reading Deductibility of Divorce-Related Payments
Today, couples seeking a divorce have options to consider outside of traditional legal proceedings. Parties to a divorce are becoming increasingly aware of the expense, time and emotional toil of adversarial litigation, and are looking to options that better suit their financial and emotional needs. The following three options are alternatives to traditional divorce proceedings that mesh alternative dispute resolution with traditional lawyering skills to settle a divorce.
Continue Reading Alternative Ways to Handle a Divorce
Your Illinois Divorce
WHAT TO EXPECT ABOUT YOUR ILLINOIS DIVORCE
What are the Legal Issues Involved in Ending a Marriage
In the U.S., a divorce* is the means by which the marriage between a couple is legally terminated. A judgment for divorce means that the parties have reached an agreement or, if the parties cannot agree, a judge has made a decision regarding the children of the marriage (custody, support, and visitation) and the couple’s financial affairs. Following a divorce, each party is free to remarry and is also able to resume a former (maiden) name.
Other issues to consider before the divorce is final are the needs for medical insurance or life insurance; obligations on a mortgage if one party stays in the marital home; and tax implications of property division or financial awards.
*The law in Illinois now uses the word “dissolution” rather than “divorce.” In order to be clear and consistent, this pamphlet will refer to the process as “divorce.”
Continue Reading About Divorce in Illinois
Today couples are looking for alternatives to litigation, in the administration of their marital dissolution. In traditional divorce matters, a judge will ultimately decide the divisions of property, spousal support, child custody and child support.
Many couples now seek to be more involved in the resolution of the divorce issues. One alternative dispute resolution method by which spouses can gain more control over the process and outcome of their divorce is through an advisory opinion.
Continue Reading Alternatives to Traditional Divorce Proceedings