Wallitsch & Iacobelli: 2013

Thursday, July 4, 2013

Thinking "Green"

The term “green,” when applied to energy and technology often connotes efficiency, cost savings and a renewable aspect.

The same is true of a Green Divorce™. This non-toxic, cost effective approach to the dissolution of a marriage and the distribution of assets, handling of custody and financial support revolves around mediation instead of litigation.

Attorney Nancy Wallitsch, a certified mediator who practices in matrimonial law, understands the importance of moving beyond the “win/lose” outcome of traditional divorces fought out in the court system. Instead of continuing the fight, Ms. Wallitsch, a seasoned attorney of nearly three decades, helps her clients find compromises, allowing both parties to get on with their lives as quickly as possible.

Particularly when children are involved, a Green Divorce™ simply makes sense. No parent wants his or her child to be at the center of an ongoing dispute. And since a Green Divorce seeks a resolution as opposed to finding the party who is “right,” this approach will cause less emotional strain on an already untenable relationship.

A Green Divorce™ through Mediation Will Help You:

Avoid the win/lose outcome of litigation
Resolve asset distribution, a custody plan for children and their financial support on your own terms – instead of those imposed by a court
Obtain quicker, more economical outcomes
Maintain a healthy relationship post-divorce for the sake of children
Keep financial and personal history confidential

Will You?

When was the last time you reviewed your will? Or, better yet, do you have a will?
Particularly as couples move toward the dissolution of a marriage, it is even more critical to have your estate in good order. This could mean updating your final wishes to reflect a change in beneficiary.
For others, it could mean working with a trusted legal professional to draw up a will that takes your impending divorce into account.
If, for example, your will directed all of your assets to your wife – whom you are separated from – and you were to die prior to the finalization of your divorce, she would be entitled to any and all assets.
Abele Iacobelli, an attorney of more than 15 years, holds a Master’s degree in tax and certificate in estate planning. He will create a customized estate plan to suit your needs.
Through Mr. Iacobelli’s help in properly plotting your estate’s future, clients can:

Determine where assets will be directed upon death
Preserve family wealth and stability
Devise a plan to help surviving family members with finances following death
Establish trusts
Minimize tax burdens

Taxed?

Benjamin Franklin once said, “The only things certain in life are death and taxes.”
Another certainty that the founding father could have added to his statement is that tax implications follow every decision made in a divorce or settlement agreement. Taxing consequences could be an issue for long after the marriage dissolution.
And since taxes, like laws, are ever-changing, it is important to rely on a professional with the expertise to help you minimize your tax impact post-divorce.
Attorney Abele Iacobelli practices in marital tax planning and litigation and can help you make informed choices. Mr. Iacobelli will:

Assist in preparing personal and small business tax returns
Prepare innocent spouse tax relief filings
Help with audit and litigation

DISCLAIMER

The information contained in this blog is for educational purposes only and is not legal advice. The use of this blog does not create an attorney/client relationship between you and the Law Offices of Wallitsch & Iacobelli. If you are considering separation or divorce, or if you are involved in any legal matter including, but not limited to present divorce proceedings, custody proceedings, or support proceedings, or any other legal matter, you should seek formal legal advice and would strongly urge you to retain an attorney

Wednesday, July 3, 2013

The Marriage May be Over, but Tax Implications Could Linger

DISCLAIMER

As Susan contemplated a divorce from her husband, the couple’s multiple assets, including investments, real estate holdings, pension plans and several successful businesses came to mind. Upon the dissolution of her 20-year marriage, how would these assets impact her in terms of tax liability?

While wanting to make it as painful on her soon-to-be ex-husband as possible, Susan was unsure of how to lessen her own tax burden. She was concerned about what their marriage dissolution would mean ultimately for their lavish home, their children’s private school education and the lifestyle she had grown accustomed to, which afforded her the opportunity to take pricey vacations.

But, what Susan did not know was that receiving higher alimony sums would essentially increase her tax liability. In her particular instance, what, on the surface, appeared to be an even distribution of assets would actually cost her in higher taxes for years to come.

Deciding to divorce involves much more than determining who gets the house, any joint monies, custody of the children and the possibility for alimony.

Each of these potential outcomes must be carefully analyzed and evaluated against your own unique financial situation. If left to chance, or settled without a thorough understanding of tax law, any of these examples could cost you more in taxes over time.

Before signing a divorce settlement on the dotted line, you should consider the tax implications of the following:

Alimony payments and what it means for the payee versus payer
(I.R.C. §71; Pa.R.C.P. 1910.01, et seq; Pa.R.C.P. 1910.16-2(a)(7).
Asset distribution
1. Savings bonds and how interest accrued figures into your total taxable income (Rev.Rul. 1987-112, 1987—2 C.B. 207.)
2. Investment accounts and how future spending could warrant the need for capital gains tax (I.R.C. §§1001 (a); 1221; and, 1223.)
3. Property transfer and how its eventual sale plays a role (I.R.C. §121 related to the exclusion of gain from the sale of a principal residence.)
4. Pension plan distribution and paperwork needed to be effective ( I.R.C. 414 (p)(1)(A))
Dependents and the agreements and guidelines necessary for claiming a minor child

Attorney Abele Iacobelli practices tax law. Mr. Iacobelli is adept at sorting through the ever-changing tax laws to find the most equitable division of property, assets and future financial support. Most importantly, Mr. Iacobelli will find the best solution for you with the least amount of tax implications.

For more information please visit us at www.greendivorce.net

Wednesday, June 26, 2013

Do child support payments and whether they take into consideration all of the children’s needs, or whether they are based solely on a guideline amount?

DISCLAIMER

Q: As my husband and I discuss divorce, I would like to find out about child support payments and whether they take into consideration all of the children’s needs, or whether they are based solely on a guideline amount?

A: Pennsylvania Support Guidelines are mandated by federal and state law and place primary emphasis on net incomes and earning capacities of the parties. While there are special provisions within the guidelines themselves which take into consideration the children’s needs, such as private school education, camps, activities and the like, unless agreed to by the other party, the cost of proving the economic need for support above the guideline amount, and obtaining a favorable order can outweigh the amount of support that is ultimately achieved in the litigation process. In the mediation forum, information with respect to net incomes, earning capacity and the children’s needs are addressed. Options are discussed, information is provided and the couple makes the decision with respect to a support amount, as opposed to one being imposed by a system in which there is very little flexibility.

My spouse and I are currently separated; can I file single on my taxes?

DISCLAIMER

Question: My spouse and I are currently separated; can I file single on my taxes?

The short answer is, no. The Commonwealth of Pennsylvania does not recognize a legal separation. Accordingly, in a divorce action the parties’ only options are to file married joint or married separate. You should consult your tax advisor as to the rules for filing head of household.

Circular 230: To ensure compliance with the requirements imposed by the IRS, we inform you that any tax advice contained in our communication (including any attachments) was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax penalty or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
Our advice in our communication is limited to the conclusions specifically set forth herein and is based on the completeness and accuracy of the facts and assumptions as stated. Our advice may consider tax authorities that are subject to change, retroactively and/or prospectively. Such changes could affect the validity of our advice. Our advice will not be updated for subsequent changes or modification to applicable law and regulations, or to the judicial and administrative interpretation thereof.
Legally privileged and/or confidential information may be contained in our communication; it is intended exclusively for the addressee. Opinions, conclusions and other information expressed in our communication are subject to the terms and conditions expressed in the governing client engagement letter. If you are not the addressee (or designated representative) indicated in this message, you may not disclose, copy, or distribute this message to anyone. Action taken or omitted based on our communication is prohibited and may be unlawful.

How Does Mediation Help Us Work Things Out?

DISCLAIMER

Question: Since my spouse and I have decided to end our marriage, but do not see eye-to-eye on anything, and seem to be at an impasse with respect to dividing assets, how does mediation help us work things out?

Answer: With respect to the division of assets, mediation provides a venue for you to obtain information in a non-adversarial way, to list the assets that are to be divided, to discuss the disputes that each party may have with the other, and hear each other’s reason for disagreement as to the division of an asset or assets. In the approach known as the “Green Divorce”, the emphasis is on assisting the parties in the mediation process to talk to each other, and come to an agreement once each is satisfied that full disclosure has been made, divide the assets in an amicable way, rather than by finger-pointing, arguing over who is right and who is wrong, and without expending substantial funds in proving a point. Besides saving money in unnecessary litigation, a Green Divorce also helps lessen the stress level which is felt when ending a relationship. In short, a Green Divorce helps parting couples move forward and allows them to get on with their lives.

Is The Alimony I Am Receiving Taxable Income?

DISCLAIMER

Question: Is the alimony I am receiving taxable income?

Any monies received as a result of a Support Order and allocated as spousal support or alimony pendente lite or an Order for alimony is taxable income to the recipient spouse and a tax deduction to the payor spouse. Accordingly, if you are the recipient spouse it is imperative that you make appropriate arrangements to set aside a portion of your alimony to address any tax issues that may arise at year end.
Additionally, in concluding your divorce, it is imperative that the Agreement is drafted so as to not include alimony in the recipient spouse’s income for the purposes of a child support calculation. A failure to address this issue could result in a substantial decrease in child support payments.
Attorney Iacobelli is uniquely trained to address and counter this scenario.

Is A Green Divorce TM The Right Approach For Me?

DISCLAIMER

Question: I have heard of a Green Divorce, but I am not sure what it is, or whether the approach is right for me?

Answer: Historically, green has represented balance and a sense of order. “Green Divorce” is an approach to dissolving a marriage that puts you in charge of the process. It offers a cost effective approach to decide how assets are to be divided, what custody schedule is best for your child or children, and an opportunity to come up with a scheme of financial support that both parties can be satisfied with. When children are involved, going green allows parents to decide what is in the child’s best interests as opposed to a Judge, who, due to time constraints, may only get a snapshot of your child’s developmental needs. In the mediation process, you can spend as much time as may be necessary to work out a plan that both parents can accept, as opposed to one thrust upon them by the Court which may not be the best for the child or children.
Attorney Wallitsch, a certified mediator with expertise in matrimonial law, understands the importance of moving beyond the “win/lose” outcome of traditional divorces fought out in the court system. Instead of continuing the fight, Ms. Wallitsch helps her clients find compromises, allowing both parties to get on with their lives as quickly as possible.

Who Claims Children On Taxes?

DISCLAIMER

Question: My spouse and I are presently separated, who is entitled to claim our children as a tax deduction?

Answer: IRS Code §152 provides that the parent who has custody of the children is entitled to the dependency deduction for minor children unless the parties specifically agree otherwise and sign the requisite Form 8332. If you and your spouse are divorced and your Property Settlement Agreement is silent as to which parent is entitled to claim the dependency deduction, the same rule applies. However, in a situation where you and your spouse share custody, equally, and your Property Settlement Agreement is silent as to the dependency exemption, the IRS Rules provide that the dependency exemptions go to the higher earning spouse.
Attorney Iacobelli has experience in drafting Property Settlement Agreements to properly allocate dependency exemptions so as to benefit both parties and the children to ensure that the maximum income is available for the support of the children.