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Anoka Divorce Law Blog

How to divide a retirement plan in a divorce

Couples in Minnesota who are getting a divorce might need to divide a retirement account. If it is an IRA, they will need to roll it over into another IRA account. The bank or other financial services company where the IRA is kept will be able to advise about the paperwork needed and any other regulations.

For a 401(k) or a pension plan, it is necessary to get a document known as a qualified domestic relations order. This is a document that must be approved by the plan administrator. The QDRO needs to explain how distributions will be made. A distribution can be rolled over to an IRA or a person can receive it directly. Although a distribution because of a divorce will exempt it from penalties, a person who receives a direct payment will still have to pay regular taxes on it.

Post-divorce finances benefit from early planning

Planning for divorce while picking out wedding rings may seem oxymoronic to most Minnesota couples, but the high divorce rates mean marriages fail despite the best of intentions. Carrying health or life insurance is not considered cynical or bad luck, and thinking about worst-case scenarios on the front end of marriage is simply part of cautious financial planning.

While prenuptial agreements are the gold standard for divorce planning, they are far from the only approach to asset protection. Postnuptial agreements have increased in popularity and are similar to prenuptials legally, but they are executed by the parties after a marriage. Such agreements allow the parties to set aside worry about what a divorce court may rule and let them focus on their relationship. Another useful strategy is simply maintaining separate assets and accounts. Having separate accounts can partially protect one party from the other person's creditors if debt collection is an issue. Many couples have joint accounts for marital bills and keep their own individual accounts as well. Discipline is important, and any comingling of assets whatsoever can lead to them being considered joint marital assets.

Are you worried about child custody due to a narcissistic parent?

While some people may display actions that make them seem full of themselves, those actions are not always destructive or harmful to others. However, some people may actually be narcissists, and behaviors displayed by individuals with this type of personality could actually have damaging effects on other people, especially if children are dealing with a narcissistic parent. Because narcissists can be difficult to reason with and think of little other than themselves, they could easily cause marital issues that lead to divorce.

Though choosing to end a marriage with a narcissist may be in the family's best interests, it can prove difficult. Because individuals with narcissistic personalities love attention, they may try to create unnecessary drama. Additionally, parents may feel concerned about the custody of their children and how much time they should have with their narcissistic other parent.

Divorce over 50 requires attention to financial matters

The end of a marriage can be challenging no matter what one's stage of life is. For people in Minnesota and across the United States, there has been an ongoing upward trend in divorces among people over age 50, a number that has more than doubled since 1993. While the financial aspects of a divorce can be complex and challenging at any age, long-term married couples with retirement plans, real estate and other properties can find them particularly difficult to disentangle.

Many people headed toward divorce over age 50 have accumulated substantial assets over the course of their married life, which means that their divorce requires significant attention to detail during property division. It is important for a divorcing spouse to enter the negotiation and settlement process prepared with knowledge about the couple's financial situation. Making a complete inventory of jointly held and individual assets can help a divorcing spouse address property division from a clear perspective on the assets at stake.

Post divorce finacial health comes with planning

For Minnesota spouses headed toward divorce, the final court date in which everyone signs the dotted line can seem like the long-awaited end of a marathon. While the finalization of terms is an important milestone, there will still be work to complete in order to actually get across the divorce finish line.

A divorce decree is essentially a set of instructions to be carried out by the parties and their respective legal teams. For example, if property is to be listed for sale, someone has to actually do the legwork of meeting a realtor. If titles to vehicles are to be transferred, fees must be paid and paperwork filed. Joint credit accounts should be canceled and the proceeds divided. Having an action plan in place to designate responsibility can be quite helpful for those looking to facilitate a smooth split.

Revenge is not a good reason to divorce

Minnesota couples get divorced for many reasons. Sometimes, they fall out of love with each other and decide to part ways amicably. Other times, they argue over finances, especially if one spouse spends beyond the couple's income, or the spouse has an affair. In contentious marriages, the hurt spouse may want to get even or get revenge when filing for a divorce.

Revenge is not the best reason to get a divorce. Is getting even more important than the well-being of the couple's children? Children struggle with divorce at any time, but when a parent airs the couple's dirty laundry in front of them, it only makes the situation worse. Parents should keep their problems to themselves and not force a child to choose between them. Parents need to assure children the divorce is not a child's fault.

Spousal support payments to be impacted by tax law changes

When Minnesota couples decide to divorce, some of the most contentious issues on the table can be the financial matters. Alimony payments have been a particular source of conflict, often leading to extensive negotiations or ongoing court filings. The recently passed Tax Cuts and Jobs Act could have a major impact on how spousal support will be handled in divorces to come.

Federal tax law has had a uniform standard in relation to alimony for the past 75 years. Under these consistent rules, the former spouse who pays alimony is eligible for a tax deduction reflecting the amount of support paid. The former spouse who receives the alimony must report the payments and pay taxes on it alongside their other income. For divorces finalized after December 31, 2018, however, all of this will change. Alimony payers will no longer be able to deduct their payments from their taxes, and spousal support recipients will no longer need to report or pay taxes on the payments.

Popular myths about marriage

Certain myths about marriage can be dangerous to couples in Minnesota if they believe them. For example, couples may believe that their marriage is in trouble if they have arguments, but according to the marriage counselor and researcher John Gottman, this is not the case. In fact, Gottman says that active listening, which involves couples using "I-statements" to talk about their feelings, does not work based on evidence.

Another myth about marriage is that married couples no longer have sex. In fact, married people are more likely than single people to have sex. Some people may believe myths about what equality in marriage means. It does not mean that both spouses always give 50 percent of their time and attention to household chores and other aspects of the marriage. Instead, spouses tend to step up as needed with each one giving more at various times. Spouses who do feel they are overwhelmingly responsible for tasks within a marriage should talk to the other spouse about it.

A peaceful division of assets is possible

Even if the custody of your children is of primary concern in your divorce, decisions about property division are likely not far behind. After all, dividing property goes beyond who gets what. An unfair or unbalanced settlement can leave you struggling for years after the divorce is finalized.

Nevertheless, dividing your marital property does not have to be a battle. If you and your spouse are able to communicate with relative civility, you may be able to work your way through many issues of asset separation without the interference of the court.

How to deal with a a business in divorce

Some Minnesota couples may have gotten married and then started a business together. When the marriage ends, the business may not necessarily do so. Those who choose to work together after getting divorced need to take steps to separate business and personal issues. Otherwise, a personal disagreement could take a toll on the company.

It may be advisable for each person to have defined roles within the organization. This may make it easier to create clear boundaries within the new relationship. Those who choose not to work together after a divorce have many options when splitting the company. One is for one owner to buy out the other. Whatever a couple chooses to do, each person should have separate legal and financial representation.

Marvin Law Office, L.L.C.

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Marvin Law Office, L.L.C.
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Anoka, MN 55303

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