Posts tagged Jordan Miller
Estate Planning During Your Divorce

Estate planning and divorce proceedings are two aspects of life that are often placed at either end of a relationship spectrum. Both are sensitive topics that often force an uncomfortable conversation, and both are frequently avoided – whether at the end of our lives, or the end of our marriage. However, these two areas of the law have more in common than you might first imagine.

Almost every married person who drafts a Will leaves their assets to their surviving spouse. But what happens if you pass away while in the midst of a divorce? Unless and until the divorce is finalized, the terms of your Last Will and Testament control. In most cases, this means that the soon–to-be ex-spouse receives all of your property. Leaving all assets to your spouse has many tax-related benefits, but it may not be right for you if you’re going through a divorce.

Assets left to a spouse are not (generally) taxable upon the death of the first spouse. Therefore, most Wills direct all assets to the surviving spouse to save taxes. If this is how your Will is written, and you pass away in the middle of a divorce, your soon-to-be ex-spouse will receive all of your property.

In Washington, a dissolution of marriage proceeding is terminated if one of the individuals dies before the divorce is finalized.  The Court views divorce as personal and can no longer facilitate the dissolution of marriage proceeding without both parties present.  If a party dies, it’s as if the divorce proceeding was dismissed – as if it never happened.  From a policy standpoint, this makes sense because the courts want people to have the ability to change their mind and cancel a divorce proceeding before it is finalized. However, if the divorce is dismissed because a party dies, the Court cannot rewrite the Will, and in most cases, all assets of the deceased spouse will be provided to the surviving spouse.  


Broader implications

This could have large consequences with second marriages and children from a prior spouse.  If the surviving spouse is not the blood relative to some or all of the deceased spouses children, the Will could (depending on how it is written) give the surviving spouse the ability to disinherit children.    

When going through a divorce, it is very important to have a new Will drafted immediately, one that clearly states that you are married but getting a divorce and thus expressly do not leave any assets to your current spouse.  This language must be clearly articulated in the Will or the soon-to-be ex-spouse could challenge the new Will as an “omitted spouse”.


What about cohabitation?

It is not only married persons who should consider the need for estate planning.  Individuals who cohabitate in a manner consistent with a marriage-like relationship may naturally assume their partner would inherit their belongings in the same way – as a spouse would under the law.  This is not correct. Even in a relationship lasting for decades, the law in Washington does not grant your domestic partner any rights to your personal property, if you do not have a Will in place.  

Making sure your wishes, and those of your domestic partner, are reflected in a Will may be of even higher importance under these circumstances.  However, in the event your co-habitational relationship ends, the law does not operate in the same way as with married persons, and any distribution you have made to your ex-partner would be enforced. 


Bringing it all together

Protecting assets and heirs is a hallmark of estate planning and marriage dissolution.  When going through a divorce, a new Will protects for your family and assets.

Tax Rules and Alimony – Changes Impacting Spousal Support

For over 75 years, payers of alimony (a.k.a. spousal support or spousal maintenance) were allowed to take a tax deduction for the amount of alimony paid to their ex-spouse.  This shifted the income tax burden to the receiver of alimony, which in any instances increased the amount of income available to spouses transitioning to two households.

Under the new Tax Cuts and Job Act (TCJA), alimony will be treated differently for divorce or separation documents put into effect after December 31, 2018. 

What Does This Mean?

In brief, the new tax rule eliminates the payer’s ability to deduct alimony from their federal taxes.  However, this all depends on when you execute, or executed, your alimony agreement or court order.  For instance: 

Current Payers of Alimony or Receivers of Alimony

  • For those who already pay or receive alimony, the TCJA changes will not affect you.   

    • Payers – you may continue to deduct alimony from your federal income taxes

    • Recipients of alimony – you will continue to report alimony payments as taxable income
       

  • This tax treatment will continue to apply even if your alimony agreement or court order is subsequently changed – unless the modification specifically states that the TCJA treatment of alimony payments now applies

Payers of Alimony or Receivers of Alimony  documents executed before
January 1, 2019

  • Similarly, for those who execute alimony documents before January 1, 2019, the TCJA changes will not affect you.   

    • Payers may deduct alimony from federal income taxes

    • Recipients of alimony will report alimony payments as taxable income
       

  • This tax treatment will continue to apply even if your alimony agreement or court order is subsequently changed – unless the modification specifically states that the TCJA treatment of alimony payments now applies

Payers of Alimony or Receivers of Alimony – documents executed after
January 1, 2019

  • Payers of alimony – you cannot deduct alimony from your federal income taxes; you will have to pay tax on the income transferred to the alimony recipient

  • Recipients of alimony – you will not include monies received from alimony in your taxable income

  • For tax purposes, alimony will be treated the same as child support, which is not taxable income to the recipient

What Happens Next?

It is still unclear exactly how the new alimony tax rules will impact divorces. 

Historically, spouses who were required to pay alimony, did so knowing they could deduct those payments from their taxable income which was an incentive instead of battling the subject in court.  Without this tax incentive, spouses may argue over the alimony payment amount which in turn could turn out to be less alimony for the receiving spouse.  Additionally, the change in the law may impact how child support is calculated in cases involving minor children. 

JDSA Law is committed to staying well-informed on how these tax changes will impact you. Listen to our recent podcast for more on this topic – or connect with us, Jordan Miller (Family Law) and Lindsey Weidenbach (Tax Changes), for assistance. 

Child Custody – Changes in Non-parental Visitation Rights

Effective June 7, a change in ‘Non-Parental Visitation Rights’ went into effect as a result of Senate Bill 5598 being signed into law earlier this year.  This law grants relatives, including but not limited to grandparents, the right to seek visitation with a child through the court system. 

What do these changes mean? 

  • Permits a non-parent relative who has an ongoing and substantial relationship with a child to request court-ordered visitation if the child risks substantial harm if visitation is denied

  • Requires a court hearing to consider the child's best interests, the risks, and benefits of visitation for the child, and reasons opposing visitation

  • Presumes a fit parent's decision denying visitation is in the child's best interests and does not risk substantial harm to the child, but permits a contrary ruling if evidence is clear and convincing

This new law is complicated and only allows a person to request visitation one time. If the request is denied by the court, the person may not ask again.

How JDSA Can Help

It's important to understand the necessary steps to take, and seek legal advice before filing a petition with the courts.  The Family Law attorneys at JDSA Law will help guide you through this complex process.  If you have questions or need advice, contact me, Jordan Miller, for assistance today.

Listen to our podcast — JDSA's Law Talk —  for more on this topic.