Kelly Byrnes & Danker, PLLC

Virginia Family Law Blog

Divorce and Social Security

The Social Security Administration reports that 96% of workers throughout Virginia and the rest of the United States have Social Security coverage. People who are eligible to receive Social Security benefits when they retire should know how the process works.

For those who have been married, it may be possible to receive spousal benefits from Social Security, even if they have low income or have never worked. In fact, one can receive up to 50% of their spouse's entire benefit if that ex is qualified for Social Security. It is also important to note that the eligibility to receive the benefits does not always go away if a divorce occurs. Individuals will find it helpful to be aware of their rights since the benefits to which they may be entitled, even after a divorce, can affect a retirement plan.

How alimony is determined in divorce cases

Family law attorneys in Virginia and around the country generally seek to nurture a spirit of compromise and cooperation during divorce negotiations before broaching possibly contentious issues like spousal support. Spouses who are expected to pay alimony often bitterly resent the monthly payments, but they may adopt a more flexible approach after learning why it is awarded and how it is calculated.

When divorce negotiations do not lead to an amicable settlement and the matter of spousal support is left to family law judges, the amount awarded is based on the needs of the recipient and the income of the payer. Judges also consider the lifestyle the couple enjoyed and the length of time they were married. Alimony was originally introduced to prevent homemakers being left destitute by a divorce, but it is now sometimes awarded even to spouses who work and earn a good living if their former partners earn substantially more.

Reducing the effect of divorce on retirement

Regardless of how close or far away retirement might be for a Virginia couple, divorce could make a significant dent in their retirement savings. Further complicating matters may be the fact that it can be difficult to set aside emotions during divorce negotiations. However, this will be necessary to ensure future financial security.

Spouses may have IRAs, pension or 401(k) accounts. Whether or not the account was established prior to the marriage, both spouses may be entitled to a portion of the funds. When looking at the value of an IRA, it's important to keep in mind that withdrawals before the age of 59 1/2 are penalized. To divide a pension or 401(k) as part of a divorce settlement, it is necessary to have a document called a qualified domestic relations order. This is not needed for an IRA.

These are the considerations made in custody cases

Divorce is tough. But it can be significantly harder when children are involved. Not only are the usual issues present – dividing assets, sorting out finances – but there’s also custody and the children’s welfare to consider.

When deciding on a custody arrangement after divorce, it’s always important to take the children’s best interests into consideration. But how to go about that is different for every family.

Shared parenting becoming increasingly common

For much of the 20th century, courts in Virginia and other states almost universally sided with mothers when making custody decisions. But during the past 30 years or so, shared parenting, or joint custody has gained more acceptance. Child custody itself can be broken down as legal custody and physical custody of the child or children involved.

While there are exceptions, courts generally approach shared parenting today with an assumption that joint legal custody will be awarded. However, situations involving physical custody, defined as where a child sleeps at night, generally favor the mother because of logistical issues, such as school obligations and the physical location of both parents' homes. Even so, there has been a clearly noticeable shift in custody trends since the 1980s, as documented by a 2014 study.

Things to consider when dividing a business in divorce

When couples in Virginia who are getting a divorce own a business, they will have to decide whether they want to keep it or sell it. Some couples decide that they will keep running the business. However, this is unusual since most estranged couples are not able to set aside their differences enough to work together effectively.

A more common solution is for one to leave the business and be bought out by the other. The value of the business will need to be determined through an appraisal. Once this is done, if one spouse has the liquid assets to buy out the other spouse directly, this will not be considered a taxable event since it is related to the divorce. Spouses who do not have this liquidity can pay off the other spouse over a longer period of time with a promissory note. Another option is for the company itself to buy out the spouse who is departing.

Divorce, taxes and dependents

Divorced or separated parents in Virginia may claim their children as dependents when filing taxes. However, they should be aware that if more than one taxpayer claims a kid as a dependent, the Internal Revenue Service will have to take a second look at the returns.

Including dependents on a return can have a significant impact on taxes. Taxpayers with qualified dependents can file as the head of their household, which is deemed a favorable tax filing. The taxpayers can also claim tax credits such as the Earned Income Tax Credit, the Child and Dependent Care Tax Credit and the Child Tax Credit.

What are the benefits of a prenuptial agreement?

Some people view prenuptial agreements as planning for a marriage to fail. That is not true. A prenuptial agreement gives you and your partner the opportunity to plan for the future. While it may not sound particularly romantic, it can help get your marriage off on the right foot.

There are many reasons why you may be considering a prenup. Here are a few benefits of signing a prenuptial agreement.

Divorce and what may happen to a business

Virginia business owners who are getting married might wonder how they can ensure that the company does not become a point of contention if there is a divorce. With a prenuptial agreement, the couple can establish that the business is separate property, and it will not be part of the process of property division in a divorce.

If both spouses are co-owners, they may also want to make a plan. This could be continuing to own the business despite the divorce, or it could mean one person agreeing to sell the company to the other in the event of divorce. A prenup might also name a certain percentage of the business that a spouse will get if there is a divorce. If a couple is already married, these provisions could be stated in a postnuptial agreement.

Divorce stress can impact performance of executives and owners

Business owners and members of upper management in Virginia often have a lot at stake when they negotiate their divorces. Decisions about the division of real estate, retirement accounts and business assets often involve tension or outright disputes. The possibility of paying child or spousal support could add to their concerns. The stress could spill over into workplace performance, or the divorce could alter the ownership of a company.

People who hold stock in their companies might succeed in retaining a controlling interest by offer former spouses other marital assets. The distraction of negotiating the transfer of valuable assets, however, could alter the workplace performance of CEOs and owners. A researcher from Stanford's Graduate School of Business found that people in this situation might struggle to concentrate at work. Their productivity might plunge. If stock is lost during a divorce, influence over business decisions and strategy could erode.

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Kelly Byrnes & Danker, PLLC

Kelly Byrnes & Danker, PLLC

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