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Financial protection and divorce

Establishing safeguards for one's finances in case of a divorce is something every Michigan resident should do. Couples can take certain actions before and during marriage to protect their financial future if they and their spouse decide to go their separate ways.

One key element of protecting one's financial assets is maintaining separate property. Retaining sole ownership of one's assets will not only make estate planning much easier, but it can give individuals more autonomy when deciding who will receive ownership of those assets when they die.

How to lock in an alimony tax deduction

The Tax Cuts and Jobs Act could influence how people in Michigan structure their divorce settlements after Dec. 31, 2018, especially in regard to alimony payments. Starting in 2019, someone paying alimony will no longer have the ability to write off the expense on a personal federal income tax return. The recipient of alimony after that point will not have to report the income as taxable.

Until then, people who complete or modify a divorce in 2018 will be creating terms that operate under the previous tax rules, and those tax laws will continue to apply in the coming years. A payor could qualify for a tax deduction on alimony payments as long as they meet certain requirements.

Getting a divorce when conflict is high

Some Michigan residents might be unfamiliar with the term "marriage dissolution", but it is simply a term that refers to divorce. It is usually necessary to reach an agreement about property division and, if applicable, child custody before a divorce can be finalized. The couple might reach this agreement in mediation or in negotiations with the help of their respective attorneys, or they may have to go to court where a judge will make a decision.

While people may think of marriage as a religious ceremony, divorce is a legal procedure. A contested divorce is more complex than an uncontested divorce. The former refers to a situation in which only one person wants the divorce and the other person is fighting it.

Startups can bring their own challenges during divorce

Divorce is always a challenging time on emotional and practical levels for spouses in Michigan going through the end of a marriage, especially if the relationship has been long or if the couple has children. While the disentanglement of personal lives can be deeply challenging, the issues that accompany divorce can be particularly troubling when it comes to handling the financial aspects of a split. This is especially true when the divorcing couple has significant assets and advanced, high-earning careers, complicating property division.

The tech industry is at the heart of the U.S. economy and wealth production today, and a number of high net worth divorces involve couples who have earned their fortunes in that industry. Those centers of the country that have become important for tech development, like Silicon Valley, have also become centers for new trends in high-asset divorces.

Placing a value on your personal property

The word "divorce" has entered your relationship, and now you are looking around you at the life you and your spouse created, wondering what will happen to it all. Naturally, the court will divide the checking, savings and retirement accounts based on guidelines, but how will you and your spouse split the antique chandelier you bought at an estate sale five years ago? What about the collection of first edition novels in your library and the jewelry in the safe deposit box?

While you could sit down together and negotiate based on what each of you believes the items are worth, a much better plan is to hire an expert to provide a professional appraisal. Here are some things to consider before you make the call.

Tax code changes could impact spousal support

For Michigan couples going through a divorce, the financial aspects can be some of the most heavily contested.Alimony payments can be a significant issue in negotiations and court hearings. Following changes to the tax code adopted in late 2017, there may be some additional complexities added to the situation when spousal support is involved.

From state to state, there are a variety of prevailing views on alimony, including its typical duration and the amount of such payments. However, federal tax law was clear. Payments were tax-deductible for the payer, and they were taxable for the recipient. However, for divorces that are finalized after Dec. 31, 2018, the tax situation regarding alimony will flip entirely. Instead, the former spouse paying alimony will no longer be permitted a tax deduction. The former spouse receiving the support will no longer need to pay taxes on it.

What to understand about collaborative divorce

Individuals in Michigan and throughout the country may be able to use collaborative law principles to resolve issues related to support or property division. A primary benefit is that these divorce matters can be settled without the need to go to court. Collaborative law is aimed at helping people work together as opposed to against each other, so it is generally effective at obtaining a fair outcome in a civil way.

Unlike other alternative dispute resolution options, there is no third-party judge in a collaborative law setting. Instead, the parties getting divorced as well as their attorneys get together in a neutral setting. However, it may be possible to bring in outside professionals to assist with the process if necessary. Prior to starting the collaborative law process, each party agrees in writing to negotiate in good faith. This includes providing necessary information and otherwise being forthcoming at all times.

When happily ever after does not extend to business

Divorce is something that most Michigan couples wish they will never have to deal with, particularly those that have embarked on a business venture together. Many successful businesses are operated by married couples; however, issues related to marital property laws will certainly come into play when spouses start thinking about dissolution of marriage as a personal option. The clean break associated with divorce will not necessarily apply to a business owned or managed by a husband-and-wife team; for this reason, mediation is highly recommended in these situations.

When it comes to handling a high net worth divorce, the complexity is magnified by business interests getting in the way. There is no fortune teller strategy that will determine the fate of the company; some couples may decide to split things up while others will agree on conducting an asset valuation for the purpose of liquidation. Other couples may decide to continue working together even after getting divorced. The only certainty about these cases is that they often spark disputes over marital property, which may result in complex asset division.

How to divide artwork in a divorce

In many divorce cases in Michigan and elsewhere, a home is the most valuable asset a couple possesses. However, depending on the net worth of the individuals involved in the divorce, an art collection may actually be worth more than their home. One collection was estimated to be worth $1 billion, and such high valuations may become more common as the price of art has gone up in recent years.

If an artwork is acquired during a marriage, it is subject to be divided in a divorce like any other property. One option is to sell a piece and split the proceeds. Of course, the value of a given piece or of an entire collection can be difficult to determine. Some believe that its true value cannot be determined until it is put on the market and a buyer is found.

3 unique challenges of high-asset divorces

If your hard work and drive has caused you to acquire a significant amount of wealth in the Mason area, chances are you have contingency plans in place for protection. However, if you are not careful, you could end up leaving your wealth vulnerable if you ever go through a divorce. 

Being wealthy means your divorce would be a high-asset one. The benefits include you being able to afford a comfortable lifestyle after things are final. One of the drawbacks is it can create complex issues for your taxes, investments and finances. Here is a brief overview of some unique challenges people in high-asset divorce often encounter. 

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