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Kentucky And Indiana Law Blog

Tax changes for alimony, child deduction after divorce

Kentucky divorces in which children or alimony are a factor will be affected by the 2017 Tax Cuts and Jobs Act. This act changed how parents can claim children on their taxes and how alimony is treated.

While divorced parents will no longer be able to use IRS form 8332 to take turns claiming their child as an exemption, one parent will be able to claim a head of household deduction as long as the parent is single, has the child in the home more than 50 percent of the time and pays more than half of the household expenses. There is also a child tax credit this parent can claim. However, the IRS has not issued guidance about whether the tax credit is tradable. Parents can create a divorce agreement that allows them to take turns using the credit if this is later allowed.

Handling DUI checkpoints in Kentucky

Generally, police officers must have probable cause to stop a driver on suspicion of DUI. Thus, they must observe some indication, however minimal, of impairment, recklessness or violation of traffic rules.

However, the law also allows sobriety checkpoints, where police officers put up a roadblock and require passing vehicles to stop at random. There, they check license and registration and observe whether the motorist presents any signs of intoxication. If they suspect DUI, they typically proceed as they would during a regular DUI stop.

Dealing with finances during a "gray divorce"

A growing number of older Americans in Kentucky and across the country are choosing to end their marriages. While divorce rates have held steady or even declined across the American population as a whole, "gray divorce" rates have doubled since 1990 for people age 50 and older. As is the case for younger couples, divorce is more likely when a couple is married for a second time or when they have only been together for a few years. However, many older couples divorcing have been together for many years or even decades.

The financial implications of divorce can be particularly significant for people at or approaching retirement age. The division of retirement funds can be one of the more complex parts of any divorce, and the effect is magnified when both parties will have little time to recover from the changes that accompany asset division. However, financial planning during divorce negotiations and after the end of the marriage can help people to enjoy a successful retirement after the end of their marriage.

Understanding the health-related impact of gray divorce

Choosing to untie the knot can have a serious health-related impact on anyone in Kentucky regardless of age. This is why it ranks as the number two stressor on a scale that predicts what life events are most likely to result in a stress-induced breakdown within a two-year period. For couples 50 and over, uncoupling can be even more impactful on health. What's more, while divorce rates have fallen for people 40 and under, they have doubled for older adults since 1990 - a phenomenon often referred to as "gray divorce."

Results from a landmark university study show that gray divorce is associated with an increase in depression, chronic stress, and anxiety. There have also been instances of older divorced individuals experiencing post-traumatic stress symptoms that may include flashbacks of troublesome marital events such as instances of physical abuse. Depression, in particular, has been associated with type 2 diabetes, heart disease, Parkinson's disease, and an assortment of other health issues.

Birth certificates without fathers raise child custody questions

The legal system in Kentucky has yet to catch up with the fact that an increasing number of children are not born to married parents. Current births to unmarried parents account for 40 percent of births. In 2007, the rate of births to unmarried parents was only 18 percent. The trend has raised the number of birth certificates that do not list fathers.

When men do not appear as fathers on birth certificates, they might be face legal hurdles when pursuing child custody. They must establish their biological paternity before courts will consider their custody petitions.

Divorce doesn't get easier to manage with age

Research indicates that women who come from divorced families are 60 percent more likely to go through a divorce themselves. For men who come from divorced families, it's 35 percent. Kentucky couples who have beaten the odds by staying married until they reach an older age need to be acutely aware of these risks. That's because divorce has become more socially acceptable and common, and this is especially true for couples past the age of 60.

The phenomenon that describes divorce for older couples has been coined the grey divorce revolution. Some experts on the topic have suggested that increased divorce rates rise for this age group due to many life transitions, including empty nest syndrome and retirement. Others say, however, that this correlation isn't very convincing, citing the main cause of divorce being dissatisfaction in the relationship. The same reason that younger couples decide to separate.

Tips for a secure retirement after divorce

A study released in June may seem to seem suggest that women in Kentucky who get a divorce should try to get the marital home, but experts say property division and maintaining financial security is more complicated than that. Some past studies have shown that women tend to suffer financially after their divorce, but women who keep a home after a divorce might be more financially secure than single women.

Traditionally, women are usually advised to get rid of the home because its upkeep can be costly. Financial advisors point out that the larger lesson is that when women get retirement assets in a divorce that they are able to hold on to, they tend to be better off financially. Since a house is not a liquid asset, women are less likely to use it on things such as a child's college education than they might be with other assets.

What can we include in our prenuptial agreement?

As you and your beloved attend to all the details inherent in a Kentucky wedding, probably the last thing on your mind is a prenuptial agreement. Admittedly, you have far more reason to want to think happy thoughts about wedding and bridesmaid dresses, tuxes for the groom and groomsmen, the perfect venue, flowers, your guest list, etc. However, given that the U.S. divorce rate has held steady at around 50 percent since the 1980s, you should not ignore the potential reality of your marriage ending in divorce. Drafting and signing a prenup now could save both of you a good deal of anger, frustration, acrimony and heartache in the future

As its name implies, a prenuptial agreement is one that you and your soon-to-be spouse enter into prior to your marriage. Once considered the purview only of wealthy couples seeking to protect their respective assets, prenups today are a practical way for couples of all economic strata to set forth the financial “rules” they both agree to follow once married.

New tax laws that could impact divorce planning

In 2015, more than 600,000 taxpayers across the country, including many in Kentucky, were able to claim a deduction for alimony payments. However, thanks to the Tax Cuts and Jobs Act, alimony will no longer be deductible by the individual paying it and the income will no longer be taxed for the individual receiving it as of 2018.

This is a major change as The Revenue Act of 1942 has required alimony payments to be deductible by the individual paying them and taxable to the recipient for more than 80 years. Understandably, there is a scramble by many to get to their divorces completed before the 2019 year begins. After 2019, some spouses will gain benefits, and others will lose benefits.

The complications of dividing assets during a 'gray divorce'

When Kentucky couples who have been married for decades decide to get divorced at an older age, certain complications may arise. In many cases, older couples who are going through a "gray divorce," or a separation that occurs when the individuals are over the age of 50, may have larger financial assets that will need to be divided.

Dividing up financial assets, which may include retirement plans, IRAs and 401(k)s, can be difficult as there could be different rules surrounding the different accounts. In some cases, dividing up certain financial assets can leave one ex-spouse with unexpected tax bills. Some assets, like annuities, cannot be divided at all. This means that couples may need to trade around the different assets so that they do not have to cash out and lose the value of their annuities.