When a marriage ends in divorce, it’s necessary to settle a number of issues concerning different types of property. Things can get especially tricky when individual retirement accounts (IRAs) are involved. In this case, it pays to know how to transfer an IRA properly—failing to do so could lead to a host of adverse consequences, not to mention tax headaches.

Common Questions About IRAs and Divorce

If you’re going through a divorce, or are about to go through one, you probably have these questions about IRAs:

What happens to assets like IRAs?
How are they divided?
When transferring or splitting funds in an IRA, who is responsible for taxes?

According to Section 408(d)(6) of the Internal Revenue Code, the transfer of a person’s interest in an IRA to his spouse or former spouse is done under a “divorce or separation instrument” and is a non-taxable transfer.

For qualified retirement plans, on the other hand, when a transfer is made to a former spouse after a divorce, the person’s interest in the plan at the time of the transfer is considered an account of the former spouse.

In other words, the spouse who transfers retirement assets is not liable for any taxes or penalties from future distributions. The spouse who receives the assets, however (i.e. when the plan becomes their own IRA), will be responsible for taxes and penalties from future distributions.

Are All IRA Transfers Tax-Free?

But not all IRA transfers are automatically tax-free. According to the Internal Revenue Service, spouses must present a number of documents, as defined in Section71(a)(2) of the IRC:

A final decree of divorce
A decree of “separate maintenance”
Or a document or written instrument incident to such decree

A decree of divorce is also known as a “judgment of dissolution.” A divorce decree may also come with an order to divide the IRA as part of the judgment or at any other after the judgment is entered.

How to Transfer an IRA

Although the process of transferring an IRA looks simple on paper, it is still complex enough that if you were to miss one technicality, the transfer can still trigger income tax. This is why having a divorce attorney by your side is so important.

In any case, a transfer of an IRA can be done in one of two ways:

Transferring a fixed amount or percentage of one spouse’s IRA to the other spouse’s IRA.
Setting up a new IRA to which the will be transferred

Remember that if any retirement funds are cashed out or distributed and then paid to the spouse or ex-spouse, the IRS will see this as a taxable event to the original IRA’s owner. In other words, it is crucial that any transfer of IRA funds is conducted as an actual transfer—not a distribution.
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Anyone who has ever gone through a divorce knows that when a child custody battle is involved, the gloves tend to come off. Anything can and will affect the outcome of the child custody case—that includes factors like age, location, income, parenting ability, and relationship with the child. And if the child is a baby, this adds another layer of complexity to your case.

But what if one parent is breastfeeding the baby?

As is often the case with child custody cases in Texas, the answer to this questions rests on several factors. What’s clear, however, is that the complex nature of child cases highlights the importance of working with an experienced Texas child custody attorney as soon as possible. When a child is under three years of age, the Court will consider the following before finalizing a parenting plan for a child under the age of 3:

– The Status Quo – who previously provided care and/or the amount of contact between parents and child
– Any Expert Opinions – how the child will be affected by separation from either party
– Current Family Dynamics: the availability and willingness of parents to personally care for the young child
– Co-Parenting Relationship – the ability of the parties to share in the responsibilities, rights, and duties of parenting, how well the parents get along.
– The Child’s Individuality – child’s physical, medical, behavioral, and developmental needs
– Your Personal Relationships – the impact and influence of individuals, other than the parties, who will be present during periods of possession
– The Family Unit – The existence of siblings
– Geographic Considerations – how close or far apart the parents live (the geographic distance between parents)
– The adaptability of the child – whether a transition schedule is needed to help the child adjust
any other evidence of the best interests of the child.

Specifically, with breastfeeding, How Are Child Custody Cases Involving Breastfeeding Decided?

All states encourage the divorcing spouses to arrive at their own child custody arrangements, provided it’s in the best interests of the child/children.

In the case of a breastfed child, the parents may come to an agreement that lets the father visit the child but allows for breaks where the mother can come in to feed the baby every few hours or so. Alternatively, the mother could agree to pump breastmilk so the baby can stay with the father for longer periods of time. This is something more feasible as the baby gets older (and much more difficult with an infant).

Again, parents are free to negotiate visitation and parental arrangements as they see fit so long as it is what’s best for the child.

Does Texas Consider Breastfeeding in Child Custody Cases?

Because each state determines their own child custody laws, different states will have different views on considering a breastfed baby’s situation when approving custody agreements. States like Maine, Michigan, and Utah have laws that specifically require judges to consider whether a child is currently breastfeeding or of a certain age requiring sustenance and nutrition from breastmilk when determining parental rights and responsibilities.

Texas, on the other hand, does not have any such laws. But the Texas Family Code, however, does specify that unique consideration must be given to custody cases involving children below the age of three (as stated above). In other words, the court may exercise its discretion to decide what is best for infants when making an initial custody order. And because of the unique needs of the baby, the court will issue another order, which will take effect when the child turns three.

This also means that a judge’s decision can be swayed by how well the mother or father can argue their case for getting custody of the baby.

For example, in a custody battle, a mother can use the argument that breastmilk is best for babies, so she must have primary custody of the baby—at least until the baby turns three. On the other hand, the father’s attorney can argue that it is in the best interest of the baby to develop healthy attachments to both parents, and that awarding exclusive custody to the mother would inhibit the father’s right to bond with the child.

Cases involving babies can be the most challenging. New parents not only have to get used to adjusting with their new baby and becoming parents but also with co-parenting in less than ideal situations.
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As the biggest change to the federal tax code in decades, the Tax Cuts and Jobs Act of 2017 (TCJA) will have a sweeping impact on how much individuals and businesses will have to pay the tax man. But what many people don’t realize is how the TCJA will also directly affect the world of family law, particularly divorce.

Although the TCJA’s provisions technically took effect on January 1, 2018, those that involve the taxability and deductibility of alimony/spousal maintenance will only apply to divorce and separation agreements after December 31, 2018. So, it might be in the best interest of anyone looking to file for divorce to weigh the risks and benefits of separating this year, while the tax changes have yet to take effect.

Here’s what you need to know about these new tax rules.

Alimony Payments

Alimony or spousal maintenance is a common solution to a disparity in the income of divorcing spouses, ensuring that the spouse with the lower income can continue a decent standard as part of a settlement or as ordered by a court.

Under Section 215 of the tax code, alimony payments used to be deductible by the supporting spouse.

Here’s where the TCJA changes things:

Section 11051 of the TCJA removes Section 215 altogether.
Alimony payments are no longer tax deductible by the supporting spouse, nor will they be considered as income to the recipient spouse. The TCJA removes such payments from the definition of gross income under Section 2016.
Moreover, income for alimony and spousal payments will be taxed at the higher supporting spouse rate instead of the previous lower rate of the recipient spouse.
Alimony payments will have the same designation as child support payments and will not be tax deductible by the supporting spouse nor taxable to the recipient spouse.

The TCJA’s new alimony provisions apply to:

Any divorce or separation instrument accomplished after December 31, 2018
Any divorce or separation instrument accomplished on or before December 31, 2018 and modified after the deadline, provided the revision uses language to comply with the new alimony provisions

Tax Deductions

In situations that allow for the deduction of alimony payments, the supporting spouse, who belongs to a higher tax bracket, will receive a deduction higher than the amount the recipient spouse, who belongs to a lower tax bracket, will pay on alimony as taxed income.

In other words, the after-tax net savings will only be available to the supporting spouse.

Other things to remember include:

Changes to alimony taxability and deductibility will directly impact the total net income of former spouses bound by child support guidelines.
The courts, family law attorneys, and mediators will have to consider the net income of each spouse to determine the appropriate amount of alimony and child support payments.
If you are in the middle of a divorce, you can file your taxes in one of two ways. If you are still married by December 31 of the tax year, you can file as married or married filing separately. How you choose could make a significant dent on how much taxes you will have to pay.
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When Texas parents get divorced, it is not unusual for one or both spouses to move to another city, state, or even country to begin life anew. Issues may arise, however, when one parent wishes to bring the child who is bound by an existing child custody order.

Under the Texas Family Code, a divorced parent’s ability to move with a child depends on the existing custody arrangement established after the divorce. So, before you make any decisions about relocating with your child, it’s imperative that you understand the basic factors and rules of child custody in Texas.

What Is the Custodial Arrangement?

While Texas law recognizes many types of custodial arrangements, the most common setup is joint custody, also known as joint managing conservatorship. The reason is simple—the Family Code assumes that awarding both parents with shared custody of the child/children is ultimately in their best interests, unless of course there is a proven history of abuse and violence in the family.

If the divorced parents are able to come up with a joint managing conservatorship agreement on their own, they may file a parenting plan stipulating the details of their agreement in court. Normally this parenting plan will also specify the child’s place of residence, which can be a specific geographical area in Texas, such as a particular county or any contiguous counties.

If the parents are unable agree on terms, the court may intervene and determine a custody arrangement that is in the best interests of the child/children. In many cases, the court’s custody orders will place restrictions on a parent’s ability to move with a child.

It’s for this reason that settling out of court with the assistance of a skilled Texas divorce attorney is important, as it gives you some control over the terms of the custodial arrangement.

What If There Is a Need to Relocate Outside the Agreed Place of Residence?

A parent can’t just pack up and move with their child outside of the agreed geographical area in their custodial agreement without first notifying the court. Under Texas law, the parent who wishes to move must seek a child custody modification from the court to change the initial custodial arrangement.

What’s more, even if the original parenting plan or custodial arrangement does not restrict the child’s residence to a specific area, a parent can’t just relocate with the child without informing the other parent. The other parent can file a motion to challenge the relocation and can even file a temporary restraining order until a hearing can be held.
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Although much has been said about the emotional and mental turmoil brought about by a divorce, there’s not a lot of information on just how damaging it can be to your finances. Sure, you’ll occasionally hear about the professional athlete or celebrity driven to bankruptcy because of ridiculously high spousal and child support payments. But things like debt, property division, and credit during a divorce don’t get the attention they deserve.

In truth, a divorce can have a significant impact on your credit score, which in turn, affects your ability to take on a loan, open a new line of credit, or refinance an existing loan. The good news is that there are ways to protect your credit during and after a divorce. Below are four steps to do just that.

Check Your Credit Report

Run a credit report during the divorce proceedings and double-check every credit card or loan item in your report. You might have a credit card under your name you’re unaware of with a balance owed that should be settled in the divorce process. Ideally, you want to close all joint accounts before finalizing the divorce to insulate your credit score from any spending activities.

Close Joint Accounts or Remove Your Name from Them

For loan accounts that can’t be closed right away, such as your mortgage or car loan, be sure you and your spouse agree on how to divide these debts.

When it comes to the family home, the cleanest thing to do is sell the property and use the proceeds to pay off what’s left of the mortgage. If your spouse insists on keeping the family home and shouldering all subsequent mortgage payments, remember that late payments will still affect your credit score.

The lender only cares about whose names are on the mortgage, regardless of their marital status. In other words, your liability for shared debt doesn’t go away after a divorce.

Apply for a Personal Credit Card Before Finalizing the Divorce

A credit card under your name can be a lifesaver for a spouse with no income after the divorce. To get circumvent the problem of having no income or not enough income to qualify for a credit card post-divorce, you can apply just before finalizing your separation. This way, you can leverage your spouse’s income to meet the credit card company’s requirements.

Evaluate Your Cash Flow Needs in the Future

High interest rates on credit cards will make it a challenge to pay off credit card debt with just one source of income after a divorce. It’s a good idea to consult a divorce financial planner to assess your cash flow needs and determine how much debt you can realistically keep. It may be in your best interest to sell off assets to pay your debt or create a settlement to pay off credit card debt.
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Financial problems are a dimension of divorce that catches many divorcees off guard. Aside from the emotional turmoil and mental and physical exhaustion of the divorce negotiations, you also have to anticipate its financial impact during and after the proceedings.

Many men and women are shocked when they learn that their money problems don’t go away after their ex-spouse signs the final divorce settlement papers. Sure, these documents will state how your assets and liabilities will be divided, but as with many things in life, actual implementation is often another story.

The good news is that most financial problems you’ll face during and after the divorce can be mitigated with some simple measures. If you’re in the process of a divorce or have already signed the papers, be sure to follow these 6 steps to protect your finances.

Take Care of Your Credit

If you still have any joint credit cards with your ex or soon-to-be ex, make sure you cancel these to avoid tying your credit to your ex’s spending habits. If you have yet to build a good credit score under your name, now’s the time to do it.

Plan Your Estate

If you’re still in the middle of the divorce proceedings, it’s a good idea to prepare to disinherit your ex. If the divorce has already happened, talk to an attorney about altering your will and estate planning documents in light of your new status. Should something happen to you, you may not be keen on your ex inheriting your estate.

Update Your Beneficiaries

You should also update all your insurance policies, pensions, annuities, trusts, retirement accounts, and anything else where your ex is listed as a beneficiary.

Divide Your Retirement Plan

Dividing retirement assets can be tricky, requiring the guidance of an attorney who knows how to split retirement plans while protecting you from exorbitant administrative costs and tax consequences. For division of 401(k)s and pension plans (not IRAs), you will need to execute a Qualified Domestic Relations Order (QDRO), which will ensure your plan administrators will pay benefits according to your divorce’s settlement.

Ensure Your Receive Alimony and Child Support

Although your divorce settlement states that your ex must pay child support and alimony, many former spouses do not honor these obligations. What you can do is place measures to ensure you receive maintenance and child support, whether it’s through an annuity purchase, automatic bank transfers, or transfer of specific property to your name.

Sell or Refinance the Family Home

The cleanest way to ‘get rid’ of the marital home is to sell it and split the proceeds equally between the two parties. If either spouse chooses to stay in the home, it’s critical to refinance the mortgage under the name of the person who gets to keep the property. This will ensure that whoever moves out is no longer liable for mortgage payments. Remember, just because your name isn’t in the title, doesn’t mean you’re off the hook as far as the mortgage goes.
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One of the bitter realities of going through a divorce in Texas is having to decide where to live while the divorce proceedings are ongoing and after things have wrapped up. There are no right or wrong answers here. Your decision ultimately depends on your specific circumstances, even if a certain option turned out well for a friend or family member.

Continuing to live in the family home may add to your personal debt and tax liabilities. On the other hand, moving out can mean paying more out of your pocket every month for rent or a new mortgage.

Here’s a closer look at your options and their pros and cons.

Continue Staying in the Family Home

If you have young children or currently don’t have the resources to move and find a new home, you can negotiate to continue living in the family home. Obviously, this means you can maintain a part of the quality of life you’re accustomed to, not to mention you get to stay close to your friends and family in the neighborhood through this tough time.

But this option also comes with issues. For starters, you need to prepare yourself financially for the costs of maintaining a home on your own, such as maintenance, cleaning, utilities, and taxes. If you are assuming the mortgage, you need to find out if you have the monthly cash flow and financial capability to refinance. Note that monthly mortgage payments cannot be counted towards spousal maintenance or child support.

Moving into a New Home

While many divorcees fight tooth and nail to continue living in the family home, there’s something to be said about starting life anew and moving into a new neighborhood, city, or state. And given the right real estate market, this can lead to an opportunity to build equity, serving as a launch pad towards greater wealth.

Of course, it goes without saying that buying a new home is expensive, so before making any final decisions, you want to be realistic about whether you can even afford the total cost of moving. These expenses include:

New furnishings
Home improvements
Transaction costs (e.g. down payment and settlements)
Closing costs

If your joint accounts are frozen or the divorce proceedings are taking longer than expected to resolve, moving into a new home may not be the smartest option.


Renting is perhaps the most practical option on this list, especially when it comes to figuring out where to live while the divorce negotiations are ongoing. At a time when emotions are high and your life is going through major changes, the last thing you want to do is make any decisions that may damage your finances permanently.

Finding a temporary home also lets you buy some time and space to think about what to do next after the divorce. By not committing yourself to a mortgage, you have more options to consider.
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A divorce in itself is a complicated process. But it gets even more complex when the spouses have to figure out what to do with a privately-owned business.

If you’re facing this situation, below are three important factors to consider.

The Value of the Business

It’s important to first look at the company’s financial statements, giving each side’s valuation expert equal access to the company’s books, tours of the company’s facilities, and time to interview the management. This is especially important for spouses who may not play as much of an active role in the business’s daily affairs as their partners do.

Inadequate discovery may cause an expert to miss important information, leading to an inaccurate valuation of the enterprise.

If the business interest was owned before the marriage, this may require the inclusion of the appreciation of the business’s value over the duration the marriage, which will, in turn, require an analysis of the current market conditions and comparing it with the business’ value at the start of the marriage.

What to Do in Case of Spousal Support Obligations

Under Texas law, which distinguishes community property from separate property, if one spouse started a business before the marriage, that company is his or her separated property. If it was started during the marriage, it will be community property, and thus divided equally upon divorce.

There are instances when it’s necessary to adjust the value of the business from the marital estate to avoid ‘double dipping,’ which happens when one spouse receives twice the recovery from one asset. Some courts will decide that it would be unfair for a spouse to receive spousal maintenance payments and a share of the business’s value, but this is not always the case—ultimately it depends on your state’s laws.

Honesty in Reporting Income

It’s common for a spouse who is a controlling shareholder of the business to hide assets and/or income to try and get a better deal during a divorce settlement. Hiding income and assets, or even exaggerating expenses and liabilities, can lead to a lower valuation of the business, which in turn, means lower child and spousal maintenance payments.

It’s for this reason that it’s important to work with an experienced valuation expert who knows how to find these kinds of anomalies.

In Summary

When a business is part of a marital estate, a fair settlement during divorce hinges on the company’s accurate valuation. This can be done by working with a reliable divorce attorney and experience valuation expert who knows how courts handle property division and how spouses hide their income and assets to undervalue the business.
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Two generations of record high divorce rates have nearly cemented the image of the father who was only around on weekends as part of American culture. But this is quickly changing, as more and more couples in recent years are opting to co-parent their children, even after separating from their spouses.

Seeing the benefits of co-parenting, lawmakers from more than 20 states have sponsored bills to encourage shared parenting or make it a legal presumption, even if it’s against the parents’ wishes.

Earlier this year Kentucky passed legislation that made joint physical custody and equal parenting time standard throughout the divorce proceedings.
Florida’s state legislature unanimously voted to approve a bill to presume equal time for child custody setups, but this was vetoed by the governor.
In Michigan, local lawmakers are looking at a bill that would make all custody decisions focus on equal parenting time the starting point of the divorce proceedings.

Why the Push for Co-Parenting?

The push for custody arrangement can be traced to years of lobbying by fathers’ rights groups, who argue that thousands of men around the country feel alienated from their children and are overburdened by their child-support. The movement is drawing bipartisan support from lawmakers, who are responding to this call for gender equality and, for some conservatives, increasing frustration from men who feel they are being shortchanged by current custody laws.

Women as Instinctive Caregivers

For more than a hundred years, court decisions were guided by the notion that women were instinctive caregivers. This changed in the 60s and 70s when no-fault divorce laws paved the way for a wave of divorces and more women joined the workforce.

And so, custody rulings began to shift to the gender-neutral standard of doing what’s in the “best interest of the child,” leading the way for joint custody arrangements. Still, many judges continued to use their discretion to award physical custody to mothers, which critics and fathers’ rights groups believe reflect a lingering bias.

Is Co-Parenting Actually Beneficial?

Research shows that shared parenting has a significant impact on children; kids with active fathers tend to have better self-esteem and better grades. Studies on shared parenting across 15 countries also showed benefits that cover emotional, behavioral, and even physical health.

But researchers also point out that these findings need to be investigated further, as children who display the benefits of shared parenting may have been raised in environments where the parents actually got along despite being divorced. This situation may not apply to those forced into shared custody arrangement, especially when the separation involves abuse and neglect.

As Robert Emery, author of “Two Homes, One Childhood” and a professor of psychology at the University of Virginia, points out, what’s important is not the amount of parenting time but the quality of parenting and co-parenting.
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When a Texas judge makes you liable for paying child and/or spousal support after a divorce, the terms are usually based on your situation at the time of the divorce or legal separation.

But let’s face it, life happens, which means that your ability to support your ex and child may change at any time. And before you know it, the original support stipulations of the divorce agreement or family court order are no longer sustainable for you. In other words, you can no longer continue making payments.

You may have run into employment issues, your work hours may have been reduced, you may have remarried and have another child to provide for, or your child may have developed a special need that requires you to increase your financial support.

In cases like these, Texas family law allows to modify the child or spousal support order, but only if you can prove that your current circumstances require it.

How to Make Changes to Child Support

To modify a child support order, a parent must prove a substantial change in their ability to provide financial support and/or a change in the financial needs of the child. Typical examples include:

Becoming unemployed or getting a promotion and raise
Becoming disabled and being unable to work because of said disability
The child has long-term special needs that will continue after they turn 18

In instances where the initial support order was issued more than three years ago, the custodial parent can ask for an increase in child support to keep up with current Texas child support rules. For example, if you have custody of your children and your ex-husband makes over $7,000 a month, you can seek a support increase.

Under the three-year rule, parents no longer have to prove a substantial change to modify their child support order. And if the expected change is at least $100 or an increase over 20 percent, Texas family courts will usually order the new amount right away.

How to Make Changes to Spousal Support

Likewise, decreasing or terminating spousal support requires providing a significant change in the circumstances of the supporting or receiving spouse. Such changes include a significant reduction in your income or becoming disabled, which the court will consider as valid reasons for reducing or terminating support payments.

Under Texas law, spousal support ends at the date specified by the court, provided that no modification was requested before said date. Spousal support, however, ends when the receiving former spouse remarries. Payments can stop automatically without the need for an official court order. The same rule applies if your former spouse cohabitates and enters a romantic relationship with another person, but this will require presenting evidence in court and obtaining a release order.

Note that supporting spouses are still required to continue paying back support payments until they’ve met all obligations.
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