Estate Planning and Divorce

Divorce is another important aspect that requires careful deliberations in relation to the estate planning. The occurrence of the divorce subsequent to the preparation and execution o f the will is quite similar for the ex-spouse in relation to the estate planning. In both the cases, ex-spouse is entitled to nothing. The ex-spouse is not entitled to any sort of legacies, nominations in relation to the executor or trustee. The alimony also came into consideration and is includible in the nature of the taxable income in relation to the recipient and is deductible by the payer of the same.  The divorce decree requires the payments that need to be made. The parties can consent in relation to the payments that the same need not be taxable or alternatively deductible. Similarly, the parties need to consider the recapture provisions if the quantum of the payments is modified or alternatively terminated.

Taxability of the Estate and Property Transfer

The process of the transfer of the estate and property among the spouses subsequent to the divorce is not a taxable event. Consider the liabilities that exceed the basis owing to the face that it can be rationale to trigger the taxable income. The future tax implications and ramifications need be consider in the event of division of the property. The point can be illustrated in such a way that if the husband is the recipient of the Stock AA which has a current fair market worth of about $150,000 and the historical cost basis of the same is $145,000 and the wife is the recipient of the Stock BB which has a current fair market worth that is exactly equal to $150,000 but the historical cost basis is varied and is equal to $150,000 it will lead the wife requiring to pay more in relation to the income taxes in the event of the sale of the stock.

Claiming of the Personal Tax Exemptions

The claiming of the personal tax exemptions in relation to the children can be called for by the parents that are custodian of the children. However, both of the husband and wife can consent in relation to letting the parent who is not custodian to claim the same tax exemptions. The personal exemptions are usually discontinued subsequent to the gross income that is adjusted to reach a certain threshold. It is not disadvantageous in any way that the parent who is high income earner calls for and requests those exemptions.    

Qualified Domestic Relations Order

United States issued a judicial order that is referred to as the Qualified Domestic Relations Order (QDRO). It is specifically relation to the estate and property division in the event of the divorce. It subsequently provides for in relation to spouse sharing in the retirement plan benefits that are the holdings of the other spouse. As per the express provisions of the Internal Revenue Code §72(t) a state court order in relation to the child support or the amount of alimony or likewise the property transfer leading to the payments from the specific retirement plan will not be levied penalty that is charged on the basis of the 10 percent in relation to the early withdrawal. Further, the payments will not be subjected to the penalty that is charged on the basis of the 15 percent in relation to excess distribution from the said retirement plant and additionally the payments can continued and rolled over into another retirement plan referred to as the IRA.  

Filing of the Joint Return

Use your judgment in the case where the ex-spouse requests you to sign a return for the objective of filing a joint return in relation to income tax and all the income streams are not specifically reported or alternatively there is presence of the deductions that is doubtful. The signing of the return in such a case and subsequent the audit of the same by the Internal Revenue Service would hold you liable in the real-time for the levy of the additional taxes individually. In such a case it is recommended that you file with the check on the Married status and option of the filing separately as a cautious approach.

Estate Planning and Remarrying

Marriage has significant influence in relation to the Estate Planning. The implications of the second marriage on the estate that could be eventally available to your children from the first or previous marriages need careful deliberation. For instance, your first marriage bore you two children and then you decided in favor of the second marriage and there is presence of a clause in the will that specifies that transfers everything in your estate in the name of the current spouse, this will eventually leave the children from the previous marriage entitled to nothing in the case of your death. If the children have attained the age that is commonly referred to as the age of majority, there is no statutory right that is available to them in relation to inheriting of their deceased parents.

In the contemporary business world, there is increasing trend in relation to the inserting of the clauses in the wills, creating of the trusts to achieve the objective of safeguarding the estate from potential claims and liabilities. A quite reliable method in relation to the preparation of the new wills is to execute the same with a qualified terminal interest property. The potential outcome of the QTIP is that it will generate an income stream with regard to the current spouse and also provide for the property for the children of yours from the former marriage.  

Following enumerated points should be considered in the event of the remarriage or the divorce

• In either case, it is beneficial to prepare new will, attorney powers in relation to the property and  lastly the directive with regard to the health-care. 
• In the case that you are receiving pension as a widow or the widower, it is important to consult the  administrator if remarrying will void such pension stream. 
• It is important to check mark that each of the spouses has property to their name that will afford them an opportunity in relation to taking advantage of the unified credit amount.
• Prenuptial agreement need to be executed. In the court of law it may lose enforceability if it is post dated however it will certainly be evidence in relation to property ownership for estate tax implications.

The list is not exhaustive and consulting your estate planner is quite necessary to execute comprehensive plan of how to design your estate plan yielding you more control over your property.

Qualified Terminable Interest Property (QTIP)

The nature of the Qualified terminable interest property (QTIP) is such that it not only allows the grantor to cause provision for the living spouse in addition to the maintenance of the control in relation to how the assets are going to be distributed in the case of the death of the surviving spouse. The income along with the principal in some cases that is generated from the creation of the trusts is the right of the living spouse that allows the spouse to live the rest of the life with care and comfort.    

Who Uses QTIPs?

The trust is quite used by the type of individuals that have children from the former marriages. QTIP allows the grantor control in relation to the allocation of the estate and property among both his living and current spouse and the children from the previous or former marriages. Stated differently, the grantor has choice with regard to the beneficiaries that are entitled to the estate in the event of his death.

Estate Planning

Marital Status has significant influence in relation to the estate planning. The marital status has influential role in the ultimate distribution in relation to the wealth to your legal representatives and heirs. Likewise, health and competency are the greatest benefit to the mankind and the assisted living options in relation to the health can be beneficial with regard to the money, stress and time as well.

Very few used to ponder over the financial implications of the marriages and divorces on the estate and wealth. The Hollywood stars and prominent wealth individuals, however, believe a little different. They believe in the management of the estate planning is a need of the hour and is therefore duly cared for as far as they are concerned. Entering into the prenuptial agreements is one of the prime examples. The stars before engaging in the relationship consent on the prenuptial agreement and adjudicate in relation to the distribution of the wealth in the event of the conclusion of the relationship either on the divorce or death of the either partner. Mostly the common individuals do not bother about causing the estate planning happen which is beneficial for him in the long-term.

The nature and extent of ramifications that result in the event of the marriage or the divorce are quite diversifying. The individuals whose marriages have ended owing to the fact of divorce or the marriage have affinity to remarry in order to enjoy the life in its true spirit. The frequency of the divorces in the contemporary world is quite high. Causing estate planning in the event of the marriage or the divorce has many merits. First of all protects the interest that is inheritance in relation to the children which have born from the previous marriage, followed by the ensuring of the security in relation to the second spouse. Similarly, the estate planning helps you in many diversifying and range of tax issues and last but not least, it considers your health as well and ensures that you have significant amount of money in balance subsequent to the estate planning to provide for the health care costs.

If you have been planning to remarry or divorce in the future, contacting your local bar association regarding the attorneys having expertise in the field of estate planning as well the tax implications will save you from mental torture, stress and will ensure your wealth is protected in the long-term.

What to do in relation to the estate planning?

Estate planning should be commencing from your efforts and seriousness in relation to your wealth. No attorney or barrister can thing in the best interest of your wealth as much as you do. Commence the estate planning by counting the things worth and listing down all the things that have value of 100 or more, followed by the non physical items that are valuable. For instance, jewelry is a physical item; however, the life insurance policies are the valuable non physical things. Similarly the list should not ignore the credit cards or the debit cards list. This way keep on pouring light and listing all the belongings that have part of your wealth and consult the estate planning attorney with your design of estate planning and his advice on those matters to ensure that you have the planning in the best interest of your wealth.