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Key considerations for bankruptcy during divorce

A divorce can be financially draining, and if people are already experiencing financial struggles, they may need financial relief. Some divorcees may see bankruptcy as a viable option.

For those considering bankruptcy during their divorce proceedings, there are a few considerations that are important in determining how to incorporate bankruptcy in a divorce.

Retirement funds can be major divorce issue

When couples in Pennsylvania move toward divorce, the financial issues surrounding the end of a marriage can be more challenging and difficult than the emotional and practical concerns. In many cases, retirement funds are the most significant and largest asset of a couple handled as part of a divorce settlement. As these savings are often the largest single asset at stake, dealing with them requires a high degree of precision and attention.

Different types of retirement accounts are handled differently in a divorce, and if the property division is not completed correctly, both divorcing spouses could find their savings reduced by significant taxes and penalties. In addition, an unequal or inequitable distribution could also result; this is a major concern for divorcing couples, as 62 percent of divorce lawyers noted that retirement funds are a contentious issue in a 2016 survey.

Planning for divorce can be sound financial advice

For people in Westmoreland County who are considering their future financial planning, the potential of divorce may be something to keep in mind. While couples about to be married may not want to consider the potential consequences of divorce, the end of a marriage can carry serious financial consequences along with the emotional and practical fallout. This means that divorce planning can be an important step in financial preparation for anyone, particularly those with individual assets of concern.

Prenuptial agreements are most frequently used by people who are already individually wealthy. In general, they apply to separate property, the assets that each spouse brought into the marriage as well as individual gifts and inheritances received later. Separate property can be particularly important for blended families that need to be protected in estate planning. Some of the same techniques that are used to plan in case of divorce can also help to protect property from creditors of a spouse.

Divorcing over age 50 carries financial concerns

The rate of divorce for people over 50 in Pennsylvania and across the United States has more than doubled in the past 25 years, and this trend is continuing in its upward direction. While divorce at any stage of life can be accompanied by a wide range of emotional, practical and financial considerations, spouses separating near retirement age can face some unique challenges.

Choosing divorce later in life after a long marriage can often mean that the couple has accumulated significant assets, from real estate to retirement plans and investment funds. Such high-asset divorces often require sorting through complex financial aspects of property and asset division. In order to begin divorce settlement negotiations, an accurate picture of the financial status of the couple is particularly important. Each divorcing spouse can help their case by preparing a full inventory of all of the property that belongs to the couple, including both individual and jointly held assets.

Prenuptial agreements can help support a strong marriage

For some Pennsylvania couples planning on getting married, the concept of a prenuptial agreement can evoke fear, anxiety or even anger. However, planning for a prenuptial agreement can actually help to strengthen a relationship as people enter a new stage in life. When a partner with a higher level of assets or a stake in a family property insists on a prenup, it doesn't always mean that they are planning for a divorce.

Financial disparities can bring their own brand of stress and anxiety to a relationship. A prenuptial agreement is one way of managing the risks posed. One type of asset that's frequently included in a prenuptial agreement is a family business or property that predates the marriage. However, concerns about a partner's relationship to their family of origin over their relationship with their spouse can also be a point of conflict. Creating a prenup can help to lay down boundaries that not only protect the family property but also support mutual agreements between the spouses.

Marriage myths damage relationships

As soon as some couples get engaged in Pennsylvania, well-meaning friends will offer suggestions and advice on how relationships change after marriage. Much of the advice is even considered common knowledge. However, some of this so-called common knowledge is wrong.

A marriage is something that is constantly evolving. The way that it grows has much to do with the belief structure that people have going into the marriage. If couples hold onto toxic myths about marriage, they may go down the wrong path or convince themselves that their marriage is going end up in divorce.

Tax considerations for divorcing couples

Divorcing couples in Pennsylvania and around the country are often primarily concerned about matters such as property division, child custody and spousal support, but they may be wise to also consider the tax ramifications of ending a marriage. The implications of decisions made during divorce negotiations can persist long into the future. One of the most important of these decisions is choosing whether to sell or divide jointly owned assets.

Spouses who have developed emotional attachment to assets may choose to offer property in exchange for them during divorce negotiations, but this can result in hefty capital gains tax bills if they choose to sell the assets in question at a later date. Spouses who receive alimony as part of their divorce settlements should be aware that they will be required to pay income tax on this money. In addition, spouses who pay spousal support are able to deduct these payments on their personal income tax returns.

Guilt and other issues to avoid in high-net-worth divorces

If you are facing a complex, high-net-worth divorce, you may feel overwhelmed by questions, such as how this will affect your children, how all the court will divide the assets, what you can expect in terms of alimony and much more.

While you are contemplating these things, the emotional side of the divorce will certainly find its way in, making poor decisions easy to make. Here are four common mistakes to avoid in your high-asset divorce.

Tax code changes could have major impact on alimony

Some Pennsylvania residents who had been considering divorce may speed up their plans to end their marriage after changes to the U.S. tax code were signed into law by President Donald Trump in December 2017. The changes, scheduled to go into effect at the beginning of 2019, could make it more expensive to pay alimony. Every year, around 800,000 Americans finalize their divorces, but in 2018, that number could see an increase as people act quickly to tax the changes into account.

Family law attorneys have commented that there have been an increasing number of requests for appointments and inquiries following the passage of the tax bill. Those with substantial assets who may expect to have significant spousal support burdens have noted particular concern about the change. Prior to the implementation of the changes, people who pay alimony could deduct it on their tax returns.

Creating a parenting plan when parents cannot work together

Going through a divorce can be emotionally difficult, especially if the former couple can no longer work together and their are kids involved. However, most Pennsylvania couples still understand the importance of coming up with a working parenting plan that is in the best interests of the children. When they have trouble negotiating an agreement on their own, there are steps they can take to make this task easier on everyone involved.

One of the first things that both individuals might want to do is hire their own collaborative attorney. These professionals focus on resolving divorce-related issues outside the court room. This process allows for some negotiation and gives the parents more control in creating a beneficial parenting agreement. If the two parents cannot be in the same room together, the attorneys can meet to negotiate.

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