Ending ongoing spousal support

When a couple in North Carolina divorces, one of the parties may be ordered to pay the other alimony. There are usually situations that signal an end to alimony payments like when the recipient remarries, but payments can continue for a long time in some cases. The actor David Hasselhoff has paid alimony to his ex-wife Pamela Bach since their 2006 divorce, and he pays $21,000 per month.

The “Baywatch” actor and recent reality star is asking a judge for permission to stop paying alimony as he wants to retire soon and reportedly had to spend some of his retirement savings to keep making payments. His gross income is $112,000, and the 63-year-old man also uses a portion of that income to take care of the couple’s two daughters as he has physical custody. He has also been dating 34-year-old Hayley Roberts for five years.

Hasselhoff and Bach were married for 17 years, and 52-year-old Bach has appeared on “Celebrity Big Brother” after the couple’s split. However, Hasselhoff claims that his former spouse is talented and could work as an actress or a producer. He alleges that she could become self-supporting if she tried to find work.

Alimony typically goes to the party who made less money or contributed to the marriage in some other fashion, and it is intended to help them keep the same standard of living. Alimony and child support are different, so one could receive both or only one depending on the situation. If the alimony recipient has become employed and no longer needs additional funds, a family law attorney could be of assistance in petitioning the court for a modification or termination of the order.

Summer Tax Checklist

Written By: David Amiss, CPA, CVA

Carr, Riggs & Ingram, CPAs and Advisors


New Year’s Resolutions and Spring Cleaning are initiatives that focus on motivating individuals to address a perceived need. Accordingly, the aim of this article is twofold. First, to convince you of the perceived need of giving your taxes adequate attention on the eve of summer; and second, to give you a list of things to consider and do related to taxes.

New Year’s Resolutions and Spring Cleaning are initiatives that focus on motivating individuals to address a perceived need. Accordingly, the aim of this article is twofold. First, to convince you of the perceived need of giving your taxes adequate attention on the eve of summer; and second, to give you a list of things to consider and do related to taxes.

Visit any of your local CPA’s office and the examples would be replete of clients engaging in a significant transaction and informing their CPA subsequent to executing the transaction. ‘If only we would have talked to you before’ or some variation thereof is what typically ensues after the first of the year when the client comes in to drop off their tax information. The resulting conversation reveals that the CPA could’ve saved their client significant amounts of cash had they been informed of the transaction prior to its execution.

That example may sound a bit dramatic. However, that which is true with significant amounts of cash is also true with lesser amounts of cash. Further, the benefits to engaging your CPA at multiple times of the year, as well as, prior to major decisions have other benefits as well, just as visiting your doctor and dentist does.

With that said, and hopefully the importance thereof established, what are some things to consider on the eve of summer? First things first, finalize your 2015 tax return. For those that have requested an extension of time to file their tax returns, acquire the necessary data to complete the tax return and provide it to your CPA. For the most part, you know now what it will take to finalize your tax return. Move quickly to complete it. Completing the tax return now has several benefits, including but not limited to allowing you to move forward to focus on a year you can plan for and assessing your 2015 tax return which brings us to the next ‘to do’.

As with most anything, a prudent response to your 2015 tax return is to evaluate it. What went well? What didn’t go well? Did your return match your expectations? Did your return match your plan and or, if applicable, your projection? Did you learn anything about your tax return? Were you made aware of opportunities moving forward? Are you confident in the competence and care that you’ve received from your CPA? These questions are a good start towards evaluating your 2015 tax return in hopes of making improvements for 2016, which leads to our next task.

Once you’ve tied a bow on the 2015 tax return it’s time to turn our attention to 2016 and beyond. Some of the leg work should have already been completed with our evaluation of the 2015 tax return. For those run of the mill components to your return such as wages, interest, dividends and other annual recurring revenue, are you satisfied with your payment of estimated taxes and subsequent liability or refund? Are your withholding and/or estimated taxes adequate for your tax liability? Do you typically owe tax or receive a refund when you file a return? Are you satisfied with those results? Are you aware that you potentially could be subject to penalties on the underpayment of estimated taxes? Further, are you aware that if you don’t pay your total tax liabilities by the due date in April you will be subject to additional penalties and interest? Now, to be sure, some individuals are aware of and content to pay penalties and interest as a result of paying their taxes later. This is due to the fact that they have the ability to use the cash now in such a way as to derive a return greater than the penalties and interest creates. If this matches your prerogative, that is certainly fine. The aim of this article however, is awareness to those facts to enable proactive planning and reducing surprises.

Another strategy is to give consideration to future transactions that you can begin planning for now. Thinking of the pieces to the puzzle now will have a direct impact on your future cash flow. There are numerous tax strategies that can be employed to minimize tax liabilities. Further, potential transactions can be structured in such a way to further reduce liabilities.

This time of the year is also a good time to make adjustments to wage withholding in order to avoid underpayments or excess refunds. Additionally, the June 15th due date for second quarter estimated tax payments is fast approaching. Be sure to pay in an appropriate amount by this date. Furthermore, if you’ve extended your tax return you may need to double up and pay for first and second quarter estimated tax payments to avoid estimated tax penalties.

Lastly, consider making aware and introducing the various professionals you work with, such as attorney, CPA, financial planner, etc. with one another. These are the trusted individuals in your lives that are charged with caring for you and your posterity to various degrees. It’s helpful for these professionals to know one another in order that they may act with prudence and efficiency when called upon.

I hope that this article has illuminated the need to be engaged in your tax situation on the eve of summer, as well as throughout the year. Additionally, that there are some specific tasks that you can address in the here and now. Finally, that in doing so you’ll receive multiple benefits which will be the proverbial ‘proof in the pudding’ of this call to action.

Parental alienation issues in divorce cases

When a North Carolina judge deals with a contentious divorce situation involving issues such as one parent claiming that the other has abused their child, there can be challenges in assessing the validity of such a claim. In some cases, allegations of child abuse may be justified and accurate. In others, however, a parent may have brainwashed a child into believing that the other party is abusive, resulting in false accusations. Unfortunately, legitimate claims of parental abuse could backfire on the accusing parent and the child.

The issue of parental alienation has become quite controversial because of the potential for the rejection of legitimate abuse claims. In some cases, the accused parent can end up with full physical and legal custody because of a judge’s view that the other party has acted maliciously in an effort to poison a child’s view. In fact, an early study of the issue involved 240 cases of alleged parental alienation, and in 80 percent of these cases, the accusing parent lost custody.

When alienation is actually occurring, a loving parent and extended family members can be rejected as a child pulls away. A custodial parent whose false accusations have been believed could interfere with the child-parent relationship for years to come as the non-custodial parent faces limited contact and involvement in the life of their child. The outcome can vary from one courtroom to the next based on the views and methods of a given judge.

In a hypothetical scenario, a parent dealing with a situation involving an abusive spouse might seek legal advice prior to filing for divorce in order to develop a strategy for documenting issues such as child abuse. Proof of issues such as drug use or other negligent behavior might be helpful in supporting a request for full custody.

Is Love Enough? 6 Big Questions to Ask Before Marriage from Your Divorce Attorney

The institution of marriage has changed drastically in the last 50 years. Back in the day, a young woman would marry the similarly aged young man that lives down the street. Their respective parents would approve of the marriage, finding the perspective wife to be a decent care giver and the perspective husband a hard worker with income earning abilities. Together they would build wealth, raise children, and contribute to social status of the joined families. These marriages will remain solid with hard work, social and religious constraints, and self-sacrifice.

Today, more often than not, people marry for love. We want not only someone to raise children with but we want to marry our soulmate, someone who will be not only a companion but a best friend and an even better lover. The bar has been raised for committing to a spouse today, we desire someone truly special. However, when the honeymoon period of love fades, and it will, unless you and your spouse are one of those sickening perfect couple everyone loves in the movies but despises in real life, it’s important to know what to expect underneath the crown of love. There may be other questions you may personally want to ask your partner, but consider the six questions listed below as a starting point to open the channels of communication about committing your lives to each other.

1. Do you want children?

This is very important to discuss honestly before marriage. If the answers are different, no matter how much love you have, one party will resent the other for pressuring the decision one way or the other. If the answer is yes, then the follow-up questions are, how many? when? and will you help change the diapers? It is also important to discuss what role each will play as a parent.

2. How important is religion?

Are both partners equally entrenched or removed from their respective religions? Are there differences in each other’s families when it comes to religion and how will you deal with that? How will you as a couple celebrate religious holidays? If you plan on having children, how big of a role do you see religion playing in the education and upbringing of the child?

3. Is it my debt or our debt?

When it comes to divorce, your debt is my debt, but couples can still keep finances physically separate during the marriage. Discussing finances is crucial, as it is often a big source of arguments that arise during marriage. Will you and your partner be sharing bank accounts or would someone prefer to keep resources separate? When seriously contemplating marriage, disclosing debts is very important. Additionally, if your incomes greatly differ it might be helpful to budget according to each owns proportional income. Ask yourselves how much you’d be willing to spend on a luxury item, like a car. This question, in particular, will let you know whether your partner is cautious or reckless when it comes to spending habits.

4. How important is sex to you?

They say there are three true pillars to a happy and loving relationship: trust, laughter, and affection. Partners need to be able to trust each other, which comes by way of honesty and being open, discourse not distance. Partners need to have the same sense of humor, whether it’s sarcasm or void of humor altogether – happiness is love. Equally as important, couples need to be on the same level of desired affection. A healthy relationship will involve discussing what each partner enjoys about sex, how often they desire to have sex, and how important it is to them in the relationship. It is imperative that both partners remain sexually satisfied throughout the marriage.

5. How did your family handle conflict?

Was your family the type that screamed and threw objects across the room, calmly sat down and discussed issues, or did your family distance themselves from each other when disagreements arose? A person’s family dynamic often reflects on how they handle conflict, or it may have drastically changed the way a person desires to handle disagreements. It is important for couples to be on the same page when it comes to dealing with conflict. There will be many hard times during the span of a marriage, and if one partner shuts down while the other craves open, honest discussions, the marriage will likely not last long.

6. Where are we 10 years from now?

What are each partner’s relationship goals? What are their personal goals? If one partner desires to go back to school to get his PhD., knowing this will take another 5+ years of dedication, and perhaps relocation to a different state, the other partner might have concerns if she is ready to start a family and wants to stay close to her family. This is also an opportunity to discuss each other’s opinions on divorce and what their expectations of marriage are. It might be that one person truly isn’t ready, and will never be ready, to commit to marriage.

If you don’t deal with an issue before marriage, you deal with it during the marriage. Honesty is, as always, the bedrock of a strong and fulfilling relationship. Being completely honest with each other before marriage when answering the above questions, and more not included, will spur important discussions that will hopefully give couples a chance to explore these very intimate and important areas of their life before committing to marriage. Of course, the answers to the questions could change with time, as people do change, but getting started in the same direction as your spouse will let you know the love is accompanied by compatibility.

Restraining Order: Criminal or Domestic?

Written by Daniel Johnson of Willis Johnson & Nelson

When the tension of a relationship ending leads someone to react with violence or in a threatening manner, it is not uncommon for the criminal justice system to step in and place significant restrictions on an individual’s liberty through what are commonly referred to as “restraining orders.” These orders generally fall into one of two categories: domestic violence restraining orders and conditions of pretrial release. Often, individuals have both types of “restraining orders” in place at the same time. It is important for anyone charged with a crime of domestic violence to understand the differences between these two types of “restraining orders,” the impact that these orders have on their rights, and the consequences of violating these orders. The following is based on a common scenario in the criminal justice system that illustrates how “restraining orders” work.

When someone is arrested and charged with a crime of domestic violence, judges will set the conditions upon which an arrested person may be released from jail. In cases of domestic violence, magistrates often impose a “restraining order” in addition to requiring a secured bond. The “restraining orders” entered by the magistrate prohibit the arrested individual from having contact with the alleged victim and restrict the ability to visit the home and place of employment of the victim. If a child custody order is already in place, these “restraining orders” may require compliance with the order. These orders may also address the possession of personal property. If someone violates a “restraining order” imposed as a condition of release from jail, a judge may increase the bond or add additional conditions of release. Violation of these orders do not, however, lead to additional criminal charges.

The other type of “restraining order” that is often imposed is a domestic violence protective order (“DVPO”). These “restraining orders” are far more expansive than the no contact orders imposed as a condition of release from jail. In addition to prohibiting contact with someone, a DVPO can determine who maintains possession of a residence, a car, and personal property. A DVPO may temporarily determine custody of children and pets and may impose child support and alimony obligations. An individual subject to a DVPO cannot possess firearms. A DVPO is usually in place for a year and can be renewed. While in place, a violation of a DVPO can result in new criminal charges or civil contempt proceedings.

Whether subject to a “restraining order” due to an arrest or due to the imposition of a DVPO, the impact can significantly impact the rights of an individual and increase the exposure to criminal or civil sanctions. It is essential that people subject to such limits on their rights consult with an attorney to minimize their exposure and protect their rights.

The role of trusts in complex asset division

Couples who manage to accumulate wealth and experience a certain lifestyle during their marriage could be in for a surprise in the event of a divorce. A high asset divorce in North Carolina can have a dramatic effect on the lives and finances of the parties. Retirement plans might have to be changed in light of the asset division, associated with a marital dispute.

An offshore account might be one method someone might consider as a way to hide money from a spouse in anticipation of a dispute over an asset division. Such conduct might conflict with financial disclosure rules designed to prevent one spouse from hiding assets to circumvent an asset division. Trusts, however, might offer a method for parents to allocate assets to their children while shielding the assets in the event of their own divorce or the divorce of one or more of their children.

Setting up an irrevocable trust in which the beneficiary does not control the distribution of the assets or income of the trust is one method of protecting the assets from the beneficiary’s spouse in a divorce. Some courts limited the effect of income distributions from a trust on spousal support requests by ruling that only those payments actually made in the past to the spouse could be taken into consideration. The theory applied by the court was that future payments, if any, were not within the control of the spouse seeking spousal support.

Whether real estate and other assets in a trust become marital property in a divorce dispute depends upon many factors. Individuals contemplating the creation of a trust for their children, or individuals involved in a divorce in which an irrevocable trust might be an issue, might benefit from consulting with an attorney familiar with complex asset division.

The benefits of thinking about a parenting plan

When North Carolina parents who have young children go through a divorce, they may think a parenting plan is just another piece of paperwork to complete. However, these plans can have value when parents take the time to consider what will happen with their children once a marriage ends.

Ideally, a parenting plan serves as a guide to assist with scheduling and the changing needs of a child. In most cases, parents share legal custody. This means both parents have an input on major decisions while each parent makes day-to-day choices when having physical custody. In regards to physical custody, the parenting plan shows how a child’s time will be split between the parents.

Both parents likely need to work together and compromise to form a mutually beneficial arrangement, and this may be the best way to prevent or minimize conflict and the negative aspects of a divorce that children experience. The parenting plan presents an opportunity to identify and solve possible issues without court intervention.

If problems do arise during co-parenting, a detailed plan that considers the challenges a couple may face helps stop arguments as parents can turn to their agreed-upon plan instead of fighting. This gives parents a chance to focus on what they agreed on when they were in a more rational mindset.

Those going through a divorce may have trouble communicating with a spouse when making important decisions like those concerning a child or children. Using mediation or negotiation might help partners reach decisions that work well for everyone involved. When possible, using alternatives to the court process could allow both parents more control and freedom than when a judge makes determinations. Both parties should have separate legal representation throughout the process.

Financial planning important in divorce

North Carolina residents who are facing the end of their marriages should consider speaking to a financial adviser. This is a step many people put off until after the divorce, but at that point, they may have already made bad decisions that affect their future. When people have been less involved with the family finances, it may be their first opportunity to learn about the kind of planning they will need after the divorce.

For people who have been the stay-at-home parent, getting the house in the divorce while the other spouse takes liquid assets such as pensions might seem like a good deal. However, that person might not factor in the cost of upkeep and insurance on the house. The liquid assets might continue to appreciate while the other person struggles to pay for the costs associated with the home.

In one divorce, a woman’s husband took out a home equity loan on the house and did not tell her. As a result, the house she got was far more burdened by debt than she realized. A spouse might even attempt to conceal assets. A financial planner might be able to detect a deception like an offshore bank account.

A person who is considering divorce may also want to meet with an attorney. After talking with a financial planner, it might be possible to map out a strategy with the attorney. Things to consider might include whether one spouse will owe support to the other and whether joint custody will be sought if there are children involved. Another discussion may be whether to pursue mediation or negotiation or whether litigation will be necessary.

March Madness: NCAA Tournament, St. Patrick’s Day, Spring Break and …Alimony?

Typically when spouses decide to go their separate ways, there can be great difficulty in stretching income that would pay for expenses of one household to now pay for two. In North Carolina, the claim of alimony or spousal support is recognized and often brought by one party who is dependent upon the other spouse for economic support. A Court may look at the reasonable needs of the dependent spouse (the spouse who claims that they are in need of maintenance and support) to determine if they are truly in need of support from the other spouse. If the Court finds that a dependent spouse is in need and the supporting spouse has the ability to pay, after taking into consideration the supporting spouses reasonable needs, the Court may award alimony.

There is a caveat to the above, and that is the Court will also consider if the awarding of alimony or spousal support is equitable under the factors enumerated by North Carolina law. The month of March is unique in that it presents an opportunity to highlight several considerations that the Court may evaluate in the determination of whether an award of alimony is equitable under the circumstances. As you probably well know, March Madness brings with it a great opportunity to watch lots of college basketball, and the opportunity to waste a lot of money betting on games. St. Patrick’s Day is often associated with drinking in excess. These two events in the month of March highlight two typical fact patterns used in determining whether or not an award of alimony would be equitable. If a Court finds that one spouse, whether supporting or dependent, is engaged in excessive alcohol use or gambling, the Court may determine that it is more or less equitable to award alimony. The Court, however, is not bound to decide either way if the facts bear out excessive gambling or drinking.

However, too much fun on Spring Break could have more of an impact on the Court’s analysis. Many spouses in unhappy marriages may use vacation as an opportunity to take a break and perhaps stray from their marital vows. Illicit sexual behavior committed by either spouse can have a determinative impact on the Court’s analysis of an alimony claim. North Carolina law provides that if a supporting spouse commits illicit sexual behavior and the dependent spouse has not, the supporting spouse must pay some amount of alimony. Conversely, if a dependent spouse commits illicit sexual behavior and the supporting spouse does not, the Court must deny an alimony award. If both spouses commit illicit sexual behavior then the Court is not obligated by law to decide one way or the other.

The Madness of March brings the opportunity of warmer weather, spring break, basketball frenzies, and The Luck of the Irish. With all of the excitement ushered in with the promise of Spring, please keep in mind the dangers that the month of March may also present to spouses with respect to alimony.

Dealing with taxes after divorce

Residents of North Carolina who have gone through a divorce may need to adjust their approaches to filing their taxes. Most importantly, a divorced party will file as single, which means that records must be kept separately for use in the process of preparing a tax return. Additionally, it is important to be sure that one’s Social Security number is not being used by an ex-spouse for their return.

A divorce settlement that involves alimony or child support could carry tax implications for either party. For example, the individual paying alimony is able to deduct those amounts, and the recipient will need to report these funds as income. Child support, on the other hand, is not deductible to the paying party and is not income for the recipient. An individual who owes support but falls behind on payments could face problems with collecting an income tax refund as these funds could be intercepted to satisfy outstanding obligations. Legal fees related to divorce are typically not deductible, but legal fees paid to get help in handling divorce-related tax matters could be.

Additional issues that could arise during divorce proceedings include the ability to claim a child on a tax return. In some cases, parents’ returns won’t be helped by claiming a child, which may allow the other party to make the claim instead. If both parents could benefit, however, then a divorce settlement might provide for a rotating schedule allowing parents to take turns in claiming a child.

During divorce proceedings, a parent might be focused strictly on the imminent issues of finances and custody. However, a lawyer may address matters such as rights and responsibilities related to income taxes and other situations to ensure that these factors are considered during settlement negotiations.