Posts Tagged ‘change’
Watch For Tax Angles In A Divorce Agreement
This week’s post is by Wendy Knutson, CPA.
If you’re getting a divorce, you’ll have to work through a variety of financial issues governed by prevailing state law. But don’t overlook the federal income tax implications. Advance planning can be critical in the following areas:
Alimony vs. child support. Generally, payments designated as alimony in a divorce decree are deductible by the payer and taxable to the recipient. But the opposite is true for child support; the payments can’t be deducted by the payer and are tax-free to the recipient. Make sure that the decree accurately reflects your intentions.
Filing status. If you divorce before year-end, you must file your 2012 federal income tax return as an unmarried individual. Depending on your situation, you may fare better or worse as an unmarried filer. For instance, joint filers could be hurt by the “marriage penalty” if the income of the spouses are relatively equal. In that case, it may be advantageous to finalize the divorce before year-end.
Dependency exemptions. Generally, the parent who has custody of young children for most of the year is the one entitled to dependency exemptions for the children. However, a noncustodial parent may claim the exemptions if the custodial parent signs a formal waiver.
Division of property. Property transferred incident to a divorce is tax-free to the recipient. The recipient’s basis and holding period are the same as they were for the ex-spouse. If you receive property in a divorce and then sell it, you must report the realized gain or loss on your tax return.
Other special tax rules may apply to the sale of a principal residence, IRA and retirement plan benefits, and life insurance policies. In summary: Seek expert tax guidance throughout the divorce proceedings to protect your financial welfare.
Your Functional Divorce Assignment:
If you’ve got questions about taxes, give a CPA a call.
21 Tips For Surviving The Holidays
The holiday season is typically a time for celebration with friends and family. Yet, when you’re divorcing, the holiday season can feel anything but merry. To help you enjoy this holiday season instead of dreading it, here are 21 tips you can use today.
1. Be patient
Even in the best of times, the holidays are usually a bit hectic. However, when you’re celebrating the holidays for the first time on your own, they can feel more than hectic. They can feel overwhelming! You’ve got so much going on emotionally with the divorce that the added tasks, events and scheduling of the holidays can all be just a bit too much. Be patient with yourself and your kids as you navigate the holidays. This is new and different for everyone and a little patience will go a long way toward making your first holidays post-separation/divorce enjoyable.
2. Be flexible
The holidays are about celebrating with family and friends and don’t HAVE to occur on only one specific day. I find that people with children who are celebrating the holidays for the first time as a single parent often get tied up in the idea that holidays can only happen on the official day marked on the calendar. For example, it’s not unusual for them to think that Thanksgiving Day can ONLY happen on the fourth Thursday of November. However, with a bit of advanced planning (See hint 16.), you may decide that Thanksgiving will actually happen the Saturday before the fourth Thursday of November so you can celebrate it with your kids. Having Thanksgiving early even has the added benefit of allowing you to avoid the crowd buying their last-minute turkey and fixings on the Saturday before the fourth Thursday of November.
3. Focus on others
Another way to enjoy the holiday season is to focus on those less fortunate than you. Consider volunteering at a soup kitchen or at a center that provides holiday “shopping” for needy families. I can guarantee that when you focus on providing joy for those less fortunate than you, an amazing thing happens; you forget about your troubles and appreciate what you do have even more.
4. It’s not about the stuff!
Gift giving is often a big part of the holiday season and with separation and divorce, the funds available for gift giving are usually less. However, gifts don’t need to be purchased to be appreciated. Sometimes the gift of time and attention means more than any store-bought gift ever could.
5. Let happiness happen
For a lot of people going through divorce, it can seem strange to experience any emotion other than some form of upset. Divorce is an upsetting event that can be almost all consuming. However, if you start to feel happy as a result of the holiday events, ENJOY the feeling! You deserve to be happy.
6. Reach out to family and friends
Almost everyone I know wishes someone could read their mind and offer help when it’s needed. On the other hand, I don’t know anyone who can read minds with any real reliability. The message here is if you need a little extra help to get your holidays merrier, be sure and ask for it. Don’t wait for someone to guess what you need.
7. Make new family traditions
With divorce so many things change. Some of these changes are not so comfortable, but some of these changes are good and might even be fun. What new family tradition can you introduce this holiday season to keep things fun?
8. Nix the guilt
So many divorced parents feel guilty about how the kids’ holidays will be different. The thing is different doesn’t mean bad or wrong. Different is just different. If you nix the guilt and embrace the new way your holidays will be, then your kids will enjoy the holidays too.
9. Work with your ex in a cooperative manner for kids sake
One of the things I always tell my clients is that their divorce is between them and their former spouse. The holidays can be a wonderful experience for the kids provided that’s the shared goal you and your former spouse have for them.
10. Continue your traditions, but simplify them
You may have holiday traditions that are important to you, but they just are not possible now that you’re divorced. What can you do to tweak these traditions so that you can still have them?
For example, maybe you had a holiday tradition of going skiing. If that kind of a trip isn’t possible this year, you may choose to do something else that captures the essence of the traditional ski trip. You may decide to play ski jumping on the Wii, have a marshmallow fight instead of a snowball fight and drink hot chocolate afterwards. Let your creativity flow and I know you’ll be able to create a modified tradition this year that you’ll still enjoy.
11. Don’t spend the holidays alone
It can be tempting to crawl into a cave and hibernate during our first holidays alone – especially if your ex has the kids. However, I urge you to resist the temptation. There’s no reason to punish yourself, for that’s what hiding in a cave during the holidays is. I’m not saying that you don’t need time alone. You absolutely do. I’m just suggesting that instead of spending all of the holiday season alone, make an effort to go out and spend some time with others. I promise that you’ll get a different perspective of your first holidays alone if you open yourself up to even a little fun celebrating the holidays with others.
12. Take care of your health
The funny thing about the holiday season is that it coincides with the cold and flu season. This, along with the stress that usually accompanies divorce, makes you a bit more susceptible to catching a bug. So, take good care of yourself by getting plenty of rest, exercise and good nutrition.
13. Give yourself a gift
This being the first holiday season post separation/divorce, you probably won’t be receiving a gift from your ex. The thing is, you probably won’t be buying them a gift either. Since your gift giving list has decreased by at least one, why not add yourself to your list? Go ahead and buy yourself something that you’ll truly enjoy this holiday season. (You may also want to make sure it’s not something that you’ll regret purchasing in the New Year when the payments for it start.)
14. Count your blessings
It’s easy to get caught up in what’s different this holiday season – in the negative sense. Flip that upside down and count what’s different AND positive this holiday season.
15. Lean on your faith
Whatever your beliefs are, you just might be able to find solace in your faith when you’re not feeling the “Ho Ho Ho!” in the holidays.
16. Plan ahead
The most important thing to have when you want something to happen at a certain time is a plan. Wanting to have happy holidays requires a plan too. Plan ahead to make it more likely you’ll have a happy holiday season.
17. Cultivate gratitude
Developing an attitude of gratitude does wonders for the way you view the world. This was one of the most important skills I developed when I got divorced. It helped me to be more positive and proactive about changing the things that needed to be changed not just at the holidays, but year-round.
What are you thankful for this holiday season?
18. What do you love most about holiday season?
People like the cooler weather, giving and receiving gifts, decorations. Whatever it is that you love most about the holiday season, figure out a way to get more of it. Once you do that, you’ll definitely have happier holidays.
19. What activities put you in a holiday mood?
When I ask clients this question I hear answers like shopping, parties, decorating, watching football, Christmas lights, and caroling. The next question I ask them is “How can you do more of these and get even more enjoyment out of the holiday season?” What are you answers to these two questions?
20. Be realistic
Your life is in the midst of a major change. For most people, separation and divorce brings increased responsibilities along with decreased financial means and free-time. Be sure and factor these facts in this holiday season. If you do, I’ll bet you’ll find it easier to be realistic with the expectations you have of yourself, your family and the holidays this year.
21. One holiday at a time
The holiday season can easily be a blur of activities that pretty much start as soon as the jack-o-lantern is off the front porch on the morning of November 1st. Prevent the blur by focusing on just one holiday at a time. Avoid multi-tasking and the potential for overwhelm by taking the holidays just as they come, one… at… a… time.
Your Functional Divorce Assignment:
Choose one of the tips to implement immediately. Sometimes seeing a long list of tips can cause us to start to gloss over them. I know these tips work, so take a moment now and choose one of them that you can implement right now and then do it!
Choose a tip that addresses your biggest concern about the holidays and put it to use. It’s pretty normal for the tip that can be most helpful to not necessarily be the easiest to implement. If that’s the case for you, take a moment now and select the tip that would address your biggest concern. And, when you’re ready, take a deep breath and figure out how you can implement that tip to help you enjoy your holidays just a bit more.
Come back to the tips frequently throughout the holiday season. Just because you’ve tried a tip out once doesn’t mean that you’re done with it. Keep these tips handy and visit them throughout the holidays anytime you could use a little bit of help. And, of course, if you’d like to schedule a Complimentary Consultation with me to discuss your particular situation, just send me an email or give me a call.
I’m Dr. Karen Finn, a divorce coach and advisor helping people just like you who are dealing with the stress and pain of divorce. You can join my newsletter list for free weekly advice. If you’re interested in taking the first step toward working with me, you can schedule an introductory private coaching session.
© 2012 Karen Finn. All rights reserved under all copyright conventions.
Finding Your True Power
I love the Beatles. OK, it’s more accurate to say I love the Beatles album 1. I consider it “happy music” and often put it on when I’ve got a long drive ahead of me or when I just need a pick-me-up. One of the songs on the album is Help!
If you’re not familiar with the lyrics of the song, you can find them on Metro Lyric’s website. For me, the idea behind the song is that we learn how to be independent when we’re young and as we grow and mature we yearn and search for interdependence.
When we’re born we’re completely dependent on others and essentially helpless. All we can do is cry and scream when we want help. Then, when we turn about 2 we begin to discover our own power and the magic word “NO!”. That’s when our natural desire is to begin to find out who we are independent of our parents. Most of us tend to begin intently striving for our independence during our teen years. Some of us wait until we get to college to become independent and some, like me, don’t realize our full independence until much later. Regardless of when you establish your independence, it’s an important milestone and the ability to exclaim “I did it!” is one of the headiest moments anyone can experience.
And yet, after we’ve achieved independence and it’s glories, there’s often the desire for connection with others. I’m not talking about a temporary connection, but a deep meaningful connection that helps us to know that we’re not alone in our life. This is the search for interdependence and where we recognize our true power – our ability to be part of something so much larger than us that nurtures and supports us and everyone else in ways beyond what we could ever do on our own.
The key to this power, our true power, is the ability to be vulnerable and ask for help when we need it. This is different that asking for help simply because you want something that you’re unwilling to do for yourself. This is about asking for help because you’ve been working toward and straining for something and you realize you’re just not able to do it all on your own, you need the help of someone to take the next step, to ease some of the burden, to be connected with all that you can be and all that is. This is the type of asking that true interdependence demands. I believe this is true maturity. I also believe this interdependence creates a joy and meaning in life that is beyond compare.
My thought is that we all live lives that are combination of dependent and interdependent thoughts, habits, beliefs and actions. I think of the path between dependent, independent and interdependent being a continuum. Probably the easiest way to visualize it is as a line with dependent at the far left, independent someplace in the middle and interdependent is at the far right.
I’ve yet to meet someone who is living completely interdependent life. Of course, there are lots of people I’ve not met yet.
Your Friendly Coaching Assignment:
Where are you on the continuum of living a dependent, an independent and an interdependent life? What I find is that the answer depends on which part of my life I’m thinking about. You may find the same is true for your too. If that’s the case, answer the question for each part of your life. I’m sure your answer(s) will be interesting.
Are there parts of your life that you’d like to move more toward independent or interdependent? This can be a tough question to answer for a lot of people because we aren’t really sure if such a change is possible or we might be plain afraid of the consequences of such a change.
If you answered “no” to the last question, good for you! Chances are great that you’re comfortable with your life exactly as it is now. That’s a wonderful thing!
If you answered “yes” to the last question, get ready for an adventure! Figuring out how to realize more of your own power is the greatest adventure anyone can take. You’ll discover so much about yourself that you’ll be in awe of whom you truly are and who those around you are. That’s been true for me anyway. I also know that it’s not always the easiest adventure to undertake and yet every time I move from dependence to independence and then to interdependence I am ALWAYS happy I have.
Happy adventuring!
I’m Dr. Karen Finn, a divorce and personal life coach. I help people just like you who are dealing with the stress and pain of divorce. You can join my newsletter list for free weekly advice.
Three Steps To Making Your Divorce Easier
“All the world’s a stage, And all the men and women merely players; They have their exits and their entrances,
And one man in his time plays many parts,
His acts being seven ages.”
-Shakespeare
As You Like It Act 2, scene 7, 139-143
Divorce is one of those times when we notice that people exit from our lives and the roles and responsibilities we shared with them no longer make sense. Many of these roles and responsibilities are ones we probably took for granted when these people were regularly in our lives. But now that they aren’t we just might find ourselves at a loss for how to get these unfilled roles filled.
Unlike a production of one of Shakespeare’s plays, we don’t usually have an understudy that will step up in if the person currently fulfilling a role suddenly isn’t there any more. This is where we need to roll up our sleeves and get to work on the functional divorce.
1. The first step is to identify which roles and responsibilities have been dropped.
To help you get started here are some roles and responsibilities people struggle with when they divorce. Well, they range widely – from the simple to the complex. Here is a partial list of what you might be struggling with:
-Chef/cook -Budgeter/Bill payer -Mom/Dad -Home maintainer -Lover/loved -Primary wage earner -Maid/butler -Laundry/Dry cleaning expert -Grocery Shopper -Investor
We struggle with roles and responsibilities when we get divorced because in a sense we’ve allowed ourselves and our spouses to become type-cast. We get used to how we’ve been living and how we’ve been living with our spouse. When we get separated/divorced, all the roles we’ve become so adept at are suddenly changed. We can feel overwhelmed about how much we’ve now got to do. We might feel a sense of freedom about how much less we have to do or we might have a sense of fear about how much less we have to do. Most likely, we feel a combination of it all.
2. The second step is to prioritize the order in which the unfilled roles need to be filled.
Not everything needs to be done at once. Which is the most critical role that needs to get covered? And after that is taken care of which is next most critical. Go through your entire list and prioritize each and every roll you’ve identified.
3. The third step is to develop your game plan for getting the most urgent roles filled.
Yes, you’ll probably have to work on multiple roles at once. I wish it was easier, but divorce is difficult at times. What I can tell you is that by taking a systematic approach to your functional divorce you will establish your new normal much more quickly. The benefit of that is a decrease in the stress and strain you (and your kids) are experiencing as a result of your divorce.
Taking a good look at the roles and responsibilities you had in your marriage and how they are changing as a result of your separation/divorce is critical to decreasing the stress and strain you experience. By having a good feel for how things are changing and what you can do to make it easier on yourself and your kids will go a long way toward getting you and your kids settled in your new roles. You can think of this experience as a script change and you are the chief writer who is determined to end the story happily.
You Functional Divorce Assignment:
Make your own list of roles and responsibilities that are impacted by your divorce. Use the list above to give you inspiration and come up with all the roles and responsibilities that you are now faced with covering.
Prioritize your list. Yes, there are a lot of things that in flux when you get divorced, but not all of them are top priority. Which are the most immediately important and which can wait for a bit.
Develop a game plan. How will you incorporate your new roles and responsibilities into your life? The important thing here is to make sure your game plan is realistic and achievable.
It’s OK to ask someone for help. Sometimes the parts you realize you now need to or want to play in your life are way different from anything you’ve ever done before. If that’s the case for you, I want to encourage you to ask for help. The right help at the right time can make all the difference in how quickly you can reach the happy ending to your divorce experience.
I’m Dr. Karen Finn, a divorce and personal life coach. I help people just like you who are dealing with the stress and pain of divorce. You can join my newsletter list for free weekly advice.