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Be Aware – The Tax Cuts and Jobs Act (TCJA)

TCJA: What It Is and How It Can Affect You

My #1 Advice – Meet with your CPA!

A big change to the TCJA has to do with spousal support for agreements entered after January 1, 2019. Alimony will no longer be taxable to the person receiving alimony or deductible to the person paying alimony. Under the old tax code, spousal support (alimony) was considered to be income to the spouse receiving it and a deduction for the spouse paying it.

The new tax code could affect modifications of spousal support orders entered by courts before January 1, 2019. The language in pre Jan. 1, 2019 orders of spousal support should indicate that the pre TCJA Be Aware: TCJA What It Is and How It Can Affect You from the experts at Lakeshore Lawtax code treatment should remain effective in any modification order after January 1, 2019. IRC 71(b)(2) applies to divorce or separate maintenance judgments entered as of January 1, 2019, or modified as of that date if the modification expressly states that the new tax code applies.

The Changes Don’t End at Spousal Support

Another change in the tax code is the minor child tax exemption. The new tax code has removed the exemption provision. The child tax credit is important. The child tax credit has been increased to $2,000 per child. The IRS has phase out income limits that may reduce these credits. The phaseout starts at 200K as a single and 400K as married. $1,400 of the $2,000 credit is refundable settlement negotiations.

Businesses will be affected by the new tax code also. All entertainment expenses are non-deductible regardless of the business purpose.

Regardless of your situation, being AWARE and consulting with your CPA as well as your divorce attorney is important as the new tax code rolls out. Lakeshore Law and Mediation can help answer your divorce tax questions and more. Contact us today, Lakeshore Law and Mediation is ready to help you!

What to Consider When You Want to Move Out

You have decided to file for divorce. Now What?

Its uncomfortable to live in the same place with your soon to be ex-spouse. But, should you move out?

The first concern in making that decision is SAFETY. 

Are you afraid of your spouse? Do you fear that you may be in danger? Has there been violence directed toward you, a child, or a pet during your relationship? If there are safety concerns you must develop a safety plan. If you are in danger go to a safe, secure place with your children and/or pets. Seek the help of a qualified and experienced family law attorney. Seek the help of an expert in domestic violence.

If there are no concerns regarding the safety of your self or others, then you must analyze a different set of questions.

Divorce and Moving Out: What Should You Consider? from the Knowledgeable Family Law Attorneys at Lakeshore Law and Mediation of Grand Haven, MIWhen should you move out? Does your normal monthly budget allow for the added expense of living in two separate households right now? How will it affect the children if you move out? Will you be in the same school district? Will you be living with anyone else? Do you have adequate room for the children? How will the move affect custody and parenting time?

You should consult with an experienced family law attorney who is familiar with the practices in your county. The decisions you make today will affect your future. Make wise choices, know your options before you make a decision that may change your future.

If you need help going over your options and deciding what is best for you and your family, Lakeshore Law and Mediation can help. Contact us today, we are with you every step of the way.

How to Avoid Losing it All During Divorce

You Don’t Have to Lose it All to Move On

You have probably heard a horror story about someone who lost their kids, their house, their car and their retirement during their divorce. It’s hard to believe that some really bad things can happen in a divorce that no one ever anticipated. You may have only heard part of a person’s story. You may not have heard the set of facts that led to the ultimate result.

In Michigan people in a divorce situation may represent themselves. They may agree to a divorce settlement and sign on the dotted line. Unfortunately, they may not have considered the long term effects of their decisions. It may seem like a fine outcome, UNTIL, they begin living in the new reality.

How to Avoid Losing it All During Divorce with Expert Help from Lakeshore Law and Mediation of Grand Haven, MI

It is then that remorse may kick in. They may have not consulted with an attorney. They may not know what the law is about custody, child support or parenting time. They may not have consulted with a CPA about the tax consequences of their settlement. They may not know how to finish the divorce or how to protect themselves in case their ex refuses to do what they agreed to do in the divorce. They may not have known the difference between legal advice and legal information. They may not understand every word and its meaning on the legally binding document that they have just signed.

So, how do you avoid losing during a divorce?

  • Be informed, educate yourself on the meaning of legal phrases.
  • Take any signed document very seriously.
  • Know what the law is as it relates to the facts in your case.
  • Seek the advice of a qualified family law attorney. You won’t regret it.

If you decide to meet with a divorce lawyer, Lakeshore Law and Mediation can help answer your questions and guide you through the legal system so you can move forward with your life. Contact us today, you don’t have to do this alone.

Divorce and Spousal Support

How Spousal Support is Determined in Divorce in Michigan

If you’re going through divorce, you may be wondering about spousal support. How much will you receive? Or, how much will you pay? And how long will it last?

An experienced family law attorney can answer all of your questions, advocate for you and help you move forward with your life.

Spousal support, or alimony, refers to a court-ordered monthly payment for one spouse after separation or divorce.

There is no absolute, black line formula for determining spousal support as part of a divorce settlement. As you might imagine, this generates negotiation and creative arguments for and against spousal support claims.

Because every situation is unique, it’s important that you discuss your situation with an experienced family law attorney to analyze your alimony questions.

Michigan courts look at many variables when it determines whether or not alimony/spousal support is appropriate.
The Court must consider the following factors in its spousal support decisions:

  1. The past relations and conduct of the parties.
  2. The length of the marriage.How Spousal Support is Determined by Lakeshore Law & Mediation
  3. The abilities of the parties to work.
  4. The source and amount of property awarded to the parties.
  5. The parties’ ages.
  6. The abilities of the parties to pay alimony.
  7. The parties’ present situation.
  8. The parties’ needs.
  9. The parties’ health.
  10. The prior standard of living of the parties and whether either is responsible for the support of others.
  11. Contributions of the parties to the joint estate.
  12. A party’s fault in causing the divorce.
  13. The effect of cohabitation on a party’s financial status.
  14. General principles of equity.

Although there are always exceptions to the general rule, the greater the length of the marriage, the greater the difference in the earning of the husband and wife, the higher the probability that spousal support will be ordered to be paid in a case.

An experienced family law attorney will help you evaluate the factors of your case to help you meet your goals.

If you’re facing divorce, you’re not alone. Lakeshore Law and Mediation can help answer your questions and guide you through the legal system so you can move forward with your life. Contact us today. We’re here for you when you need us.

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Divorce and Your Business: The Role of “Fault” in Dividing the Marital Estate

While fault plays a role in determining an equitable division of marital assets, it’s generally not overemphasized.

It’s understandable and natural to want to point fingers and assign blame in divorce. However, the goal of the court is not to award blame and innocence, but rather to find an equitable division of marital assets.

In Michigan case law, the general trend is to limit the role of fault arguments in divorce settlements.

Dissipation of assets — a legal concept that is related to fault — means that one spouse has used money from the marriage for purposes not related to the marriage, like money spent on a lover.

Courts will generally attempt to “even out” any dissipation of assets to make it fair for the non-dissipating spouse.

Examples of how courts view “fault” when determining a divorce settlement:

Several cases have stated that in considering fault, only behavior causing the breakdown of the marriage is pertinent in making divorce rulings.

The Role of Fault in Dividing the Marital Estate by Lakeshore Law & MediationFor example, in the Knowles1 case, the court found “fault” after the date of filing for divorce was not pertinent because it did not lead to the breakdown of the marriage.

In the Zecchin2 case, the trial court ruled that the wife was at fault for the breakdown of the marriage because she had ordered the husband to leave.

The Court of Appeals did not agree with the trial court about the ruling stating “fault” is based on the conduct of the husband or wife leading to the separation rather than on who left whom.

The Court of Appeals reviewed the trial court’s ruling and said that the husband and wife were equally at fault for causing the marriage to breakdown. The trial court was instructed by the Court of Appeals to “do over” and directed the trial court not to consider fault when re-calculating spousal support.

Even when fault leads to the breakdown of the marriage, courts are not to overemphasize this factor. Fault is only one of a number of pertinent factors in the court’s goal for an equitable division. Fault is not to be used to punish but only to make things “equitable.”

If you’re facing divorce and need assistance, the attorneys Lakeshore Law & Mediation are here to help. Contact us today and let us help guide you forward.

References:
1. https://www.courtlistener.com/opinion/2212417/knowles-v-knowles/
2. http://www.leagle.com/decision/1986872149MichApp723_1790/ZECCHIN%20v.%20ZECCHIN

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Determining the Value of a Closely Held Business

What is a Closely Held Business?

A closely held business is defined as a business entity whose shares are held by only a small number of stockholders. The stockholders typically have a common interest in the company (i.e., family members), and the shares of stock are generally not traded in the public stock market1.

Valuing a Closely Held Business

Determining the value of a closely held business involves many factors and considerations.

Valuing a Closely Held Business by Lakeshore Law & MediationBecause there is no standard formula for valuing a company whose stock is not actively traded, your lawyer can appoint a valuation expert to help appropriately determine the value of your company.

In the Kowaleskycase, a Michigan case on the value of closely held businesses, the Michigan Court of Appeals stated that, in determining the value of a closely held business, trial courts may use Revenue Ruling 59-60 if they find it helpful, but they are not required to use that ruling or any other one specific method. There are several methods, or approaches, to valuing a business.

The following factors, found in Revenue Ruling 59-60, from the Internal Revenue Service, are commonly considered in finding value:

  • the nature and history of the business
  • the economic outlook in general, and the condition and outlook of the specific industry in particular
  • the book value and financial condition of the business
  • the earning capacity of the business
  • dividends and dividend-paying capability
  • the existence of goodwill or other intangible value
  • previous sales of ownership interests and the size of the block valued
  • market prices of businesses engaged in the same or similar line of business, which trade in the open market

Ultimately, the goal of the valuation expert is to determine fair market value of your business. Every case must be evaluated on the unique set of facts. All factors influencing the final value of the company must be carefully examined.

There are three categories regarding “Approaches To Value” in valuing marital business interests:

  1. the asset
  2. income
  3. market

Within each of the approaches listed above, are “methods” in arriving at a value.

When approaching value from an Asset standpoint, the valuation expert will look at book value, liquidation value, and adjusted net asset value.

When approaching value from an Income standpoint, the expert will look at discounted cash flow and capitalization of earnings.

When approaching value from the Market standpoint, the expert will look at reference data regarding sales of similar businesses.

Hiring a good valuation expert may be crucial to your divorce case. A solid, valid opinion of value will be based upon all of the useful facts, common sense, and reasonable conclusions.

Do you have questions regarding “Closely Held Business” and divorce? If so, we’d love to hear from you. The attorneys at Lakeshore Law & Mediation are dedicated to providing you guidance with all legal aspects of your divorce, so you can focus on moving forward. Contact us today!

References:
1.
https://www.legalmatch.com/law-library/article/closely-held-business-laws.html

2. http://www.leagle.com/decision/1986299148MichApp151_1284/KOWALESKY%20v.%20KOWALESKY

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Divorce and Your Business: Determining the Value of Your Marital Estate

What is the Value of My Marital Estate?

Generally speaking, a marital estate is divided equitably. In order to divide a marital estate, your divorce attorney must know the values of all assets and debts. The value of those assets may require the opinion of an expert on valuation. The court looks at many factors to determine how to divide assets and debts.

If a husband or wife wants to include an asset or debt in the marital estate, that person bears the burden of proving a value. The court may rely on expert testimony to determine the value of assets, such as real property, art, antiques,  guns, coins, and business interests.

Determining the Value of Your Marital Estate with Lakeshore Law & Mediation

Your attorney, together with a valuation expert, can help determine the value of your marital estate to ensure assets and debts are properly assessed.

In the case of a closely held business, if the court does not have enough reliable evidence to determine value, then the court could appoint its own business valuation expert.

If you’re facing divorce, it’s important to have your assets and debts carefully reviewed and assessed.

The attorneys at Lakeshore Law & Mediation can help. We hire the most experienced valuation experts and are committed to helping you navigate through all legal aspects of your divorce.

Do you have questions regarding your marital estate? We’d love to hear from you. Contact us today!

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Divorce and Your Business

How the Value of Your Business is Determined & Divided

What Happens to Your Business During Divorce?

If you’re facing divorce and own an interest in a business, it’s important to understand how your business will be handled. Whether it be: tool and die, law office, chiropractor, photography, hair salon, manufacturing, grocery store, family farm, or construction business, the value of the business must be determined and divided in a divorce.

Divorce and your BusinessWhy? Because in most cases, the value of the business may be one of the most valuable assets of the marital estate.

Step 1: Hire a Valuation Expert

It is essential your divorce attorney hires a valuation expert for the purposes of divorce. Although the financial aspects of your business may be sensitive, the valuation expert must be allowed to confidentially review financial information about the company. In most cases, the financial information is subject to a protective order to maintain as much confidentiality as possible about the financial status of the business.

Hiring a qualified valuation expert early in the case is an important task of your divorce attorney. There is not just one single method or approach to valuation of a business and, the method for valuation will vary depending on the nature of the business in your case. A valuation date must be selected for the value of the business. This date is usually based upon tax return data and material received during the discovery process.

It’s our business to protect yours.

If you own an interest in a business and are facing divorce, be sure your assets are in good hands. An experienced divorce attorney can help you find the right valuation expert to meet your needs.

If you have questions about how divorce will affect your business, contact Lakeshore Law today.

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What To Consider Before Hiring a Divorce Attorney

Ten Tips to Consider Before You Hire a Divorce Attorney

Finding the right divorce attorney starts with you!

The process of divorce can be difficult. But having the right attorney on Divorceyour side can make the proceedings and life beyond divorce a much more positive endeavor.

Choosing the right divorce attorney doesn’t have to be an additional burden. But it does require a bit of planning before hiring someone to represent you during this critical time.

Before you hire a divorce attorney, do your homework.

  1. Interview different attorneys to find the right one for you. Your situation and fact pattern is unique. It’s important to find an attorney that makes you feel comfortable and understood. It’s important to find an attorney who has experience in your type of case.
  2. Understand the divorce process that will work best for you. Some examples of different divorce processes are: collaborative, mediation, and litigation. Generally speaking, the more conflict in a case, the more costly your case may become. However, trying to save money in a family law case could also cost money or time with your children in the final analysis.
  3. Choose an attorney who fits your situation. Some attorneys are highly litigious, others are low key, still others are adaptable and will focus their strategy based on your goals.
  4. Choose an attorney who has a positive attitude and who tells you the truth about possible outcomes. You don’t want to hear doom and gloom but you don’t want Pollyanna either. An attorney who has a balanced approach to your case may offer the most efficient means to your end goal.
  5. Discuss costs. Although the discussion may be awkward, it’s important to have a frank discussion with your attorney about cost.
  6. Discuss with your attorney your goals for the outcome. Everyone has a different idea of what is most important to them.
  7. Reach out to your support network but don’t expect that your case should turn out the same way as a “friend’s” divorce because your case is based on your facts and your unique situation.

Divorce Attorney8. Stand up for yourself. A good attorney for you will listen and understand what is important to you. That attorney will explain what you need to do in order to reach your goal. There are a lot of choices to make as you go through your legal situation, talk to your attorney honestly. Expect honesty from your attorney.

9. Look to your future. Divorce can be sad and difficult, but some people find relief from a bad marriage that made everyone unhappy. Find an attorney who will help you see that there is positive and happy future for you.

10. Learn about the legal process. Be informed and ask all the questions you need to ask so you can understand where you are going and how you are going to get there. Expect your attorney to be your teacher.

Choosing the right divorce attorney is crucial to finding common ground and an acceptable outcome from your divorce. Take time to do your homework and find an attorney who will work with you to get you the outcome you deserve.

Learn more about Pre-Divorce Planning.

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Wise Money Choices While Contemplating Divorce

Be Smart About Finances in Divorce!

Tips for Finances in Divorce from Lakeshore Law and Mediation of Spring Lake MISome marriages are just unhappy. Days of bickering and cold shoulders pile one on top of the next. For some, marriage counseling can offer a new perspective. For others, divorce may be the fresh start they have been seeking.

If you have decided to file for divorce, or you have been shocked by being “served” with divorce papers, you will need to make wise choices as you navigate finances in divorce.

 

7 Points of Financial Wisdom During Divorce

1. Prepare a Budget.  If you have never lived by a budget before, NOW, is the time to sit down and consciously become aware of your monthly bills. There are many online tools to help you prepare a budget, or your attorney can provide you with a schedule of expenses (including recurring and non-recurring expenses).

Since you will incur attorney fees, it is important for you to project the cost to include in your budget as well. Ask direct questions of your attorney as to “how much your divorce will or may cost?”

2. Prepare an Asset and Debt Spreadsheet.  Do you know your financial standing? It is amazing how many people are unaware of their exact financial outlook. Many couples have one person who handles all of the finances while the other person just contributes a paycheck and remains “in the dark” about bottom line.

When faced with divorce, financial knowledge is a MUST. There have been cases where a spouse is totally blind-sided by credit card debt, lack of IRS tax payments, or other financial debacles that significantly affect them for the rest of their lives.

3. Be Aware of your Emotions. In a stressful situation, like divorce, it is difficult to make wise, thoughtfully considered decisions. People who “just give up” or “fight to the death” often regret their decisions later on. “Buyers remorse” is common once the divorce settlement’s ink has dried.

An attorney can help you gain perspective on your financial decisions. It is important to separate emotional reactions from financial results. Your decisions now will  affect you in the long term.

4. Your Children. Children will adjust to the new living situation so long as they are not used as pawns by either one of you to gain either and emotional or financial advantage. Children are the innocent third parties in any divorce. Do not share “adult” topics with them. Assure them that both you and your spouse will always love them. Leave your children out of the controversy. If you need help with this aspect of divorce, seek counseling for yourself.

5. A New “Friend”. While it may be exciting to move on from the old “ball and chain,” having a new love interest may drain your pocket book when you can least afford the luxury.

Also, spending marital money on a new love may alter the final financial outcome of the divorce,  if you are using “marital money” for the benefit of a third party. Watch your step in this arena.

6. Begin Separation of your Accounts. You must be aware of any court orders regarding “dissipation of marital assets.” However, once temporary orders have been established, it is important for you to set up separate accounts, both checking, savings, and credit cards where appropriate.

7. Credit Reports. If you are a person who never checks your own credit report, now is the time to start. My annual credit report allows for you to receive all three major credit reports once per year at no charge. You don’t have to pay extra for your “credit score.” Just get your reports and become familiar with the content of each report. If you need help understanding what they mean, ask your attorney.

 

If you need personal financial advice for your divorce, Lakeshore Law and Mediation is here to help! Simply give us a call at 616.844.4091