Alimony: Periodic or lump sum support payments (not child support) to a former spouse to support his/her lifestyle. The paying spouse may deduct these payments, and the receiving spouse must declare them as income if they are “periodic” (payable over a definite period) and meet the criteria outlined under IRS Code Section 71. Also referred to as spousal support or maintenance payments.
Alimony Recapture: Excess payments of alimony in first and second post-separation year that payer must include in gross income. IRS determines a portion of property settlement on child support is excess payments of alimony in first and second post-separation year that payer must include in gross income. IRS determines a portion of support must be recaptured and included in income as alimony.
Alternative Dispute Resolution (ADR): Ways for divorcing parties to resolve their disagreements without a trial. ADR methods include: negotiation, medication, arbitration, and collaborative divorce.
Appraisal: Procedure for determining the fair market value of assets when it is to be sold or divided as part of the divorce process.
Assets: Cash, property, investments, goodwill, and other items of value (as defined by state law) that appear on a balance sheet indicating the net worth of an individual or a business.
Child Support: The amount of money paid by a non-custodial parent to the custodial parent for a child’s day-to-day expenses and other special needs. Each state is required by congress to have written child support guidelines and enforcement procedures.
Child Support Guidelines: A series of mathematical formulas used to calculate the amount of child support to be paid in some cases. Congress has mandated the stated adopt child support guidelines & support enforcement procedures.
COBRA: Consolidated Omnibus Budget Reconciliation Act (COBRA) law passed in 1986. It allows an ex-spouse to continue to receive health insurance coverage from his/her former spouse’s employer if the employer has at least 20 employees, for up to three years after the divorce. Premiums for this coverage are typically higher than when they were covered under the employer’s plan. It should be noted that the normal COBRA provision states that if an employee leaves or is fired from a job, he or she can get health insurance from that company for 18 months. However, in the case of a divorce it is extended to 3 years or 36 months.
Collaborative Divorce: Collaborative Divorce is a team approach to divorce. Divorcing families obtain professional help from specialists in the psychotherapy, financial. Legal fields, and when needed, medical and child specialists to help them settle their case.
Collaborative Law: Collaborative Law is a new dispute resolution model in which each party retains their own attorney who has gone through specialized “Collaborative Law” training. The lawyer’s only job is to help settle the dispute. All parties agree to work together respectfully, honestly and in good faith to try to find “win-win” solutions to the legitimate needs of both parties. No one may go to court, or even threaten to do so, and if that should occur, the Collaborative Law process terminates and both lawyers are disqualified from any further involvement in the case.
Community Property: A form of co-ownership of property used in some states that, divides equally property acquired during the term of the marriage, regardless of whose name it is titled. Inheritances and gifts are excluded in some jurisdictions. Currently, these eight states have community property laws: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington. The Wisconsin system has similarities. Most other states follow the rule of Equitable Division of Property.
Decree: The final ruling of the judge on an action for divorce, legal separation, or annulment. Decree has the same meaning as judgment.
Deposition: The testimony of a witness taken out of court under oath and reduced to writing. Discovery depositions are the most common and are taken for the purpose of discovering the facts upon which a party’s claim in based on discovering the substance of a witness’s testimony prior to trial. The deposition may be used to discredit a witness if he changes his testimony.
Discovery: Procedures followed by attorney’s in order to determine the nature, scope, and credibility of the opposing party’s claim. Discovery procedures included depositions, written interrogatories, and notices to produce documentation relating ti issues, relevant to the case.
Divorce: The legal proceeding by which a marriage is legally terminated. It may be contested (where one party denies the allegation or wants to keep the marriage in place) or uncontested.
Emancipation: The point of which a minor child comes of age. Children are emancipated in most states upon reaching the age 18, 19 or 21 or upon marriage, full-time employment, graduation from high school, or entering the armed services. Emancipation is the point where parents have no further legal or financial obligations for a child’s support.
Equitable Division of Property: Method of diving property based on a number of considerations (such as length of marriage, differences in age, wealth, earning potential, and health of partners involved) to achieve an equitable; and fair distribution-not necessarily an equal one. Eight of the western states use different method of division called Community Property.
Interest-Based Bargaining: A method of negotiation used in mediation. It starts with each party educating the other party about their interests. Ideally, the parties will work together until they find solutions that allow both parties to meet their needs.
Legal Separation: Court ruling on division of property, spousal support, and responsibility to children when a couple wishes to separate but not divorce. A legal separation is most often desired for religious or medical reasons. A decree of legal separation does not dissolve the marriage and does not allow the parties to remarry.
Lis Pendens: A piece of property cannot be transferred during a pending lawsuit that may change the disposition of it, once a notice has been filed in the public record.
Maintenance: Same as spousal support and alimony.
Marital Property: Accumulated income and property acquired by the spouses during the marriage, subject to equitable division by the court. States will vary on their precise definition of what is to be included in martial property, sometimes excepting property acquired by gift or inheritance. (See community property and equitable division of property.)
Mediation: A non-adversarial process in which a husband and wife are assisted in reaching their own terms of divorce by a neutral third party trained in divorce matters. The mediator has no power to make or enforce decisions. Mediation differs greatly from Arbitration.
Retainer: Monet paid by the client to the lawyer or expert witness to obtain a commitment from the lawyer or expert witness to handle the client’s case. A retainer can be deposit against which the lawyer or expert witness changes fees as they are earned.
Section 71 Payments: Section 71 is a Section of the IRS Code, which states that alimony, and separation maintenance payments generally are taxable to the recipient and deductible from gross income by the payor. These payments can be treated as alimony for tax purposes if:
Additionally, Section 71 requires that if the payor of alimony wants to deduct alimony payments over $15, 000 per year, payments must last for at least three years. If this requirement is not met, payments are subject to recapture rules.
Settlement Agreement: A written contract dividing property, spelling out rights and obligations, as well as settling issues as spousal and child support and custody.
Spousal Support: Money paid to one spouse to the other for the recipients support following the divorce. Support may be mandated for a specific period of time (long-term or short-term) and is based on the needs of the recipient, ability to pay, and economic differences between the partners. Also called alimony or maintenance.
Standard of Living: A factor when determining spousal support, allowing the recipient an adequate amount to maintain their current lifestyle.
Unallocated Support: Total amount of maintenance and child support that doesn’t specify a specific amount for either. Encourages sensible cash-flow planning between spouses.