Divorce Stipulation Agreement in NY

[mistoffolees]

In my friend's case, neither one of them had an attorney and the judge still had to go along with THEIR agreement.

How do you like those apples??

Why would it matter if I liked it or not?

The fact is that if the agreement is very one sided and the person being cheated doesn't have an attorney, it is only fair for the judge to suggest that they get one.

It makes it a little harder for one person to cheat the other - which is obviously why you're opposed to it.

 

[LdiJ]

In my friend's case, neither one of them had an attorney and the judge still had to go along with THEIR agreement.

How do you like those apples??

And in my case the judge went along with our agreement even though NEITHER of our attorneys liked it.

However, that is just as irrelevant to this case as your examples are.

Its already been stated here, multiple times, that the judge may accept the agreements but that its safer to make sure that the person on the receiving end of an imbalanced agreement be represented by an attorney.

Clearly, there is plenty of money available to provide representation to both parties...and you never know what a judge will think about below guideline child support.

 

[quentin1000]

thanks everybody for your opinions on this.

to clarify: yes, i make decent money albeit my bonus represented roughly 70% of the total pay - guess what, it's going down this year substantially and i hope the court recognizes this.

i want to clarify a couple of things for you folks: yes, my wife will have her own attorney who will do his or her best to convince her to take more from me - well, this is the tricky part as for right now my wife is ok with less. the attorney wouldn't do his or her job if the advice was any different than going for more in child support.

i've been married 16 years but we've lived together only for the last 13 years . she does not want alimony - at least at this point - as she makes ok money but nothing close to my income. she has no assets of her own. she will keep our possessions that are worth about 5% of our total net worth too.

if properly drafted and if both parties are represented by independent and unrelated attorneys, i have a shot at a decent settlement. also, i think i have more room to manuever with the upfront settlement - i can try to pay less upfront but agree to a higher monthly payment etc.

now, can someone tell me if the separation agreement fee of $2500 to $3000 is reasonable in nyc? yes i can afford this no issues but i don't want to be taken advantage of, that's all. also, what is the best website to find an attorney in new york city? can this website be used to find an attorney for myself?

again, thanks a lot. appreciate everyone's input and thoughts on the matter.

 

[LdiJ]

thanks everybody for your opinions on this.

to clarify: yes, i make decent money albeit my bonus represented roughly 70% of the total pay - guess what, it's going down this year substantially and i hope the court recognizes this.

i want to clarify a couple of things for you folks: yes, my wife will have her own attorney who will do his or her best to convince her to take more from me - well, this is the tricky part as for right now my wife is ok with less. the attorney wouldn't do his or her job if the advice was any different than going for more in child support.

i've been married 16 years but we've lived together only for the last 13 years . she does not want alimony - at least at this point - as she makes ok money but nothing close to my income. she has no assets of her own. she will keep our possessions that are worth about 5% of our total net worth too.

if properly drafted and if both parties are represented by independent and unrelated attorneys, i have a shot at a decent settlement. also, i think i have more room to manuever with the upfront settlement - i can try to pay less upfront but agree to a higher monthly payment etc.

now, can someone tell me if the separation agreement fee of $2500 to $3000 is reasonable in nyc? yes i can afford this no issues but i don't want to be taken advantage of, that's all. also, what is the best website to find an attorney in new york city? can this website be used to find an attorney for myself?

again, thanks a lot. appreciate everyone's input and thoughts on the matter.

If you are really considering offering less up front, and more monthly, then you would be better off paying her alimony. Alimony is tax deductible to you, and taxable income to her. Her marginal tax bracket is obviously going to be considerably lower than yours.

 

[mistoffolees]

If you are really considering offering less up front, and more monthly, then you would be better off paying her alimony. Alimony is tax deductible to you, and taxable income to her. Her marginal tax bracket is obviously going to be considerably lower than yours.

However, be very careful with alimony. You can't give a huge alimony one year and then have it drop off a lot the next year or it will be considered property settlement and disallowed. There are IRS rules about how much it can decline from one year to the next.

 

[LdiJ]

However, be very careful with alimony. You can't give a huge alimony one year and then have it drop off a lot the next year or it will be considered property settlement and disallowed. There are IRS rules about how much it can decline from one year to the next.

Correct, it would have to be a monthly, consistant payment for a specific period of time, and specifically be defined as alimony or spousal support in the divorce agreement.

 

[mistoffolees]

Correct, it would have to be a monthly, consistant payment for a specific period of time, and specifically be defined as alimony or spousal support in the divorce agreement.

Even then, it's worth checking with an accountant. IIRC, there are rules about how long and how fast it drops off. For example, if he pays $10 K per month for 1 year and then zero, it will probably be a property settlement by IRS rules, even if the divorce decree calls it spousal support.

OP should see the IRS rules which are in Publication 504. http://www.irs.gov/pub/irs-pdf/p504.pdf

 

[LdiJ]

Even then, it's worth checking with an accountant. IIRC, there are rules about how long and how fast it drops off. For example, if he pays $10 K per month for 1 year and then zero, it will probably be a property settlement by IRS rules, even if the divorce decree calls it spousal support.

OP should see the IRS rules which are in Publication 504. http://www.irs.gov/pub/irs-pdf/p504.pdf

I AM an accountant...and a tax professional.

The IRS does not expect alimony to taper off. The IRS expects it to be a consistantly monthly amount over the course of a defined period (or permanently if appropriate).

Yes, the IRS might look a bit askance if it goes for only one year at 10k per month, but I don't think that is what he had in mind. There are circumstances however where 10k a month for 1 year might make perfect sense to the IRS.

Basically, it has to make sense.

 

[mistoffolees]

I AM an accountant...and a tax professional.

The IRS does not expect alimony to taper off. The IRS expects it to be a consistantly monthly amount over the course of a defined period (or permanently if appropriate).

Yes, the IRS might look a bit askance if it goes for only one year at 10k per month, but I don't think that is what he had in mind. There are circumstances however where 10k a month for 1 year might make perfect sense to the IRS.

Basically, it has to make sense.

You're forgetting the recapture rules:
CCH Financial Planning Toolkit | Recapture of Frontloaded Alimony
"a provision in the federal tax law requires that when large sums of alimony (over $15,000) are paid in the first or second year following the divorce, but significantly less is paid in the third year, a portion of the alimony deducted by the payer in the first two years is recaptured by being added back to the payor's taxable income in the third year. This has the effect of "recapturing" the lost tax for the IRS."

Or, you can use the IRS site:
Publication 17 (2008), Your Federal Income Tax


Anyone paying $10 K per month for one year and then nothing is ABSOLUTELY going to run afoul of the recapture rules and end up adding that amount back to income in the third year.

 

[LdiJ]

You're forgetting the recapture rules:
CCH Financial Planning Toolkit | Recapture of Frontloaded Alimony
"a provision in the federal tax law requires that when large sums of alimony (over $15,000) are paid in the first or second year following the divorce, but significantly less is paid in the third year, a portion of the alimony deducted by the payer in the first two years is recaptured by being added back to the payor's taxable income in the third year. This has the effect of "recapturing" the lost tax for the IRS."

Or, you can use the IRS site:
Publication 17 (2008), Your Federal Income Tax


Anyone paying $10 K per month for one year and then nothing is ABSOLUTELY going to run afoul of the recapture rules and end up adding that amount back to income in the third year.

No, I haven't forgotten the recapture rules. However, what this guy has in mind isn't short term, its long term. Also, "large sum" is relative to income. 15k might be a large sum in some income brackets, but would not necessarily be a large sum in other income brackets.

If someone relatively wealthy was divorcing someone who was in their last year of law school, medical school or some other type of schooling that was going to pretty much guarantee them a healthy income after graduation, then an agreement for one year of alimony at a relatively high rate would be perfectly logical...and perfectly acceptable to the IRS.

The recapture rules only apply if the IRS says that they apply to a particular case.

 

[mistoffolees]

No, I haven't forgotten the recapture rules. However, what this guy has in mind isn't short term, its long term. Also, "large sum" is relative to income. 15k might be a large sum in some income brackets, but would not necessarily be a large sum in other income brackets.

If someone relatively wealthy was divorcing someone who was in their last year of law school, medical school or some other type of schooling that was going to pretty much guarantee them a healthy income after graduation, then an agreement for one year of alimony at a relatively high rate would be perfectly logical...and perfectly acceptable to the IRS.

The recapture rules only apply if the IRS says that they apply to a particular case.

If you're going to backpedal so fast, you really need a rear view mirror.

You stated that $10 K per month for a year would be OK with the IRS. Their recapture rules say it would not be. It's right there in black and white.

I guess it's possible that if Bill Gates were getting a divorce, that the IRS wouldn't consider $120 K to be significant, but for the real world, the recapture rules would apply.

Just admit it - you were wrong.

 

[LdiJ]

If you're going to backpedal so fast, you really need a rear view mirror.

You stated that $10 K per month for a year would be OK with the IRS. Their recapture rules say it would not be. It's right there in black and white.

I guess it's possible that if Bill Gates were getting a divorce, that the IRS wouldn't consider $120 K to be significant, but for the real world, the recapture rules would apply.

Just admit it - you were wrong.

I am not backpedaling...I am talking proportionality and purpose...and I am not wrong.

Ok..lets put it this way. OH (for example) allows for short term alimony for a short term marriage. So lets say that a judge orders someone to pay alimony for two years only and they are ordered to pay 2000.00 a month. That is 24k per year and clearly more than 15k.

The way that you are explaining the article you read means that someone who is only ordered to pay alimony for one or two years would have to recapture that alimony...or if someones ex passed away or remarried they would have to recapture the alimony if its more than 15k per year. That is not how the recapture rules work.

Now, I will give you an example of how they DO work.

There is no upfront settlement, and someone is going to pay long term alimony. For the first year or two they pay 5k a month and in the third year it drops to 1k, and remains at 1k permanently. Or, there is a clearly lopsided up front settlement, and the same scenario applies.

That is clearly a case of a property settlement being structured as alimony, and that is what the recapture rules are designed to stop.

That is why alimony must be consistant over the term of the alimony. Someone can pay short term alimony that is over 15k per year without running afoul of the recapture rules.

 

[mistoffolees]

The way that you are explaining the article you read means that someone who is only ordered to pay alimony for one or two

You're confusing the 'article I read' with the IRS rules which I cited.

Sorry, but I'll go with the IRS rules as clearly laid out in their publications rather than your opinion that there ARE no rules.

 

[LdiJ]

You're confusing the 'article I read' with the IRS rules which I cited.

Sorry, but I'll go with the IRS rules as clearly laid out in their publications rather than your opinion that there ARE no rules.

You simply don't understand what the publications are saying.

No one will ever be stuck recapturing alimony simply because they pay more than 15k a year, and the term of the alimony is two years or less...and anyone who is worried about what you have posted needs to consult with a tax professional for reassurance.

Front loaded alimony is alimony that lasts beyond two years, but drops significantly in amount after the first or second year.

 

[quentin1000]

Quite a lively discussion and at times confusing, especially as it relates to the IRS rules etc.

You folks just gave me an idea and something i haven't thought about: how about this:

1. can i only pay alimony to my wife for until my kid is 21 instead of child support? would the court go with that? or do i in all cases have to pay child support, period? again, i live in New York, in case there are significant differences among states etc.

of course i get tax deduction and my wife gets a larger payment from me. she makes money this way because she is in a lower tax bracket than i am.

thx!