Before signing a divorce agreement, make sure you can support yourself when going from two incomes to one. This includes negotiating a property division settlement that protects your interests and preserves your financial security.
Consider these factors when dividing marital assets in your divorce in Kentucky.
Whether you plan to remain in the family home or move to a smaller property, make a realistic monthly budget that accounts for rent or mortgage payments, utilities, food, transportation and other life necessities. You should also consider your earning potential and whether your income will cover those needs and allow you to save for the future.
In Kentucky, either spouse can request alimony if he or she cannot meet regular expenses. The judge will consider the couple’s lifestyle before the divorce, the property division agreement and each person’s earning capacity.
If you stayed home to raise children or manage the household while your spouse earned money at a demanding job, you probably have concerns about how a divorce will impact your retirement. In Kentucky, you can ask the court to issue a Qualified Domestic Relations Order. This requires the firm holding the retirement accounts to divide the benefits among spouses when they retire. All taxes and interest on these investments will remain separate.
If one spouse owned an asset such as a home before the marriage, the asset remains separate property in the eyes of the court. However, if the other spouse contributed to the home’s upkeep or bills, he or she can receive a fair portion of the increase in equity over the course of the marriage.
Tax implications and spousal maintenance (alimony)
In the past, the IRS allowed the paying spouse to deduct alimony payments and required the recipient spouse to pay taxes on alimony income.
However, that changed in recent years. The tax deduction and the reporting requirements were eliminated for spouses divorced on or after Jan. 1, 2019. These changes should be considered when negotiating for an equitable divorce settlement.