Heidi E. Opinsky

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Tax And Estate Considerations Of Property Division

Tax & Estate Considerations Of Property Division In Connecticut and New York

Get Help From a New York Estate Planning Lawyer

A couple who obtains a divorce in Connecticut or New York faces many changes in their lives, including the division of their property and assets. A New York estate planning lawyer like Heidi E. Opinsky can help minimize the impact these events have on her clients. In determining how to approach the distribution of assets, it is important for someone with high net worth to contemplate the tax implications of the division before agreeing to a plan for the allocation of assets. In addition, it is necessary to make sure the long-term plans of the parties are modified to reflect the new situation. If proceeding before the court, individuals should work with their attorney to have a strategy about what type of distribution will best suit the circumstances.

Some of the tax and estate-related considerations that may arise in a
high-asset divorce include:

  • The capital gains tax implications of selling the family home, vacation homes or investment properties
  • Tax benefits and rights to exclude taxes and primary residence holding periods
  • The valuation and sale of business interests
  • Tax implications of spousal support and child support
  • The distribution of inherited property or other property acquired by one spouse during the marriage
  • The distribution of liabilities that might affect tax consequences
  • Structuring spousal support payments in order to minimize tax repercussions
  • Addressing any delinquent tax matters before the divorce is finalized and liabilities have been allocated to each of the spouses
  • Determining the expenses surrounding the divorce that may be tax deductible
  • Making all necessary changes to estate documents in order to ensure that the revised needs of the parties are reflected in the expressed wishes of the controlling instruments — making necessary changes, consents and waivers to wills, trusts and accounts where a spouse may have been listed as a beneficiary or has statutory rights to take against the testamentary instrument, are all very important issues in a divorce
  • All other actions necessary to effectuate the needs and wishes of the client

Many people forget that the tax consequences of a divorce can be as much of a concern as the divorce asset allocation considerations. The intent of the parties in a divorce is best effectuated through an overall analysis of income tax, capital gains taxes, inheritance, child support, alimony and real estate write-offs, deductions and taxes. When working out a plan for property distribution, it is critical to balance the tax deductions and liabilities with the assets being distributed.

Some common tax issues include:

  • Spousal support payments, which qualify as taxable income for the recipient and are tax deductible to the payor. It is important to consider that it is permissible to elect these payments be neither taxable income to the recipient spouse or deductible to the payor-spouse under the Internal Revenue Code, resulting in significant benefits to both parties.
  • The tax benefit for dependents — Although this becomes less relevant for high-income earners, there is a tax benefit from being able to claim dependents, and who has the right to take the deduction and dependency exemptions for the children is negotiated during the divorce process.
  • The transfer of a marital and primary residence, and investment real property, have significant concerns regarding mortgage interest and real estate tax and casualty loss deductions to the respective parties during the divorce and as part of the settlement, as well as capital gains tax exclusions.
  • Innocent spouse and governmental tax lien issues are to be considered.
  • The review of previous tax returns to ensure there are no improprieties that will become an issue or that capital loss carry-forwards may be taken advantage of and shared between the parties.
  • Reviewing or drafting prenuptial or post-nuptial agreements can impact the division and distribution of the marital and separate assets and income between the parties.

The estate considerations that must be addressed as part of a comprehensive divorce strategy include:

  • Changing a will or trust instrument to eliminate a spouse as a beneficiary or drafting a new individual will or trust
  • Altering any trust documents to eliminate a spouse as a beneficiary or a trustee or to establish a parent as a trustee for a minor child who becomes the beneficiary of bank accounts and life insurance proceeds and assets during their minority
  • Making changes to any living wills or advanced directives
  • Creating new estate plans

Heidi E. Opinsky Represents Individuals In High-Asset Divorces

There are many issues that arise as part of a divorce which must be addressed quickly and efficiently, sometimes with the help of a New York estate planning lawyer. Dealing with tax and estate matters while the divorce is ongoing will prevent problems later. Heidi E. Opinsky and her skilled legal team represent moderate to high net worth individuals in divorce actions, and they will provide the compassion, attention to detail, skill and experience it takes to protect and achieve the goals for each client.

Experienced Divorce And Family Law Attorney Serving Connecticut And New York

Every divorce has the potential to become complicated, but when the couple has accumulated extensive property and assets, there are complexities built-in to the divorce process. It is critical to have an attorney with the skills and resources to manage these issues appropriately.
Contact Heidi E. Opinsky today at 203-653-3542 to schedule a confidential consultation.