Arizona Divorce & Family Law Blog : Commentary on Arizona divorce, child custody, paternity, child support & family law litigation. : Arizona Family Law Lawyer & Attorney : Nirenstein Garnice Soderquist, PLC

Kate Walsh, star of the television show Private Practice (and formerly Grey's Anatomy), and her ex-husband have adopted a long-time but not-often used approach to dividing the community property.  The Stipulated Settlement Agreement provides:

"One-half of the community property furniture and artwork to be divided by alternating picks after the flip of a coin to determine who will pick first".

To read more about Kate Walsh and her divorce, check out the USA Today article "Kate Walsh, Ex To Divide Assets by Flipping a Coin". 

Believe it or not, sometimes this is the most amicable way to divide up personal property, especially when it does not have much value.  Both parties alternate in choosing until nothing is left.  Kind of like picking dodgeball teams.  For more information on community property, contact Arizona lawyers, Nirenstein Garnice Soderquist PLC.

The Court of Appeals affirmed The Honorable Judge Hugh Hegyi's ruling in Frantz v. Frantz, 2009 WL 4981533 (Ariz.App. Div. 1), a case that dealt with an issue that is becoming more and more common in Arizona as a result of the State's heavy financial reliance of the real estate market. In Frantz, Husband appealed from a decree of dissolution arguing that the family court erred in its determination that a second lien secured by the marital residence was not a community obligation. At the dissolution hearing, Husband, Wife, and a real estate appraiser testified.  Judge Hegyi stated:

“In finding that the community has $92,000 in equity in the [residence], the court does not deduct the value of the $84,000 second lien on that property. It finds that WIFE has established by clear and convincing evidence that the lien is not a community obligation. The money was received by HUSBAND alone. HUSBAND alone had the ability to explain what happened to the proceeds of the loan, and has failed to do so. After observing the parties' demeanor in testifying, the court finds HUSBAND expended these proceeds in a manner that was not intended to, and did not, benefit the community."

Husband filed a motion to alter or amend the decree requesting that the court value the residence at $8,000 - an amount reflecting the fair market value minus any and all of the liens and encumbrances obtained by the parties during the marriage. The court denied Husband's motion.

Last Thursday, the Arizona Court of Appeals rendered an opinion in Pullen v. Pullen, wherein it decided how and when trial courts should attribute income to a spouse for purposes of calculating Arizona spousal maintenance.  

The Court of Appeals recognized that Arizona case law had previously only addressed this issue in the context of child support (e.g., Little v. Little).  The Court held that the reasoning of the Little court, to apply the intermediate balancing test in lieu of the strict rule test or the good faith test, applied equally in the context of spousal maintenance.  

The Court of Appeals went on to hold, however, that it is not possible to rely upon the holding in Little to determine what factors to balance in the context of spousal maintenance, because the Little court focused on the need of the child for child support.  Rather, the Court of Appeals enumerated five (5) factors, and held that trial courts should balance these five factors in addition to other evidence in determining whether to attribute income for purposes of calculating spousal maintenance.

The five factors are:

1. The reasons asserted by the party whose conduct is at issue;
2. The impact upon the obligee of considering the actual earnings of the obligor;
3. When the obligee’s conduct is at issue, the impact upon the obligor of considering the actual earnings of the obligee and thereby reducing the obligor’s financial contribution to the support order at issue;
4. Whether the party complaining of a voluntary reduction in income acquiesced in the conduct of the other party; and
5. The timing of the action in question in relation to the entering of a decree or the execution of a written agreement between the parties.

For any questions regarding Arizona spousal support, contact Nirenstein Garnice Soderquist PLC and an attorney will discuss this information with you in more detail.

QUESTION:

My fiancée has asked about putting her name on the deed to my house after we get married. I don't want to do that in case things don't work out and we divorce. But I've heard that when I marry all of my assets automatically become half hers, anyway. I should say that I will be the only one paying for the mortgage and home improvements. What does the law say, and will a premarital agreement remedy the situation?

Learn about tax breaks available to most parents.

New parents often find themselves overwhelmed by the expenses that come with a baby. From nursery furnishings to "onesies" to countless diapers, your little bundle of joy is going to cost you, well, a bundle. Fortunately, the federal government offers a number of tax breaks to offset the cost of raising a child. Here you'll learn about two tax breaks for which most parents qualify: the dependent exemption and the child tax credit.

The Dependent Exemption

You might be surprised to learn that the IRS does not tax every single dollar that you earn. Instead, the IRS gives you a very modest tax exemption ($3,200 per person in 2005) to cover your basic living expenses. Single people can take one exemption for themselves. Married couples can take two exemptions (one for each of them).

When you add a new child to your family, you can add one more exemption to your income taxes -- called a "dependent exemption." This means that you get an additional tax deduction of more than $3,000 every year until your child turns 19 -- a nice baby gift from Uncle Sam!

In terms of actual tax savings, the amount you save with the dependent exemption depends on your tax bracket. The higher your tax bracket, the more savings you get -- unless your income is so high that you cannot claim the exemption at all (see below). For example, if you were in the 10% tax bracket, you would save about $320 per child with the dependent exemption in 2005. But if you were in the 25% tax bracket, the dependent exemption would save you $800 per child.

Like many tax breaks, however, the dependent exemption is phased out for higher earning families. For the 2004 tax year, for example, married couples filing jointly could not claim the dependent exemption at all if their adjusted gross income was more than $336,550, and they lost a portion of their dependent exemption if their adjusted gross income exceeded $214,050.

If you qualify for the dependent exemption, claiming it on your tax return is easy. Simply complete line 6C of Form 1040 or Form 1040A, making sure to provide a Social Security number or Adoption Taxpayer Identification Number for your child in column 2. (See Social Security Numbers and Why Your Baby Needs One.) Also be certain to complete line 41 of your Form 1040 or line 26 of your Form 1040A.

The Child Tax Credit

The dependent exemption is not the only tax break that parents can claim. Provided that your income is below a certain limit ($130,000 for married couples filing jointly in 2004), you can also claim the child tax credit. The child tax credit trims your tax bill by $1,000 per child. Because it is a credit, and not a deduction, the child tax credit gives you $1,000 back in your pocket for every child that you have.

To determine the amount of the child tax credit you can claim, complete the child tax credit worksheet contained in IRS Publication 972, Child Tax Credit. (You can download this publication for free from the IRS website at www.irs.gov.) Then enter the amount of your child tax credit on your tax return (line 51 of Form 1040 or line 33 of Form 1040A). Also complete line 6C of Form 1040 or Form 1040A and provide a Social Security number or Adoption Taxpayer Identification Number for each child. Finally, check the box in column 4 of line 6c for each child for whom you are claiming the child tax credit.

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