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Newark Family And Estate Law Blog

You may have several conflicting emotions about your soon-to-be-former spouse, but you do not feel conflicted in the slightest about wanting to take care of your shared children. How should you structure child support in your divorce agreement?

Forbes offers factors to remember for helping to care for shared children after finalizing your divorce. Learn how to create an agreement that fits your desires and provides for your loved ones.

Child support trumps spousal support

The parent who receives child support likely also receives spousal support. If a court later decides you do not need the same amount of child support, you may anticipate a reduction in spousal support, too.

You may change child support payment amounts

Besides the court, you or your soon-to-be-ex-partner may initiate a child support modification. Courts determine payments according to a person’s income, time spent with shared children and how many shared children the former couple has. If those factors change, one person may request a child support payment modification. Either parent may ask for a reduced or increased payment, depending on if either loses a job or earns a raise.

Child support does not affect taxes

Because of new legislation, receiving or paying child support does not positively or negatively affect your tax bill. That means the parent paying child support cannot deduct those payments from taxes, and the parent receiving support does not pay taxes for payments. Further, only one parent may claim a shared child as a dependent.

Understand all angles involved in paying and receiving child support. Educating yourself may help you sidestep nasty surprises later on.

Having an estate plan is beneficial for all California residents, but if you are also a new parent, creating one may be of particular importance. Many young people put off creating estate plans, either because they feel they do not have enough assets to warrant doing so or because they simply plan to do so later. Having one in place helps you look out for your new child, and it also helps you maintain more control over your own personal affairs.

What are some of the important estate planning steps you may want to take once you become a parent?

1. Revisit your beneficiary designations

Once you have a son or daughter of your own, you may want to consider reviewing the beneficiary designations you made when creating your investment accounts or purchasing your life insurance policies. Minors may not control property, so you may need to create a trust and move your life insurance policy into it to have those assets ultimately transfer to your child.

2. Appoint guardians and trustees

Guardians and trustees help look out for your child once you are no longer around to do so. A trustee might oversee the financial aspects of your estate and make appropriate distributions to your son or daughter. A guardian might assume custodial rights over your child, if necessary.

While taking these steps may help you provide for your child’s ongoing needs in the event of your death, this is not an exhaustive list of all estate planning steps you might want to take after having a child of your own.

If you are thinking about ending your marriage, you may have some concerns about your financial future. Fortunately, you are likely to end up with roughly an equal share of the marital estate. You may also be eligible for spousal support to help you make ends meet after your divorce.

While dividing your home, vehicles, cash and savings may be straightforward, your retirement accounts may be a different matter. That is, in California, the typical process for dividing marital assets may not work for retirement funds. Consequently, you may need to obtain a qualified domestic relations order during your divorce.

What is a QDRO?

In simple terms, a QDRO is a court order that directs the retirement plan administrator to pay funds to you instead of your spouse. Judges in California may not automatically issue a QDRO. Accordingly, your divorce attorney may need to petition the court for one.

When do you need a QDRO?

Not all retirement plans require QDROs. Still, if your spouse has a private pension, an IRA or a 401(k), you probably need to request one. On the other hand, many government and military pension plans are exempt from the QDRO requirement. Likewise, any plan that does not operate under the Employee Retirement Income Security Act of 1974 may not require a QDRO.

How does a QDRO work?

A QDRO tells the plan administrator how much of your spouse’s pension you should receive. It may also dictate the number of payments or time period for payments. Essentially, the QDRO works by giving the plan administrator the information necessary to pay benefits appropriately.

Your and your spouse’s retirement accounts may be a substantial part of your marital estate. Ultimately, by knowing when and how to obtain a QDRO, you can be certain you receive the retirement funds you deserve after your divorce.