June 15, 2011 § 5 Comments
I’ve had these suggestions on the stockpile for a little while, waiting for an opportune time to post them. Considering Randy Wallace’s post about a less-than-perfect PSA yesterday, I thought now was a good time to float these. I’ll have more later.
- If you don’t address allocation of the tax exemptions for the children as dependents, the IRS takes the position that it remains with the custodial parent. If the non-custodial parent will get the exemption, or it will be split, you should include language that the parties agree that they will promptly complete and timely execute and deliver IRS Form 8332 in order to give effect to the provision. That form is the one that the IRS requires to claim the exemption.
- Stick with the traditional terms. The IRS understands the terms periodic alimony, lump sum alimony, rehabilitative periodic alimony, and child support. If you try to disguise those terms as spousal support or family/spousal support, or family maintenance, or something similar, you are likely sending your client off onto a collision course with the IRS. William Wright, an attorney in Jackson, told of a case he had where opposing counsel insisted on applying the term family support to a substantial payment that William’s doctor-client was having to pay each month. William complied, and his client later took the position with IRS that the payments met all the requirements for alimony, so that he should be able to deduct it, and it should be alimony to the recipient. IRS agreed, costing the recipient a whopping tax bill, and no doubt improving William’s standing in his client’s estimation. Had the payments been allocated between child support, which is not taxable, and alimony, which is, the result would have been far different for the recipient spouse.
- If the other party is not represented, have you made it clear in the agreement which party you do represent, and have you added language to the effect that the other party acknowledges that you have not given him or her any legal advice?
- Name the children in the agreement. It affects them directly. I have read agreements that refer only to “the minor children,” without identifying them, or stating their ages or birthdates, or even how many there are.
- Have you bothered to read the agreement? Does it make any sense? Here’s an actual sentence from a property settlement agreement I was presented: “Husband to have his title and car, and wife hers. Each to pay and hold harmless.” I think I know what that means. But that doesn’t make it an enforceable contract.