How Inheritances Impact Alimony Payments

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In West Virginia, the number of factors affecting spousal support can make it hard for parties on both sides to understand their rights and obligations. This issue becomes even more complicated when you throw an inheritance into the equation. Whether you receive or pay spousal support, find out how an inheritance could change your current agreement. For personalized legal advice regarding your spousal support agreement in Charleston, call Pence Law Firm at 304-407-7852.

When an Inheritance is Received Prior to Divorce

In general, inheritances are considered separate property—even when they are received during a marriage. This may change if the inheritance is commingled. For example, let’s say Spouse A receives $100,000 from an inheritance. They do not put it into a separate account that’s only in their name, instead, they put it into their shared bank account. 

The couple draws on it for years to pay family bills and expenses. At that point, the inheritance may be considered commingled and would be divided accordingly during a divorce. But if it is kept separate, it could still affect spousal support. If a lower-earning spouse has an inheritance, that could decrease the amount of spousal support they receive or eliminate it entirely. If the higher-earning spouse has one, their spouse may receive more in the way of spousal support and the division of marital property.

One topic that comes up from time to time is a promised inheritance. For example, imagine that one spouse is set to receive spousal support. The paying spouse insists that they should not have to pay because the receiving spouse will receive a massive inheritance when their family member dies. The court doesn’t consider future or potential inheritances—it will only look at what is already paid out.

Paying Alimony After Receiving an Inheritance

What if you receive an inheritance after a divorce and you’re currently paying spousal support to your ex? Many people worry at this point that their good fortune could mean giving some of it up to their ex-partner. However, it’s unlikely that an inheritance would put you on the hook for more alimony. If the court were to increase alimony, the payee would need convincing proof that their circumstances changed in a way to require an increase.

Another important factor to consider is what happens if your inheritance is enough to live on and you stop working. Even if you no longer have a standard source of income, you will likely still have to make alimony payments per your court order. When you give up your income willingly, the court knows that you are capable of earning what you made at your previous job, and they do not typically adjust spousal or child support accordingly.

Receiving Alimony After Securing an Inheritance

Depending on the terms of your alimony agreement in West Virginia, your alimony payments may change if you receive an inheritance. Rehabilitative spousal support is intended to help the payee make it until they are financially stable on their own. Generally, that means becoming gainfully employed or marrying someone who can support you. However, if you inherit enough to be financially self-sufficient, your ex may have grounds to ask the court to terminate alimony payments.

This isn’t always the case. Perhaps the court-ordered spousal support in gross, and you are entitled to a certain amount. Instead of paying it in a lump sum, your ex chose to have it divided up over 60 payments. Even if you become self-sufficient in the third year, you’re likely still entitled to the lump sum agreed upon in your divorce. In this scenario, the court may not terminate spousal support payments.

It all comes down to when you inherit, how much you inherit, and the specific language used in your divorce agreement. That’s why it’s important to discuss your situation with a Charleston family law attorney and get advice that fits your needs.

Get Help with Your Post-Divorce Issues Now—Call Pence Law Firm

If you or your ex-spouse have received an inheritance and you’re worried about its effect on spousal support, let the team at Pence Law Firm explain your rights and obligations. To schedule your consultation, just contact us online or call us at 304-407-7852.

What the New Alimony Tax Rules Mean for Divorce Cases

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Under the Tax Cuts and Jobs Act passed last year, alimony rules are about to change in the United States. Couples filing for divorce must settle terms before 2018 is over, lest they want to be subject to the statutes set in place by the recent tax reform.

For 70 years, alimony payments have been tax-deductible under federal law. Currently, individuals paying alimony can deduct the amount on their taxes, while individuals receiving alimony must claim payments when filing taxes. This will all change on January 1, 2019. Soon, individuals who pay alimony will not be able to deduct payments on their taxes, and individuals receiving alimony will not have to claim payments when they file their taxes. These changes already have many couples rushing to file divorce papers by the end of the year.

Although the new tax law should, in theory, benefit those receiving alimony, because they will no longer have to pay taxes on it, many are concerned it will actually be worse for those receiving alimony—especially women. Studies have indicated that women often struggle more financially following a divorce, and in many cases, their income drops over one-fifth, while men with children frequently see their income go up by a third. Although statistics show a rise in women becoming the primary breadwinners in their families, the 2010 census indicates that of the 400,000 people currently receiving alimony in the U.S., only 3% are men. Many women who need spousal support after a divorce are now at risk of receiving smaller payments from their partners, who will likely try to negotiate payments down, knowing they will have to pay taxes on them every year.

Many are also wondering how the new rules will affect postnuptial and prenuptial agreements. It is possible that courts will increasingly try to put a cap on payments now that they are no longer tax-deductible. With the shift in policy expected to raise almost $7 billion for the IRS over the next decade, one thing financial experts can agree on is that all parties who are entering into, or have recently entered into, a divorce should reexamine their agreements with an experienced accountant or divorce lawyer to ensure their current arrangement will benefit them in the long-run.

Hire a Charleston, WV Divorce Attorney Today

At Pence Law Firm PLLC, we are committed to making sure our clients receive the settlement they deserve. Our Charleston, WV divorce lawyers provide hands-on legal representation and personalized attention every step of the way, so you never have to feel like you are going through this alone. And, with years of experience in equitable distribution, spousal support, and high-asset divorce, you can trust that we know how to advocate for the maximum settlement in any case. Don’t let the latest tax laws prevent you from receiving the alimony payments you deserve, contact Pence Law Firm PLLC today.

Talk to a divorce lawyer on the phone at (304) 345-7250, or contact us online for a confidential consultation.