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Divorces in Colorado
BY FRED DUNSING ON May 3, 2018
There has been a lot of discussion in the media about how the 2017 tax reform bill will impact Americans, both in the short-term and the long-run. As it turns out, the tax reform bill will have an impact on current divorce laws, which can make divorce proceedings confusing and frustrating. This is why consulting with a Denver, CO divorce attorney will be so crucial in the coming year.
The team at Dunsing & Deakins, LLC would like you to consider how the tax reform bill affects the way alimony/spousal maintenance payments are reported on your taxes. Hopefully this gives you a sense of what’s ahead and why it’s crucial to consider your financial future as part of your divorce.
How Tax Reform Affects Alimony/Spousal Maintenance
Prior to the tax reform bill, alimony and spousal maintenance were handled as follows. The spouse that pays maintenance is allowed a tax deduction for their spousal maintenance; the spouse receiving maintenance would then report any maintenance received as income when filing taxes.
Under the new tax laws, circumstances have changed. The tax reform law now eliminates both the deduction on maintenance payments as well as the need to report maintenance as income in your tax return. This could seriously impact the spouse paying alimony given the loss of this tax deduction. The result may be messier and more contentious divorce proceedings when it comes to alimony payments.
When Do These Changes Go Into Effect?
These changes to existing alimony tax laws do not go into effect until 2019. That means that as long as a separation agreement is signed by December 31, 2018, you and your spouse can decide whether or not the new tax laws will apply to your divorce and spouse maintenance.
Changes to Child Dependency Exemptions
If you and your spouse are negotiating child custody, the changes to previous tax laws are important to keep in mind. As of January 1, 2018, the child dependency exemption has been eliminated. However, the child tax credit has increased to $2,000 for each qualifying child.
Only the custodial parent will be able to benefit from the child tax credit unless some agreement was reached, allowing the non-custodial parent to claim the child as a dependent on their taxes.
Proposed Changes to Colorado Family Support Obligations Due to Changes in the Federal Tax Laws
The current guideline advisory amount of spousal maintenance in Colorado's maintenance statute, and the definitions used for calculating gross income and adjusted gross income for maintenance and child support awards, reflects the anticipated tax consequences to the payor and recipient under the prior tax law. As a result of the new tax law, HB18-1385 was introduced (by State Representative Dylan Roberts and State Senator Don Coram) to modify existing spousal maintenance guidelines. The bill adjusts downward the advisory guideline calculation of the amount of maintenance in circumstances where the maintenance awarded is not deductible by the payor spouse and is not taxable income to the recipient spouse. The bill also amends the definitions of 'gross income' and 'adjusted gross income' to properly reflect the tax implications of maintenance obligations. At the time of this writing, this Bill has not yet been passed by the Colorado legislature.*
How Our Family Law Attorneys Can Help
These tax and divorce issues can become more complicated and granular depending on a number of factors, which is why having skilled divorce lawyers on your side is helpful. We can advise you on future tax matters as well as current tax laws that apply to alimony and child support. Knowing the laws as they stand now as well as the tax changes to come can give you a better understanding of your financial future after divorce.
Any concerns you may have can be discussed in full detail. Our goal is to provide you with a full understanding of how legal decisions and changes in legislation affect you.
*UPDATE: This legislation passed the Colorado legislature Governor John Hickenlooper signed the Act into law on May 24, 2018.
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DUNSING & DEAKINS WINS CHANGE OF CUSTODY AND RELOCATION OF CHILDREN
After a multi-day trial, Fred Dunsing won a change of custody of two young children to our client, as well as relocation of the children to the client’s residence outside of Colorado.
This case was a hotly contested post-decree custody battle that had spanned multiple attorneys, domestic relations decision-makers, protection orders, law enforcement and social services involvement, and over three years of litigation.
In the end, after a comprehensive Parental Responsibilities Evaluation that included psychological and mental health testing of the parents, the judge found that the children were endangered under the current parenting time and decision-making scheme, and ruled that it was in the best interests of the children for custody to be changed to our client. The judge also ordered that sole decision-making for the children be placed with our client.
Legal Standards
In Colorado, the standards for a change of primary residence and a change of decision-making responsibility can be found in Colorado Revised Statues 14-10-129(2) and 14-10-131(2). These statues require the court to engage in a best interest analysis under Colorado Revised Statue 14-10-124. A court is required to maintain the current parenting time and decision-making orders unless the child is endangered under the current orders, and “harm likely to be caused by a change of environment is outweighed by the advantage of a change to the child.”
Colorado’s best interest standard (C.R.S. 14-10-124) requires a court to consider, among other things, the wishes of the parents and children, the interaction between the parents and the children and between the children and siblings, the children’s adjustment to home, school and community, the mental and physical health of the parties and children, the ability of each parent to encourage love and affection in the children for the other parent, the past pattern of involvement of each parent, and the ability of each parent to place the needs of the children ahead of their own.
For a change in decision-making, a court will also look at things like whether the parents are able to cooperate to make decisions jointly for the benefit of the children – commonly known as co-parenting.
For relocation requests in post-decree cases, a court will also examine factors such as the reason why one parent wishes to relocate with the children and the reason why the other parent is objecting. Also, the history of each parent’s relationship with the children, the educational opportunities at both locations, the presence or absence of extended family at both locations, any advantage of the children remaining the parent who has been the primary caregiver, the anticipated impact of a move on the children, and whether a court can fashion a reasonable parenting plan for the non-relocating parent.
In this case, we were able to carry all of these statutory burdens, and our client became the primary residential parent and was permitted to relocate the children outside of Colorado.
Private Judge
Colorado Revised Statue 13-3-111 provides for the appointment (by the Colorado Supreme Court) of a retired judge to hear a case where both parties agree. Private judges can be a good alternative where parties want to avoid the docket delays of a district court, or where they may have an objection to a magistrate being assigned to hear their post-decree matter.
In this case, the parties agreed to have the Colorado Supreme Court appoint a retired judge. As a result, the parties were able to obtain the Parental Responsibilities Evaluation that had previously been denied, and were able to finally gain resolution of their case that had been delayed for years in the district court. One caveat: private judges can be expensive!
