New York: Divorce & The Gift Tax

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New York: Divorce & The Gift Tax allows for any transfer of property including settlement agreement in a divorce to be subjected to gift tax. According to Federal Internal Revenue Code, divorce settlement agreement is liable for gift tax where one spouse transfers property to the other. However, this rule is a confusing one and tends to change frequently. Hence, it’s highly recommended to get yourself the services of one of the best NewYork divorce lawyers. The divorce process involves many legal procedures which general public are not that much aware of. So, having a divorce attorney will ease the pressure off you and prepare your case well. 

 Baring a few exceptions like the ones given below, one needs to pay gift tax while transferring property.

• A deductible transfer made between the couples during the year they got married notwithstanding if they divorced the same year
• Transfer of property when the settlement agreement is incorporated in the divorce decree
• A transfer made to the annual $10,000 exclusion made for waiver of pension rights, medical and educational expenses
• A transfer of property in exchange for support is not taxable under gift tax law
• A transfer of property where consideration is deemed given. This happens usually in case where the husband and wife have already decided the way they would like to handle their property. If the couple gets separated within two years, any transfer of property that was made during this time will not be taxable under gift tax law.

In case of transfer of property where an immediately enforceable right is relinquished

In case the spouse is not a US citizen, an exclusion of $133,000may apply. If the property transfer in divorce happens to be greater than this amount, the spouse who is making the transfer of property needs to pay gift tax on the excess value only. However, the bottom-line goes that any transfer of property or settlement agreement between the spouses is not considered taxable under the gift tax law unless the settlement agreement is incorporated into the divorce decree. What is confusing though is the law in New York that the divorce is not valid until the divorce decree has been signed by a judge. However, divorce lawyers posses enough knowledge and experience to make sure you are fairly dealt with and all your legal rights are protected. So, get yourself the services of one of the top divorce lawyers who will ease the pressure off you and take care of the legal issues involved in the divorce process.

 

Understanding the law regarding gift tax and the exceptions to it may sometimes be complicated. Hence, the couple should hire one of the great divorce lawyers in the city to be represented by in the court. He will understand your case and provide you with all necessary legal guidance so that all your rights are protected and justice is done.