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The Real Way to Plan a Wedding: Keep Yours, Mine and Ours in Mind by Sandra Perez, CPA/ABV/CFF, CFE

Posted on August 21, 2018 by Sandra Perez

Wedding planning can be an exciting time. However, the anticipation of preparing for one’s big day should not be overshadowed by the fact that marriage is a contract involving a broad range of legal and financial obligations defined by the state where you live. In addition to shopping for a dress, selecting floral arrangements and creating seating charts, spouses-to-be should recognize that they and their future spouses have a right upon divorce to an equitable distribution of property and financial support. While it is difficult to think about the potential end to a marriage that has not yet begun, failing to plan properly for this can spell disaster for your future financial well-being.

When you say “I do,” you not only vow to join lives with another person for better or for worse, you are also promising that you will share the assets you and your spouse acquire during the marriage, and you will give up your rights to half of those marital assets in the event of a future divorce. All too often, couples do not recognize that the non-marital assets they bring with them into a legal union can later become marital property, which the courts can and will divide in divorce proceedings.

For example, if you own a business or a home before saying your marriage vows, those assets and the income they generate can become marital property subject to equitable distribution in the future. Similarly, if you are the recipient of a significant inheritance or gift during your marriage, your spouse may have a right to claim half of the value of those assets, including any appreciation in value, when the marriage ends. Avoiding these challenging issues requires couples to understand the concept of comingling non-marital and marital assets.

 Comingling Marital and Non-Marital Property

Under Florida law, non-marital assets are not subject to equitable division upon divorce. You may leave the marriage with the property you brought with you, along with any appreciation in the value of those personal possessions. However, if you “comingle,” or combine, your non-marital property with that of your spouse, or with property you both acquired together during marriage, it can become a marital asset subject to equitable division for which your spouse is entitled one half of the value.

Unfortunately, a very thin and easy-to-cross line exists when trying to distinguish between marital and non-marital assets. At the most basic level, once you withdraw money from your individual, premarital savings account and deposit it into your joint marital account, you are comingling funds. Consider what would happen if you owned a condominium prior to your wedding day. If you sold that premarital apartment during your marriage and used the sale proceeds towards a new home for you and your spouse, you essentially comingled the value of that premarital condo and turned into a marital asset. Likewise, if, during your marriage, you receive a gift of interest in a family business that you help grow during the marriage, the increase in the value of that gift will be subject to division upon divorce.

 How to Protect Pre-Marital Assets

While no one wants to begin a marriage with thoughts of it terminating, the unfortunate realty is that half of all marriages end in divorce. Pretending otherwise can have damaging financial consequences. The best way to protect yourself and your assets before getting married is to consider a prenuptial agreement that details what will happen to you and your spouse financially in the event of a divorce.

Prenups are no longer reserved just for the uber-wealthy. In recent years, they have gained in popularity across all income levels, especially as both spouses increasingly share in the responsibilities as family breadwinners. In fact, couples can agree in a prenup how they will use their respective incomes earned during their marriage. Moreover, with the high rate of divorce, many well-established individuals are entering into second and third marriages, blending families and bringing with them significant assets, including established businesses and retirement savings as well as the financial care for minor children. Therefore, a prenup would be important to protect your premarital assets for the benefit of your children from a previous marriage.

Prenuptial contracts open the door for couples to share detailed information about the income, assets and debts they bring individually into a marriage. The prenup helps to ensure that neither party enters into a marriage financially blind. It creates a dialogue between the spouses-to-be to share their financial goals, values and expectations. This is especially important when considering that financial issues are one of the leading causes of divorce.

Couples should remember that people and circumstances could change over the course of a marriage, whether it be a few years or many decades. The decisions they make permanent today, before they marry, will undoubtedly affect their future – together or separately. Therefore, when preparing a prenuptial agreement, couples should look down the road and consider if the decisions they agree to today, under current circumstances, will still make sense and be considered fair to them in five, 10 or 25 years, after they have children and their assets appreciate in value. A well-drafted prenup with the benefit of experienced legal and financial counsel can include language that anticipates these factors and can even feature a “sunset provision” that voids the agreement automatically after a certain period of time. These advisors, which may include CPAs, should also have experience in family law and be able to run the numbers to help you understand the current and future financial implications and tax consequences of the decisions you agree upon in a prenup you sign today.

In the current legal environment, it is not easy to challenge or break a prenuptial agreement, especially if there was full financial disclosure and both parties had separate legal representation. However, couples may agree, at some point during their marriage to terminate a prenuptial contract. This should be done formally, with caution, under the guidance of legal and financial counsel.

While even the idea of a prenuptial agreement can be uncomfortable to bring up during an engagement, the truth is that by being proactive and addressing the ugly side of marriage statistics up front, couples can protect themselves and their ability to maintain their financial independence – whether together or apart – throughout the remainder of their lives.


About the Author: Sandra Perez, CPA/ABV/CFF, CFE, is director of the Family Law Forensics practice with Berkowitz Pollack Brant, where she works with attorneys and individuals with complex assets and income to provide expert witness testimony and assistance with settlements. Her expertise includes valuing business interests, analyzing income, determining net-worth, preparing financial affidavits, and calculating alimony and child support obligations and litigation support in all areas of divorce proceedings. She practices in the tri-county area of South Florida and can be reached at (954) 712-7000 or via email

Will Tax Reform Expedite Divorces in 2018? How can Couples be Prepared? by Sandra Perez, CPA/ABV/CFF, CFE

Posted on March 22, 2018 by Sandra Perez

The Tax Cuts and Jobs Act (TCJA) that the president signed into law in December 2017 calls for the elimination of tax deductions for alimony payments made to a former spouse beginning on Jan. 1, 2019. Similarly, alimony recipients will no longer be required to include those payments as taxable income on their annual tax return filings. The law applies to divorce and legal separation agreements executed after Dec. 31, 2018. Taxpayers with alimony orders in place prior to Dec. 31, 2018, will not be affected, and payors will continue to receive preferential tax treatment for the spousal support they pay.  However, it is important to note that the alimony provisions of the TCJA will apply to future modifications of support orders in place prior to Dec. 31, 2018.

The TCJA upends settlement strategies in divorces.  Because the individual who pays alimony is traditionally in a higher tax bracket than the alimony recipient, the tax savings on the payor’s deduction is currently worth more than the amount of tax paid by the recipient. Essentially, because each dollar of alimony paid to a recipient costs less to the payor, the payor could afford to pay more in alimony. The elimination of the alimony deduction beginning in 2019, reduces the overall dollars a family has to divide.

This TCJA’s repeal of the alimony tax deduction combined with the law’s temporary through 2025 repeal of dependency exemptions and increase in standard deduction will eliminate the need for divorcing couples to argue over who may claim a dependent child as a deduction in future years. However, it is possible that the new law’s treatment of spousal support will create a sense of urgency for couples, especially high-earning spouses, to expedite a divorce in 2018 and take advantage of the tax break under current law.

As the government works to develop guidance for applying the new tax law, couples considering a divorce should recognize that the entirety of the law is subject to modification and even repeal under a new presidential administration or a change in the congressional majority. As a result, it behooves taxpayers to consult with professional advisors to understand the law in its current state and address in divorce settlements any potential changes that may impact former spouses’ future income and tax liabilities.

About the Author: Sandra Perez, CPA/ABV/CFF, CFE, is director of the Family Law Forensics practice with Berkowitz Pollack Brant, where she works with attorneys and high-net-worth individuals with complex assets to prepare financial affidavits, value business interests, analyze income and net-worth analysis and calculate alimony and child support obligations in all areas of divorce proceedings. She can be reached in the CPA firm’s Fort Lauderdale, Fla., office at (954) 712-7000 or via email

Information contained in this article is subject to change based on further interpretation of the law and subsequent guidance issued by the Internal Revenue Service.


Tax Reform Eliminates Kiddie Tax Complexity by Jeffrey M. Mutnik, CPA/PFS

Posted on February 21, 2018 by Jeffrey Mutnik

Congress first introduced the Kiddie Tax in the 1980s to prevent high-net-worth families from paying overall lower taxes on their investment income by transferring income-generating assets to their young children in a lower tax bracket. For example, during the 2017 tax year, unearned income that exceeds $2,100 from investments held by children age 19 and younger, or full-time students under the age 24, is taxed at the parent’s marginal tax rate, which could be as high as 39.6 percent. However, under the Tax Cuts and Jobs Act (TCJA) that the president signed into law in December 2017, the parent’s income and marginal tax rate are disregarded.

Instead, beginning in 2018 and through the end of 2025, a dependent child’s unearned investment income (from capital gains, dividends and interest) in excess of $2,100 is subject to the trust income tax rates, which are capped at 37 percent on income above $12,500. In addition, earned income for wages, salaries and other compensation a dependent child receives for providing personal services is subject to taxation at the single taxpayer rates, which can be as high as 37 percent on income exceeding $500,000. While this modification makes the taxation of such income simpler, there are other important factors that families should consider in their tax planning.

For example, under the TCJA, the highest 37 percent tax brackets for trusts and estate in 2018 kicks in at $12,500, a much lower threshold than the top 37 percent rate that would have applied to parents with $600,000 in taxable income before the new law was enacted. As a result, the benefits of the new law will depend on the amount of a child’s unearned income during a tax year. In most cases, transferring substantial investment assets into children’s names will potentially lower a family’s overall federal income tax liabilities in 2018 and through 2025, when this provision is set to expire. However, families should be mindful of the gift tax and asset control issues they may face when contemplating transfers to family members.


The advisors and accountants with Berkowitz Pollack Brant work with U.S. and foreign families to protect wealth and maintain tax efficiency while complying with complex global tax laws.


About the Author: Jeffrey M. Mutnik, CPA/PFS, is a director of Taxation and Financial Services with Berkowitz Pollack Brant Advisors and Accountants, where he provides tax- and estate-planning counsel to high-net-worth families, closely held businesses and professional services firms. He can be reached at the CPA firm’s Ft. Lauderdale, Fla., office at (954) 712-7000 or via email at




The Tax Implications of Divorce and Separation by Joanie B. Stein, CPA

Posted on October 30, 2017 by Joanie Stein

Among the many financial and emotional issues that couples will encounter on their road to a divorce are the implications that a final dissolution of marriage will have on their taxes. Following are some important tax-related issues for separated and divorcing couples to keep in mind.

Tax Filing Status

Legally separated and divorced couples have the option to file their individual tax returns as single taxpayers, or they may choose to file as heads of household when they have custody of minor children and are not married on the last day of the year. Couples whose divorces have not become finalized by the last day of the calendar year have the option to file a joint tax return as married filing jointly, or they may file two separate tax returns as a married couple, whichever will result in a lower tax burden. Often, this determination is best made under the guidance of an accountant, who can run the numbers for each filing status and determine which is more financially advantageous.

Estimated Tax Payments

Couples that make quarterly estimated tax payments during their marriage must determine which spouse will receive credit for those payments and any overpayments made in the year prior to a legal separation or divorce. While the credit will typically apply to the former spouse whose social security number is listed first on a prior year’s tax return, the IRS allows divorcing couples to come to an agreement to allocate estimated tax payments in any manner they choose. For example, a couple may agree to divide the payments equally, or they may choose to allow one individual to claim all of the payments, leaving the other individual with none. When agreement cannot be made, the IRS will typically divide the credit for prior year estimated tax payments proportion to each party’s separate tax liability.  On a related note, taxpayers should remember that a divorce will ultimately change the amount of estimated taxes they will be required to pay each quarter.

Alimony and Child Support

The alimony an individual pays to a former spouse is tax deductible to the individual making the payments, as long as those payments are a requirement contained in a divorce decree or separation agreement. Any money given voluntary to a former spouse, outside of the final dissolution of marriage, is not deductible.

Alimony recipients must include those payments as a part of their taxable income on their annual tax returns. Under certain circumstances, it may be advantageous for recipients of spousal support to make estimated tax payments throughout the year or increase the amount of taxes withheld from their wages in order to avoid the possibility of a significant tax bill that alimony payments will create.

Name Change

Individuals who change their names after a divorce must notify the Social Security Administration (SSA) to ensure that the name on file with the SSA matches the name on their tax return. This can be accomplished by completing Form SS-5, Application for a Social Security Card, which can be found online at or by calling (800) 772-1213.

In addition, individuals who purchase health insurance through an Affordable Health Care Marketplace must report to the Marketplace any changes to their names or addresses. Should an individual lose health insurance due to a divorce, he or she must enroll in new coverage during the Special Enrollment Period.  Obamacare requires all individuals to have coverage for every month of the year or risk exposure to an individual shared responsibility payment.

Investments and Financial Accounts

To ensure that one spouse does not remain responsible for the liabilities of the other spouse, it is recommended that divorcing couples close joint credit card and bank accounts. One a couple settles all of their marital debts, each spouse should then open new accounts in their own names. It is equally important that individuals update the named beneficiaries on all of their financial accounts, including retirement plans and insurance policies, to ensure that their assets will not be passed to an ex-spouse upon their death. Any contributions an individual makes to his or her Individual Retirement Account (IRA) before the issuance of a final divorce decree is tax deductible only to that individual; Contributions made to a former spouse’s IRA are not deductible.

About the Author: Joanie B. Stein, CPA, is a senior manager with Berkowitz Pollack Brant’s Tax Services practice, where she helps individuals and businesses implement sound tax-planning strategies.  She can be reached at the CPA firm’s Miami office at (305) 379-7000 or at

8 Tips to Help Women Improve Financial Literacy by Kathleen Marteney, CRPC

Posted on July 02, 2016 by Richard Berkowitz, JD, CPA

For too long, women were socialized to believe that they were bad with money or that financial management was a role better left to their husbands. While women have come a long way, there remains a significant gender gap in financial literacy.


According to the results of a recent study conducted by the Global Financial Literacy Excellence Center at the George Washington University School of Business, women are less likely than men to provide correct answers to questions about basic financial concepts and more likely than men to admit that they do not know the answer to such questions. This lack of self-confidence in women’s abilities to manage money is alarming, especially considering that women outlive men.


Ninety percent of women will need to be self-reliant with financial decisions at some point in their lives, due to late-in-life marriage, divorce or widowhood. Rather than sitting on the sidelines, women of all ages should get in the game and start to take responsibility for their long-term financial success, now, before divorce or a spouse’s death results in financial surprise in the future. Here are some tips to get started:


  1. Be actively engaged in pursuing knowledge and building financial self-confidence.
  2. Ask questions and begin a conversation about personal finance by focusing on a topic on which you feel comfortable and to which you can relate easily.
  3. Be involved in financial decisions that affect you or your family.
  4. Pay yourself first by participating in an employer-sponsored retirement plan. Or, if you are self-employed or are a stay-at-home parent, create a retirement plan that you can contribute to for your future.
  5. Spend less than you earn.
  6. Build an emergency fund equal to three- to six-months of expenses.
  7. Set short- and long-term goals and develop an estate plan, including a will, which you can review regularly to ensure it continues to meet your needs and life circumstances.
  8. Seek the guidance of experienced financial advisors who you can trust to guide you through the process and help you make the decisions that are key to your long-term financial success.


About the Author: Kathleen Marteney, CRPC, is a financial planner with Provenance Wealth Advisors, an independent financial services firm affiliated with Berkowitz Pollack Brant Advisors and Accountants, and a registered representative with Raymond James Financial Services. She can be reached at 800-737-8804 or via email at

Provenance Wealth Advisors, 200 S. Biscayne Blvd., Miami FL 33131 (954)712-8888

Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC.

Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors and Accountants.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of PWA and not necessarily those of Raymond James. You should discuss any tax and legal matters with the appropriate professionals. Prior to making an investment decision, please consult with your financial advisor about your individual situation. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.







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