If one spouse remains in the home after the divorce, it is important to note that lending institutions will still hold both parties jointly and severally obligated on the mortgage, even if the spouse living in the home has been assigned full responsibility for the payment as part of the divorce settlement.
Michigan Divorce: Dependency Exemptions 101
Tax law says the parent who has physical custody of a child for more than half a year is automatically entitled to claim the dependency exemption. An exception allows for the custodial parent to execute a written waiver releasing the exemption to the other parent either for a single year or a specified number of years. This exception can be part of the divorce settlement as an "asset" to the non-custodial spouse.
Some custodial parties will use this waiver as a way to ensure that the other parent is making their support payments; if payment is not made, the custodial spouse can simply not sign the waiver.
Only the spouse entitled to the dependency exemption for the child may use the tax credit for child care costs, unless there is an agreement to the contrary
For purposes of medical expenses, a child of a divorced couple is treated as a dependent of both parents. This applies even if the parent is not entitled to the dependency exemption on their income taxes.
Michigan Divorce Settlements and Closely Held Companies
In a Michigan divorce, it is quite possible that that a closely held business or professional practice is an asset of the marriage. The first thing is to determine the value of the business, which will usually require a professional appraiser. Once the value is determined, what are the different options? Well most couples getting a divorce, don't exactly want to run a business together, but selling the business may not reflect its real value, and it could put one or both parties out of their job/career. If there are additional martial assets, it may be possible to have one spouse retain a full interest in the business, and the other spouse is granted additional martial property, which matches the value of the business.
If that is not possible, there are other options:
The owner spouse can simply pay the other spouse with installments from the company, which would be taxable income, because it would be classified as a form of compensation/salary. Under this method, it is important that the payee spouse actually perform some sort of work/benefit to the company, or there could be tax issues. Another way to pay the non-owner spouse are to classify the payments as part of the property settlement of the divorce.
The non-owner spouse could also receive stock from the owner spouse, then the corporation would but the stock back from the non-owner. Along with stocks, the non-owner spouse could be assigned an interest in the owner's 401k plan