Life After Divorce—3 Things To Do Next

On behalf of The Law Office of Wickersham and Bowers posted in Family Law on Monday March 7th, 2022.

What happens after a divorce? The proceedings have likely left you depleted of your energy and feeling stressed. You should be aware, however, that divorce can be a significant first step toward a new chapter in your life. 

Let’s look at three primary areas where you should concentrate your efforts.

Break Ties With Your Ex

Marriage entangles your lives in many ways, and after a divorce, you need to go about extracting yours from theirs. It will likely mean new bank accounts, separate insurance accounts, and splitting any money you have in savings or retirement accounts. 

You may also be changing your name, which means updating all of your financial accounts and maybe even your social media. You may be closing joint streaming services and updating emergency contacts. 

If you have children, school and daycare will need updated contact information. Wills will need to be changed, and beneficiaries updated as well. 

Get Your Finances in Order

You may use the new start of a divorce to get your spending under control, start saving, improve your income, and achieve your financial objectives if you have a proper financial plan in place.

It is very likely that you were previously living with two incomes, and your financial circumstances have drastically changed. Take the following steps to ensure that you can maintain an appropriate lifestyle:

  • Make a new monthly budget
  • Track your new net worth
  • Eliminate expenses as necessary
  • Build up your emergency fund
  • Plan to pay off debt
  • Set new financial goals
  • If necessary, rebuild credit
  • Plan for your retirement

Resolve Any Legal Issues

As part of your divorce, you may have put in place provisions for spousal support and child custody agreements. If not, you will need to do that right away. 

There are plenty of details to co-parenting that will need to be worked out, such as visitation, where the kids will spend the holidays, and maybe even what religion they will be raised in. If things are amicable, you may be able to work these details out on your own, but an attorney should be involved if compromises can’t be reached. 

Understanding Gift Tax

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Monday March 7th, 2022.

A gift tax is a federal tax levied on someone who gives something of value to someone else without obtaining anything of equal or greater worth in return. Gifts can be anything of great value, such as sums of money, vehicles, or real estate, and the tax can be applied even if the donor never intended it to be a gift in the first place.

The Internal Revenue Service, or IRS, sets the limits on how much you can give before having to file a return and being taxed. Amounts in excess of the annual thresholds must be reported and count toward a lifetime gift tax exemption. When this significant provision is depleted, the gift tax is due.

Does the Person Receiving the Gift Pay Taxes?

In the vast majority of cases, the person being gifted does not owe taxes. At the federal level, assets you receive as gifts or inheritance are usually not taxable income. However, if the assets generate income in the future (for example, interest, dividends, or rent), that income will almost certainly be taxable. The specifics can be found in IRS Publication 525. 

Inheritance taxes are also imposed in some states.

How Can I Avoid Paying Gift Tax?

The yearly exclusion ($16,000 in 2022) and the lifetime exclusion ($12.06 million in 2022) keep the IRS out of most people’s pocketbooks.

If you stay below those, you’ll be able to be generous while remaining untaxed. If you go above that, you’ll have to fill out a gift tax form when filing your taxes.

Taxable Gifts

Are you curious about the gift tax and what constitutes a gift? Money and property, including the use of property, are examples of gifts. Remember, gifts are given without expecting to receive something in return of equal worth. 

In addition to simply giving someone something of value, these instances may also qualify as gift-giving: 

  • You sell something at a lower price than it is worth
  • You give someone a no-interest or low-interest loan


There are a few exceptions to the gift tax laws. These contributions are exempt from the annual limit:

  • Expenses for tuition or medical treatment paid directly to an institution
  • Gifts for your spouse
  • Donations to a political party
  • Donations to charity