I lost my job in the middle of a divorce, do I have to pay for health insurance for my soon to be ex spouse?

Probably Not. 

Health Insurance continues to be a tricky issue for divorcing families. Under the automatic temporary restraining orders that go into effect when you file for divorce in California, a party is prohibited from canceling or changing health insurance coverage. Family Code 2040(a)(3). This code section did not address what happens when an individual loses health insurance from a non voluntary termination.

Experienced Family Law attorneys in San Francisco California Bay Area will advise clients that if they lose a job during a divorce, they should give their ex spouse notice that due to a job change they will not be obtaining coverage for the ex spouse. This notice will give the spouse time to plan for new coverage. 

While there is clear answer under the family code, if you are fired or laid off from your job you are probably not responsible for obtaining coverage for your ex spouse. This is because if the cancellation or change is not voluntary then there is no violation of the ATROs.  Nevertheless, there may be an obligation to preserve COBRA rights for the non-employee spouse. And if you voluntarily quit you may be responsible for health coverage.  Additionally, a court could direct a party to obtain health coverage or to consider this expense when calculating child or spousal support.  If you lose your job during a divorce, it is important to understand your obligations - contact a family law attorney to learn more. 

 Contact amanda@gordonfamilylaw.com for more information. 

Can I deduct spousal support from my taxes if we are only separated and not divorced?

Yes, experienced Bay Area California family law attorneys will tell clients that spousal support is tax deductible to the payor even if you are still married.  

The IRS rules about spousal support or alimony state that alimony is deductible to the payor and income to the payee. IRS Rule 26 US Code Section 71 states that if you have a written Agreement, the payor spouse can deduct spousal support so long as the payments are in cash or check, you do not live in the same house as your ex-spouse, the Agreement is in writing, the Agreement states that payments will not continue after the death of the payee, and the payments are not marked as "NOT ALIMONY". 

Even if you are still legally married, if you no longer live in the same house and are making spousal support payments to your ex-spouse you can claim a deduction if you file taxes as Married Filing Separately.  If you file taxes as Married Filing Jointly, you cannot deduct spousal support.  IRS 71(e).

Many couples find it helpful to create a separation agreement - allowing for the dust to settle before divorce. Taking advantage of tax rules around spousal support deductions can reduce your liability at the end of the year and create more cash flow during a difficult time.  Contact a family law attorney or tax specialist to learn more about these rules.

Contact amanda@gordonfamilylaw.com if you are considering a temporary support order. 

What is an Ostler/Smith Order?

Experienced family law attorneys in the Bay Area will tell clients that an Ostler-Smith order is an additional support order (child or spousal) that takes into account overtime or bonus income. 

How is child support calculated? 

Under California Family Code Section 4058, salary and wages are includable for purposes of determining annual gross income. Gross income can also include income such as commissions, bonuses, rents, dividends, pensions, interest, trust income, annuities, workers’ compensation benefits, unemployment insurance benefits, disability insurance benefits, Social Security benefits, and spousal support actually received from a person not a party to the order at issue.  And what about inheritance? Although a party’s inheritance is not income under Family Code 4058, the court may consider it as a “corresponding reduction in living expenses”.  

What is a bonus table? 
If you or your ex has an income that fluctuates due to overtime or bonus income, the court will order a set amount for support and an Ostler-Smith order for any overtime earnings or bonus income. At the time the child support is set, the Court will refer to a schedule which provides for a specified percentage of any bonus or overtime to be paid “as and for” child support. The actual percentage will vary depending on the amount of the bonus or overtime.  (See below for an example).

The person who pays support could be ordered to pay a base rate of $2,000 per month for child support.  In addition, he court could also issue an Ostler-Smith order of a fixed percentage of all bonus income received payable as additional child support.  

The payor spouse can be ordered to pay a bonus percentage for both child and spousal support.

Typically,  "Bonus income" is defined as income resulting from employment or self-employment in excess of regular periodic earnings.

Contact a family law attorney today to speak about bonus income and what you or your child may be entitled to receive or what you may be ordered to pay. 

I'm always interested in hearing from readers of this blog and if you have questions, you can reach out to me at amanda@gordonfamilylaw.com or (415) 326-4148. 

Sample Ostler Smith Order