A recent hi-profile divorce between a celebrity couple was amicable. Even the rumours of Rs 400 crore settlement figure were promptly denied. This is because the actor and his wife are reportedly said to have been divorced in a unique and elegant way with not a single document drawn up between them, thanks to trust, respect and faith. But for most others, divorces are rarely elegant, and alimony fights can get messier.
Your best bet for a 'financially happily ever after' is an amicable parting of ways. Lawyer Mrunalini Deshmukh, who has handled several high profile divorce cases says, "Going to court is a no-win situation because not every part of the wealth is documented. In certain high profile cases, I myself suggest, not disclosing the numbers and arriving at an out of court settlement."
In the case of a divorce, the spouse (usually the husband) with a higher post-tax income has to pay maintenance or alimony to the other (wife). The alimony is calculated considering the essential expenses and their lifestyle. According to family court lawyer, Satish Prabhu, the wife can always approach the court to increase the maintenance amount citing a change of circumstances in the future. "The courts are known to take a realistic and practical decision on a case to case basis,'' he said.
Typically, disputes arise when emotions like greed, vindictiveness and spite come into play. While the women are known to make outrageous demands, the spouses with higher incomes are unwilling to disclose all their assets or sources of income. V N Kulkarni, chief counsellor, Abhay Credit Counseling Center, Bank of India, says, "If a person says he does not have assets but has transferred the same in the name of his parents, the courts can question his motive and pass a restraining order against the transfer."
To avoid such unforeseen problems, Jayant Pai, certified financial advisor, advocates drawing up a pre-nupital agreement. "One must begin early when things are still rosy between the partners," he cautions. Practical advice but easier said than done.
And finally, while calculating the alimony and division of assets, do look into the tax aspects too. "Any change of ownership of property in the official records would attract stamp duty. And the alimony by the husband to ex-wife is considered as revenue receipt, hence could be taxable,'' says Arnav Pandya, CFP and financial advisor.
Opinions are divided on whether a one-time settlement is better than a monthly payment or vice-versa from the tax point of view. The tax treatment depends on whether the alimony is considered as a revenue receipt or a capital receipt.
When it ends...
Opt for a Married Woman's Policy (MWP). Unlike a regular insurance policy, the MWP allows the wife to continue as the beneficiary even after the divorce and remarriage of the spouse.
Change the mode of operation of your bank account from `Either or Survivor' to `Joint' or `Jointly or Survivor'. Link your mobile number to your bank account to get SMS alerts regarding withdrawals from the joint account.
Check out the liabilities that could impact you and ensure they are provided for in the alimony.
Keep track of all jewellery and hard cash in lockers as these are easiest to dispose of.
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