Kal's Kweries**

KWERY:A number of years ago, while I was married, my parents gifted me a 5% interest in a family business. I don’t work in that business, I just get dividends every once in a while. I’m getting divorced now, and my husband is demanding that we value this 5% interest and he get a piece of it.

RESPONSE:In virtually every jurisdiction, the value of a gift (or inheritance) is not up for grabs in a divorce – except to the extent there has been an increase in the value during the divorce and further (and this may depend on which state you are in) only where either or both spouses played a role in increasing that value. What you are describing sounds like a situation where your husband will have no claim to any part of that value since you had no role in increasing it (if it went up) during the marriage, and further the starting point is that it was a gift.

Tax Tip of the Week*

EXEMPTION TAX BENEFIT
Many times in a divorce, even after custody of a child has been determined, there is an argument or battle over who is to get the exemption on the tax return for that child. The basic rule is that the exemption goes to the custodial parent; but that can be waived by signing off and giving that right to the non-custodial parent. However, it is important to recognize the economic realities of the exemption. Under current tax law, the exemption deduction is phased out above a certain level of income. Thus, for a “high earner”, there is no tax benefit to claiming the exemption.