A new federal tax law is a game changer for wealthy couples planning to file for divorce. This new law eliminates the tax deduction for alimony payments, removes a significant incentive for some payers according to an article in The New York Times. As a result, financial advisors of wealthy individuals are advising their clients to finalize their agreements before the end of the year.
Up until this year, those paying alimony were eligible for significant tax breaks based on their payments. Therefore, it made sense for high-net-worth payers to agree to a larger payment to be able to deduct the amount from their taxes. That benefit will be eliminated in 2019, except for those who have agreements signed before the end of 2018. While divorce, according to the article, is nothing one should rush through, one professional quoted in the piece noted that, “in this particular instance, we could be talking about 15 to 20 years of support, and shifting the tax burden for the last years of a person’s working life.”
For those who cannot finalize things before 2019, financial professionals in the report advised that there are other areas of leverage outside of alimony for settlement agreements, including real estate, stock, retirement accounts, or even a hybrid of assets.
With divorce can come related issues surrounding finance, estate planning and more. Our work with clients includes referrals to many other trusted and reputable professionals. Contact the Albany divorce and family attorneys at LaClair & DeLuca. Call us at (518) 650-8861, or email admin@laclairdeluca.com.