When a Colorado couple has reached the point when they can no longer remain together and would like to divorce, the emotional issues and other factors that have led to the dispute will often take precedence over practical matters such as when they should move forward with the proceeding. However, the timing of the when to file can be important, especially for couples with significant assets amid the new tax laws that went into effect at the beginning of the year. For people in this situation, understanding the best possible timing for the divorce can be key.
In many high asset proceedings, one spouse will be ordered to pay alimony to the other. Before the change, alimony had been tax deductible for the paying spouse and taxable for the spouse receiving it. With the new tax law, the spouse paying alimony will be taxed for the total amount; the spouse who is receiving alimony will not pay taxes on what is received. This can be a concern for people whose divorce might be settled after December 31. To keep that deduction, settling the case before year’s end could be beneficial. For couples who are parting ways amicably, this might be easier to handle than for couples that are in a contentious dispute.
With high asset divorce, there is often a prenuptial agreement. The document itself will often state how much alimony will be paid should the marriage end. This can be based on myriad factors such as the length of marriage and if the payments are deductible. It might be questionable as to whether that clause will be effective after 2018. For those who own a business, the valuation of that business could be changed. The new tax law can raise tax flow and make a business more valuable meaning there is more at stake in a divorce settlement. Other issues related to asset division such as a home, retirement accounts, and other savings plans could be impacted by the new tax laws.
It is easy to be concerned about how changes to the tax code will impact many areas of a person’s life. A high asset divorce is no different. When navigating these issues, having legal help that can sift through the changes and provide well-reasoned and sound legal guidance is imperative. Calling a lawyer before a divorce is critical to a case and should not be underestimated, especially with financial matters and taxes.