Will the new tax law affect family law issues like divorce?

| Jan 9, 2019 | Family Law |

The beginning of a new year is a popular time for some couples in Michigan to realize that they need a fresh start, and to file for divorce. While this is not an uncommon process at all, the outcome may be much different than it was in the past. New tax laws are set to have a significant effect on the outcome of many family law issues, particularly divorce.

In the past, a person who paid alimony could deduct the expense on his or her taxes while the recipient would list it as taxable income. While those who finalized their divorces before the calendar flipped over to 2019 will still be able to follow this system, going forward this will no longer be the case. This means that fights over the size of alimony may become more frequent. If a person cannot deduct the expense of paying alimony, he or she might be more resistant to shelling out large chunks of after-tax money. Even for those who were grandfathered into the system, modifying their agreements could end up with them having to follow the new rules rather than the old.

Marital agreements — prenuptials and postnuptials — could also be affected by the new rules. Finding out that certain aspects of a prenup are no longer enforceable while in the middle of a divorce is not ideal, though. Couples may want to consider reviewing the terms of their agreement to make sure that the changes to the tax law do not leave them without their vital protections.

Change can be scary, and while it does take time to adjust to new normals, these changes are not necessarily bad. This is true when facing things like divorce and the effects of the new tax law on those proceedings. To eliminate some of those fears and ensure the best possible outcome for their unique situations, many divorcing couples choose to work with an attorney who is experienced in Michigan family law.

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