Late last year, President Donald Trump signed a sweeping, $1.5 trillion
tax overhaul into law, the largest in decades. While the bill slashes
the corporate rate from 35% to 21% and temporarily reduces the tax burden
for most individuals, it could also wreak havoc on prenuptial agreements
across the country.
A prenup usually contains provisions about how much a partner would pay
in alimony, also known as spousal support, in the case of divorce. Unfortunately
for some, starting in 2009, the bill would eliminate the tax deduction
that divorcees receive on their alimony payments to ex-spouses. For those
in the top tax bracket, this change could mean that they could potentially
pay double in post-tax costs compared to what they had agreed on in their prenups.
Some prenups may specify that in the event of divorce, one spouse is owed,
$8,000 a month for half the length of time the couple was married. Other
agreements set alimony based on a formula, such as a percentage of income.
If agreements aren’t amended to factor in the tax changes, it could
be left for the judges to decide whether the amounts or formulas still
stand for couples who divorce next year.
Ultimately, the change could hurt those who receive alimony the most. Payers
could plead with judges to revise their obligations given the new law,
resulting in reduced payments.
If you believe your prenuptial agreement may be affected, please contact the
Westlake Village family law attorney at the Law Offices of Jeffrey S. Graff today to learn more. Although it
may seem ugly to amend your agreement, I can help you and your spouse
come to an agreement that’s more advantageous to the both of you
in the long run. I have helped thousands of families navigate through
difficult family law matters, and I’m ready to assist you.
If you want the personalized legal solutions that you need, call me at
(805) 633-4999 or contact me online
to schedule a free consultation.