Couples rush to get divorced
Estranged couples all over the United States were reconciled this Christmas over one thing: they must get divorced before New Year’s Day.
Family lawyers reported a sudden rush for the divorce courts before a law came into effect that could make separations considerably more expensive.
Under tax reforms signed off by US President Donald Trump last year, alimony payments are no longer tax-deductible for those who reach divorce agreements. The new rules mean that the exspouse receiving alimony payments will no longer have to pay taxes on them, but divorce lawyers say that overall, the divided household will be left poorer.
The change is expected to raise
US$6.7 billion for the US Treasury.
The fact that the wealthier partner could claim a tax deduction was often deployed as a sweetener during negotiations over the settlement, Michael Stuttman, a Manhattan-based divorce lawyer, said.
‘‘Supposing he’s in the 50 per cent tax bracket. A payment of
$100, as long as it’s tax-deductible, costs him $50. But she’s in the 30 per cent tax bracket, so now she has $70. It cost him $50, but she’s got $70.’’
The American Academy of Matrimonial Lawyers opposed the tax change before it was agreed last year, warning that it would lead to harder-fought divorce battles.
Stuttman, a former head of the New York chapter of the academy, said it would not affect the wealthiest divorcing couples. Where both partners were in the same tax bracket, the change made little difference. However, ‘‘for the wage earners, the people who maybe have 11⁄2 incomes . . . who now have to support two homes, it’s a real problem’’, he said.