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Alimony Tax Deduction: Is It Too Late To Divorce in 2018?

Have you heard the news about the alimony tax deduction?  It is going away for divorces finalized after December 31, 2018.  But fear not!  If you and your spouse act smartly and quickly, you can still lock in your alimony tax deduction.

What is the Alimony Tax Deduction?

The alimony tax deduction is currently enshrined in 26 U.S. Code section 215.  It states that alimony (as opposed to child support or distribution of property) can be tax deductible to the payor and taxable to the payee.  This means that the person who pays alimony will pay less in taxes, and the person who receives alimony will pay taxes on it as if it were regular income.

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What is a Collaborative Facilitator?

If you are looking at your divorce options (from traditional divorce to collaborative divorce to mediation), you may have come across the term “Collaborative Facilitator.”  What is a Collaborative Facilitator?

A Collaborative Facilitator is a neutral professional in a collaborative divorce.  He or she is oftentimes utilized as a team leader and communication specialist within the collaborative family law process.  He or she generally has a background in family dynamics, childhood development, and/or  conflict management.  A Collaborative Facilitator will have credentials and a license.  These will be in the area of marriage and family therapy, mental health counseling, social work, psychology,  or psychiatry.  However, the Collaborative Facilitator is not engaging in therapy as part of the collaborative process.

Author, psychologist, and collaborative trainer Jeremy S. Gaies, in A Clear and Easy Guide to Collaborative Divorce, discusses the role of the Collaborative Facilitator (which he describes as “coach,” using the nomenclature of the International Academy of Collaborative Professionals) in the following excerpt:

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The Truth: Alimony is Arbitrary

I recently came across an article on how alimony is awarded in different states.  The article, titled “A Survey of Lawyers’ Observations About the Principles Governing the Award of Spousal Support Throughout the United States,” was written by J. Thomas Oldham of the University of Houston Law Center.  Here is the abstract:

Abstract

At the beginning of this project, I distributed 5000 questionnaires to family lawyers around the country. I asked the lawyers to respond by estimating the spousal support award, if any, that would result for six hypothetical divorcing couples in their jurisdiction. While the response rate was not great, the responses received suggest that there are three different types of spousal support systems in the U. S. today. In some states, spousal support is rarely awarded, and then only to prevent severe hardship. In others, spousal support is frequently awarded when the spouses’ incomes are substantially different at divorce. In most states, however, it appears that there is no clear spousal support policy, and the award, if any, in any given case is the result of which judge is assigned to hear the matter. In these states, spousal support determinations appear to be arbitrary. I have included as an appendix to my article a summary of the responses.

Some states have responded to this lack of clarity regarding spousal support standards by adopting guidelines. These guidelines attempt to provide more uniformity in terms of award amounts and award duration. To date, they have not attempted to provide guidance regarding when a spousal support award is warranted. In this article, I discuss how spousal support standards could be clarified in those states where there appears to be no clearly accepted policy.

I would say that Florida falls into the last category:  there are no alimony guidelines, and the amount you might receive or pay is highly dependent on the whims of the judge you are in front of.

That is, if you let the judge decide the amount of alimony.

You Can Be Your Own Judge

More and more families are coming to realize that going through a court battle is, in most cases, the worst possible way to divorce.  If you choose a private form of dispute resolution, such as the Collaborative Process, you and your spouse will have the final say on the amount of any alimony.

In the Collaborative Process, you and your spouse each have separate attorneys to guide you.  However, the attorneys are not there for opposition research or to prepare for trial; rather, they are there solely for the purpose of helping you reach an out-of-court agreement.  This means that no time, energy, or money is spent fighting in court.

Oftentimes, a neutral financial professional will help you and your spouse develop and analyze financial options that work best for your family.  The financial neutral can do a lifestyle analysis to determine what has been spent in the past and where there might be efficiencies that can be created in a spouse’s cash flow.   The financial professional will oftentimes also look into whether there are tax loopholes that might allow the family to enlarge their proverbial pie.

So do your family and your future a favor and consider the Collaborative Family Law Process.


Adam B. Cordover is co-author of an upcoming American Bar Association book on Collaborative Divorce.  Further, Adam trains attorneys, mental health professional, financial professionals, and mediators in the Collaborative Process throughout Florida and the U.S.

Alimony Tax Deduction Repeal Delayed

As part of the U.S. Congress’ drive to reform the tax system, one issue that kept on arising was whether the alimony tax deduction would be repealed.  The House of Representatives passed a version of the tax bill that included a repeal for divorces finalized after December 31, 2017, while the Senate version of the bill included no alimony tax deduction repeal.

In conference, both houses agreed on a final bill that includes the repeal.  However, it will only take effect for divorces that occur after December 31, 2018.

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You Already Have A Prenup

Congratulations, you are getting married!  You found the person with whom you want to spend the rest of your life, and now you have a big, bright future ahead!  But now the P-word has come up: Prenup.

You and your fiance may be wondering whether to get a prenuptial agreement, also referred to as a premarital agreement.  It may be that one of you has significantly more assets than the other.  Perhaps there is a family business in play.  Maybe you have children from a prior relationship that you want to protect or you have other estate-planning needs.  Or maybe you just want to plan for all possible contingencies.

Prenup

So if you are considering a premarital agreement, there is something you should keep in mind:  You already have a prenup.

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Divorce Without Lawyers – A Mediation Option in Tampa Bay

If you are going through divorce, you should have a lawyer.  Divorce is one of life’s traumatic moments, and it is smart to have a steady hand to advise you during uncertain times.

However, you don’t need to have a lawyer to get divorced.

Florida Supreme Court Mediator

You have the option of going through pro se mediation (mediation without legal representation).

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2016 Florida Alimony Reform Bill Vetoed

The Tampa Bay Times is reporting that Florida Governor Rick Scott has vetoed SB 668, a bill that was intended to make large-scale changes to the state’s alimony and child custody laws.

Rick Scott (cropped).jpg

For the first time, the bill was set to create alimony guidelines that calculated a presumptive range for the amount and length of spousal support.  Further, the bill would have directed judges, when establishing custody schedules, to start out with the premise that each parent should have approximately an equal amount of time with children.

It was that second point that seemed to be the sticking point for Governor Scott.

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2016 Collaborative Law Process Act Making Progress in Florida Legislature

Senate Bill 972, the “Collaborative Law Process Act,” is making its way through the Florida Senate and will hopefully become law this summer.

[UPDATE 2: Governor Scott signed the Collaborative Law Process Act on 3/24/16]

[UPDATE: The Collaborative Law Process Act Passed the Florida Legislature on 3/4/16.  Learn more about it in the following Article: Collaborative Law Process Act Protects Families’ Privacy]

The Collaborative Law Process Act creates a legal framework for families to resolve disputes outside of court.  The bill specifies that family law matters under chapters 61 or 742 of the Florida Statutes may be resolved via the collaborative process.  These family law matters include the following:

  • Divorce;
  • Alimony and child support;
  • Marital property and debt distribution;
  • Child custody and visitation (also known as time-sharing and parental responsibility);
  • Parental relocation with a child;
  • Prenuptial and postnuptial agreements; and
  • Paternity.

Families in Tampa Bay, Greater Sarasota, and throughout the state of Florida are already utilizing the collaborative process to resolve divorce and other matters privately and respectfully, but a big improvement with this bill is that there will be a statutory framework to ensure discussions had in the collaborative process can be enforced as confidential.   Read more

2015 Florida Alimony Reform – Proposed Factors for Alimony

In a previous post, I wrote about Florida House Bill 943 and the proposed alimony guidelines contained in the bill.  Florida currently has no guidelines for alimony, and the bill creates formulas which would implement presumptive ranges for the amount and duration of alimony that a judge could order, making awards more predictable.

As an update to my prior post, HB 943 has been amended.  As of the date I am writing this, the years of marriage is multiplied by 1.5%, rather than 1.25%, in the formula to determine the low amount of alimony that a judge could order.  There are likely to be more changes to the bill before the it passes both houses of the Florida legislature and is signed into law (if, indeed, it makes it that far).

So, if the alimony guidelines become official, where in the range of amount and duration of alimony will any particular award fall?  The bill sets out certain factors to help a judge make this decision:

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Florida Alimony Reform 2015 – Florida Alimony Guidelines

Many people are surprised to learn that, currently, Florida has no alimony guidelines.  Rather, it has a bunch of factors that a judge considers, such as lifestyle of the parties, each spouses’ contribution to the marriage, and the age and physical condition of each.  This has left many clients frustrated when they ask their attorneys how much alimony they should expect to pay or receive.

House Bill 943 looks to change this.

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