Year End Deadline Looms for Alimony Payers
Alimony is often a part of a divorce settlement, particularly with marriages of long duration. If you are considering or in the midst of a divorce, better act now to meet the new deadline set by the 2017 Tax Act.
Specifically, the 2017 Tax Act will take away the right of a payor of alimony to deduct same from his or her taxes IF they have not signed or completed one of the following before January 1, 2019:
“ (2) Divorce or separation instrument
The term “divorce or separation instrument” means-
(A) a decree of divorce or separate maintenance or a written instrument incident to such a decree,
(B) a written separation agreement, or
(C) a decree (not described in subparagraph (A)) requiring a spouse to make payments for the support or maintenance of the other spouse.”
In Pennsylvania, two parties moving toward or considering divorce can execute a Property Settlement Agreement at any time – even before filing the Divorce Complaint.
This is because the Property Settlement Agreement, sometimes called the Marital Settlement Agreement, is a standalone, legal contract if properly created and executed. It is negotiated prior to the Divorce Decree, then later incorporated into the decree.
Often divorcing parties, strapped for cash, mistake a mutual frame of mind as to the disposition of assets as meaning they can simply write down what they want and sign it. However, parties should be careful and have a qualified attorney draft such a contract so that it will be accepted by the Court AND protect the parties should either fail to honor the Agreement in the future. Alimony is often a part of such an Agreement, and, in light of the new tax law, care must be taken to craft language that addresses issues such as tax deductibility and modifiability.
I can help you and your spouse create your Property Settlement Agreement in several ways: as a mediator, hired equally by both parties to guide you through the equitable distribution and alimony process; as an attorney to one party who incorporates the previously agreed plan into a useable form; or as an attorney in collaborative law, whereby both parties agree to stay out of court and keep all financial and tax matters private.
Call my office today for a free first consult at 215-345-5259.
– Elissa C. Goldberg, Esquire
Law Office of Elissa C. Goldberg
107 North Broad Street, Suite 211
Doylestown, PA 18901