January is the most popular month for unhappy couples to file for divorce. However, recent changes to the tax law could leave some people in California confused and unsure of how to best move forward. With things like alimony, the marital home and more possibly affected, having a better understanding of the new laws could help some people ensure the best possible outcome for their divorces.
You may feel unhappy with the idea of making monthly payments to your ex, but spousal support is an important part of California family law. Spousal support -- also called alimony -- ensures the stability of a spouse who earned less during the marriage until such a time as they are able to create their own financial security. While it is essential that individuals who receive alimony get the right support, it is also necessary to protect the payer's financial well-being.
The idea of providing ongoing financial support to an ex-spouse can be uncomfortable, but it is often a necessary aspect of divorce. Alimony -- commonly referred to as spousal support -- is intended to limit any potentially unfair economic aftermath of a divorce. A California family law judge might order that one person pay support, or a couple may come to an agreement on the matter by themselves.
Post-divorce support payments are often necessary aspects of California family law. For those who earned significantly less than their ex-spouse or left the workplace altogether, alimony -- often referred to as spousal support -- can be an important lifeline. But how can an individual know whether he or she will receive alimony? There are a few factors that usually go into the decision.
Most people in California are familiar with the concept of spousal support in the form of monthly payments made from one person to a former spouse. While this is a common approach to alimony, there is an alternative. Some people choose to handle alimony as a one-time, lump sum payment.
For decades, when couples divorced, it was the man who paid support to his ex-wife mainly because men earned higher incomes. Typically, women were stay-at-home moms or in lower-paying jobs, and she would receive alimony when the marriage ended. Today, in California and many other states, women are now holding more powerful, higher-paying positions with many being the family breadwinner.
Tax-saving opportunities may still be available under The Tax Cuts and Jobs Act. Couples who are negotiating an alimony agreement as part of their divorce may consider having pretax retirement savings transferred instead. Transfers can be through property division, lump-sum payment, IRAs and 401(k) plans. In California and other states, couples may find more creative tax-saving ways to pay alimony.
A divorce can shake up emotions that can sometimes lead to irrational decision-making about finances. Taking proactive steps to protect monetary assets before filing for divorce may help prepare for better financial decisions during the divorce. Experts in California and other states suggest closing joint accounts, considering alimony and researching retirement accounts.
Studies show that over the past ten years more and more women are in powerful positions in the workforce and are earning more money than men. Because of this surge in their careers, some women are also paying out huge amounts of alimony to former husbands. In California and other states, serious money deemed "manimony" is being raked in by ex-husbands.
For the past 75 years, spousal support payments have been a tax deduction for the payer. Now, because of a new tax code, alimony can no longer be deducted, and taxes will not need to be paid by the recipient. California and other states set their own rules about how much alimony is paid and when payments should end. Across the country, there is no consistency regarding alimony.