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Abstract: 

When contemplating a divorce or during the pendency of a divorce, couples understandably have a lot on their minds. But one critical thing they should be sure to consider is whether their estate plans are aligned with their post-divorce goals and the tax consequences of the allocation of property and support payments in the final decree. In the context of a divorce, tax and estate planning considerations generally include: (1) strategically allocating retirement plans, real estate, and business assets; (2) setting appropriate support amounts for children and former spouses; (3) understanding the income- and gift-tax consequences of property transfers; and (4) reviewing existing wills, trusts, and beneficiary designations regarding distribution of property. In addition to these customary considerations, the Tax Cuts and Jobs Act of 2017 (TCJA) has brought about tax changes that couples who are contemplating divorce, or are in the process of divorce, should also consider. Understanding the recent changes that the TCJA has caused in the area of divorce is critical to proper tax and estate planning.

Keywords: tax planning, divorce planning, prenuptial agreements, alimony deduction

Affiliations:  1: Horwood Marcus & Berk, Chartered.