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New Tax Laws May Affect Alimony Settlements

The end of a marriage is one of the most difficult and stressful events anyone can go through. Many people have compared their divorce to the death of a loved one or the loss of a limb. Divorce is hard but entering into divorce proceedings unprepared will only make matters more difficult.

With the extra layer of uncertainty provided by our current political climate, it is extremely important to consider the effects that changing laws and tax codes may have on the outcome of a divorce. Any legal changes that affect personal finances, and how they are handled during and after a divorce, can be especially impactful.

Currently, proposed tax changes will end a law that has been in place for more than 70 years. Since 1942, alimony payments have been considered a deductible expense on personal tax filings. At the end of 2018, that law will be cut from the books.

The impact of such cuts on West Michigan couples could be far-reaching. Aside from the increase in cost to the payer, alimony may now become an even more hotly contested issue in divorce cases since it is likely to push either side in the case to disagree with the amount requested.

For the payer, the law means they will carry more expense for years to come. For the payee, the law could mean that they get a lower settlement in their divorce case, potentially affecting their quality of life. This major change has the potential to drive divorce rates up for the remainder of 2018.

For couples already struggling to find even ground in a rocky case, contesting an alimony request could add one more layer of turmoil and difficulty to their divorce proceedings. Before taking steps in any direction, spouses considering divorce should educate themselves on the changing laws and the potential effects.

Anyone considering divorce in 2018 should look to an experienced divorce lawyer for assistance and to become educated regarding the outcome of their decisions. Couples could easily end up fighting over a decision that may have been clear before changes to current laws. This could affect their ability to maintain a civil relationship once their divorce is final, which is an especially disruptive outcome for couples with children.

With any divorce, both parties should consider the importance of education and preparation. Please contact the experienced West Michigan divorce lawyers at Johnsen Wikander for help in understanding current and upcoming changes and how they could affect your case.

Alimony in Michigan: The Basics

If your divorce case, the first thing you need to know is that Michigan handles support on a case-by-case basis. Support is established to help ensure both people are equitably supported post-divorce. There are many factors involved in determining whether spousal support is appropriate and for how long it should be paid. Here’s what you need to know.

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The Double-Dip: What does it even mean?

A common issue in divorce cases revolves around business interests, often held by one spouse and not the other. Business interests are marital assets, divisible upon divorce. The tricky part is determining what the business is worth and how the owner spouse compensate the non-owners spouse for their interest?   The so-called “double-dip” scenario involves whether or not the value of a business, and the excess earnings derived from same, can be considered when valuing a business and when considering spousal support. Read more