For many lucky couples, February marks St. Valentine’s day and often a proposal for marriage. If you are engaged to be married or strongly considering a proposal, you should consider whether your financial or family status warrants a prenuptial agreement. The first step in this process is consulting with a qualified divorce lawyer and family law attorney to learn about your rights and obligations.

A prenuptial agreement or “prenup” is a written contract between two people who intend to marry that provides for the division of assets, treatment of income, and payment or non-payment of alimony or spousal support should the marriage end in divorce. 

Prenuptial agreements also known as antenuptial agreements are more common than you might think. Prenuptial agreements can serve specific purposes that can help individuals regardless of their financial means, and are highly recommended for:

  • elderly couples where at least one or both partners have been widowed or previously divorced
  • couples where at least one or both partners were previously married, especially if there are children from prior marriages or relationships
  • parties who own a business

Prenuptial Agreements often provide for the following in the event of divorce:

  • the waiver of alimony or spousal support
  • the amount of alimony or spousal support or other divorce related payments
  • the identification of pre-marital or separate property that will not be part of the divorce
  • waivers of interests in the other spouse’s probate estate or retirement benefits

Including agreements regarding child related issues such as child support, child custody, or child visitation is not recommended, as they are generally unenforceable during a subsequent divorce.

It is much less stressful to discuss a prenuptial agreement before setting a wedding date. If you wish to learn more about obtaining a prenuptial agreement in Massachusetts or have been approached to sign an agreement and wish to learn more about your rights from a divorce attorney and family law lawyer, please call me at 617-431-8071 to schedule a consultation.

On December 22, 2017, Congress approved the Tax Cuts and Jobs Act (TCJA), that made significant changes to the Internal Revenue Code that will affect alimony or spousal support going forward. If your divorce is already final you should not be concerned. If you are contemplating divorce or currently in the middle of a divorce, and are concerned about paying alimony or spousal support, you should consider how the change in the tax code may affect your taxable income.

Under the outgoing version of I.R.C. § 215 a taxpayer was able to deduct “alimony or separate maintenance payments” from gross income. The new tax law repealed this deduction for any divorce judgment or separation agreement executed after December 31, 2018. This will not affect modifications of older judgments. The repeal of the deduction will not apply to any divorce or separation agreement executed on or before December 31, 2018, and modified after that date unless the modification expressly indicates it is subject to the new rule.

If you became divorced prior to the this change in the law, the tax deductibility of your alimony will not be affected, and you may modify the payment amount or duration. If you or your spouse file for divorce or if your divorce is filed and finalized prior to January 1, 2019, the old rule still applies. If you are divorced after January 1, 2019, alimony, spousal support or separate maintenance payments will remain taxable income for the paying party and will be a non-taxable support payment to the recipient.

Often the spouse who pays alimony or spousal support is in a higher tax bracket. The spouse that pays the support will no longer benefit from the tax deduction and will have to pay taxes on income used to make alimony or spousal support payments. The party that receives the alimony or spousal support will not have to pay taxes on these payments. This means there will be potentially less net income available to you, your former partner, or your children. This loss may evidentially be mitigated by a future Court decision or the state legislature in Boston, but no change has occurred yet.

If you are planning or in process of a divorce, based on recent changes in tax law, it is in your financial interest to determine the advantage of finalizing the divorce before or after the end of calendar year 2018. The tax treatment of alimony and spousal support payments may differ substantially for those divorced before or after the end of the year. If you wish to learn more, please call me at 617-431-8071 to schedule a consultation.

Additionally, for more information please visit:

https://www.irs.gov/pub/irs-drop/n-18-37.pdf