Money & FInances

How the New Tax Law Will Impact Spousal Support Calculations in New York in January 2019

Spousal Support CalculationsChanges go into effect on January 1, 2019, that will impact spousal support payments for people who divorce in 2019. The signing of the Tax Cuts and Jobs Act in December 2017 created changes that will impact couples who divorce after December 31, 2018.  The previous law made spousal support a tax deduction for the payor while it was taxable income for the payee. Beginning in January 2019, the payor will no longer be able to deduct these payments, and the recipient is no longer required to pay taxes on the income. 

This is a critical change that all couples who are considering divorce should take into account. Spousal support calculations in New York will change drastically in the new year. Here are some of the ramifications that may need to be weighed. 

Typically, the payor of spousal support does so because they have a larger income than the individual who receives the payments. If the payor no longer gets to deduct the spousal support payments before determining what their income tax due is, and instead, required to pay income taxes on the total; then there will be less money available to support the family while the government benefits from collecting more tax dollars. 

Under the old law, people who were paying spousal support frequently saved money on their taxes. This is because the amount that they paid in spousal support (maintenance) was deducted right off of the top of their taxable income.  Furthermore, because that they are taxed at a higher tax bracket, the tax dollars paid would have been more than, when reported as income by the recipient spouse (typically) taxed at a lower tax bracket, and thereby there was more money to share in the family. 

It may look as if the new tax law which goes into effect in January 2019 simply shifts the burden of paying taxes on spousal support payments from the payee to the payor, but the effects may be more far-reaching than that. The paying spouse is almost always subject to a higher tax rate than the receiving spouse.  Accordingly, after January 1, the payor will pay the taxes on the maintenance payments at their higher tax rate rather than the recipient paying the taxes at their lower rate. 
With the upcoming increasing tax burden on the payor (and hence, on the family), it seems logical that couples seeking a divorce may want to consider resolving their situation before December 31, 2018. 
 

Couples whose divorce proceedings are finalized in 2018 or who are already divorced will largely not be affected by the change. However, seeking any alteration to an existing spousal support agreement may result in being subject to the new 2019 tax law. 

Speak with a legal professional at the Sabra Law Group by calling 646-472-7971 today.

 

 

 

 

How to Plan for Retirement When Going Through a Divorce in New York

Divorce in New York

Going through a divorce can be a very difficult thing. This is especially true if you are nearing retirement. In such cases, you have to bear the risk of losing out on a significant portion of your savings. However, this does not need to be the case. With the right kind of legal guidance and prudent planning, you can protect your retirement fund. Here are some important factors to consider:

  1. Pre-Nuptial Agreement

In this day and age where almost half of all marriages in the US end in divorces, it is completely negligent to not have a prenup. While you might enter into a matrimonial bond purely based on romantic feelings, that does not exempt you from being prudent. However, most divorce cases do not have a prenup and if you are reading this, then, while it is probably already too late for a prenup, a post-nuptial agreement may be appropriate. Nevertheless, any person looking to get married should invest in a prenup that protects them, their assets and their children in case of divorce.

  1. Grounds for Divorce

During the hearing of a divorce case, it is very important to explain its cause. For example, if your spouse has had an adulterous relationship, then that is certainly grounds for divorce. Further, you can protect your finances from being split up with your former spouse. However, you are going to need sound professional advice in order to make that happen.

  1. The Agreement

It may happen that you want to get a divorce, but your spouse does not. Or it can be the case that your spouse has filed for divorce and now you might lose part of your savings. In such situations, you should seek out legal help as soon as possible. The details of every case are unique as are the people who are going to be advocating for each side. The best way to come out on top is to hire reputable and experienced divorce lawyers who can negotiate a favorable divorce agreement on your behalf.

Where Can You Get Legal Help to Plan for Retirement and Divorce in New York?

Sabra Law Group is one of the leading divorce specialists in New York. Sabra has helped countless clients resolve their divorces with the least impact possible on their retirement plans. Ensure your freedom and future security comes at the least possible price. Call 646-472-7971 and book an appointment with Sabra today!

The Pro’s and Con’s of Moving in Together Before Marriage

pro's and cons of living together before marriage

 

There are so many different views on moving in together before marriage.  Some people believe it’s not a good idea to live together before marriage, whereas; others are not opposed to it.  Making a decision to move in together before marriage is just as big of a decision as making the commitment to your partner.

 

Let’s Consider Some of the Benefits of Moving in Together Before Marriage

 

  1. The shared expense for rent or perhaps no rent depending on the situation: when you’re living separately, both of you are paying rent or a mortgage.  From a financial perspective, living together makes sense.
  2. The Good, the bad, and the ugly:  when you live with someone you will really see them for who they really are.  With that comes the good, the bad, and the ugly.  So you really get to see who they really are before deciding to tie the know, and it may actually save you from getting a divorce in the future by getting out before it’s too late.
  3. You will learn if you can tolerate each other 24/7: dating is very different from living together.  You can date someone yet not know the real person.  When you’re living with someone, it is difficult to hide everything. 
  4. You can have more fun together doing everyday things such as cooking together, gardening or playing board games.

 

There Are Also Some Disadvantages of Living Together

 

  1. If they are getting everything without putting a ring on it, they may never put a ring on it.   Even if you’re already engaged prior to living together, the marriage may take longer to happen.
  2. Domestic chores take the fun out of living together.
  3. If finances are not discussed in advance, living together can cause stress and arguments over finances. On the other hand, living together may force the issue, and you can see if the two of you can work out your differences.
  4. It may lessen the excitement of getting married. The only difference in your relationship when you get married will be the rings and the marriage license.

 

There are certainly both advantages and disadvantages of living together.  The most important thing to consider is to do what feels right for you.  There is no right or wrong answer.  If you have questions regarding prenuptial agreements, or how to discuss finances (and other challenging topics) with your future spouse, contact Sabra Law Group today at (646) 472-7971.

How to Get Comfortable Talking About Money Matters with Your Future Spouse

Handle Finances during a Divorce - Money Matters

 

One of the most common reasons that marriages end in divorce is due to money or financial matters.  The more comfortable you can be at the beginning of a relationship discussing money; the better it will be for sustaining a healthy relationship. 

 

If you are uncomfortable discussing finances with your future spouse, it is best to start with baby steps.  If you are planning on getting married, finances are of primary importance to be discussed prior to marriage.

 

Below Are Some Steps You Can Take to Get Over Your Anxiety When It Comes to Discussing Finances

 

  1. Make a List:  write down all the important issues that need to be discussed and then write down what your desired outcome is.
  2. Figure Out the Living Arrangements: determine who will pay for rent or the mortgage and if living expenses will be shared equally or not.
  3. Don’t Discuss All the Finances in One Meeting: pick one aspect of finances to discuss and come to an agreement on that before moving on to the next topic.  By approaching the situation in a systematic way, it will eliminate confusion and conflict. Once you have tackled a difficult topic, set up another day to discuss the next topic. 
  4. Consult with a Financial Planner: a financial planner may be able to best guide you on how to maximize your money and grow it.  They may also be able to advise you on investment vehicles that are aligned with your comfort level.
  5. Determine if a Prenup is Necessary:  have a candid discussion prior to getting married about a Prenuptial Agreement and whether it makes sense to have one.  If you and your partner are not sure if a Prenuptial Agreement is right for you or why you would consider having one, read our blog article about that here and here and consult an experienced New York Prenup Attorney who can help you to understand whether a Prenup is appropriate for you and your partner.

 

Couples who communicate openly with each other are more likely to stay together.  This is why it is important to discuss even the most difficult topics.  Furthermore, once you have had this conversation a few times, it will become easier to have these types of conversations in the future.

 

Do You Have Questions About Money Matters or Prenuptial Agreements?  

 

Contact Sabra Law Group today for a confidential consultation at (646) 472-7971. Sabra has years of experience helping couples setting up the right type of Prenup for their lifestyle. Call her now ar 646-472-7971.