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Divorce and the new tax law — it’s not just about alimony

| Aug 6, 2018 | Divorce | 0 comments

Divorce can be a complicated undertaking in New Jersey. It is not normally entered into lightly. With the imminent change in those tax laws that will go into effect on Jan. 1, 2019, there is another factor to be considered. Should a couple divorce sooner or later? This holds true particularly for wealthier couples.

The new alimony law that goes into effect will take away the tax deduction for alimony paid to an ex-spouse. However, alimony is not the only factor affected. Child support issues such as how 529 college savings plans can be handled are changing. The value of privately held businesses and partnerships may also be handled differently under the new law.

Under the current law, 529 plans are only eligible for use for post-secondary education. Under the new law, these accounts can be used for private tuition in elementary and secondary schools. This could impact the availability of those funds for a child’s college education, possibly requiring a larger contribution from another source. Where a shared business ownership is involved, the value of the business enterprise could change under the new law because of how certain taxes will be handled. This may cause the value of the business to go up and affect how the value is apportioned in a divorce settlement.

The above issues, and others, could make the decision to divorce a challenge. It might benefit a person considering a divorce in New Jersey to have a confidential conversation with an experienced lawyer who is familiar with the aspects of the new law. A knowledgeable lawyer can review his or her client’s assets and liabilities and help advise his or her client on the best path to pursue.