Posted on : December 19, 2017, By: Christopher Hildebrand
The Effect of the 2017 Tax Bill on Divorce
The Effect of the 2017 Tax Bill on Divorce.
President Trump and the Republicans have advocated for the elimination of the income tax deduction for the payment of alimony. The Republican party’s reasoning for eliminating that income tax deduction is that it is being exploited by the wealthy in their divorces. The result of the elimination of the spousal maintenance deduction, however, will create more income tax for the federal and state governments and negatively affect those in the middle class who pay a majority of spousal maintenance. The republican premise for the elimination of the spousal maintenance deduction is flawed and actually hurts the middle class.
I have been a divorce attorney for over 20 years and can attest to the fact that neither I nor any family law attorney with whom I have had a case has ever raised a discussion on how we could game the Internal Revenue Service with a strategy to increase spousal maintenance for a tax benefit. There simply is no beneficial reason for doing so.
Jennifer, thank you for being my attorney. I could not have been more pleased with the outcome of my family court hearing. Everything you have done for me throughout this case reflects in the final ruling of the judge. You helped me keep my head together and taught me a lot about myself as a person. I learned so much about my life from observing and listening to you. I will take all the advice you gave me to continue taking responsibility for my choices, continue to put the kids' needs first, and always stay truthful. Your diligence, dedication, and persistence in my case made what seemed impossible, possible. You are a wonderful person and an amazing attorney and I am stronger and more confident because of you.
I just want to again thank the Firm for working with me all that it has. I could not have done anything without everyone's assistance. You, Chris and Stacey have been and continue to provide me with compassion and hard work towards my case. Also a very special thanks to Kip for taking my case in the beginning. Also continued support from him and his dedication to providing me with his expertise in this matter.
After interviewing several law firms, I came across Jennifer Shick, and her firm, who I hired to represent me for my Family Court case. Jennifer has extensive knowledge of the law and is determined to bring the truth to every issue involved within the case. Throughout my case, Jennifer was prepared meticulously as well as went above and beyond all of my expectations. Even when the other party tried to differ from the truth, lie to the Judge, and turn situations around, Jennifer remained attentive and provided substantial evidence to show the judge the facts as well as the proof to support what was the best interests of my children. Additionally, Jennifer helped me endure many difficult experiences, situations and inspired me to remain positive throughout the entirety of my case. Her kindness, compassion, and professionalism helped me through very difficult times and made the process feel a thousand times lighter on my shoulders. She truly has my children and my best interest at heart and I trust her perspective as well as her honesty on each and every aspect of my case. She lessened the burden on my shoulders and even when I felt like the case was not going to go in my favor, Jennifer was open-minded and reassured me that the Judge would, in fact, see the truth, which he did and the case went in my favor. After nine months of court, everything finally came together. I cannot declare how much Jennifer has been an outstanding attorney. She addressed each and every issue with diligence, she cares about her clients and their families. Jennifer genuinely cares about her clients and her dedication to the details of the case was remarkable. Overall, I am extremely pleased with Jennifer’s services and I am truly thankful that I was so blessed to have her represent my children and me. I highly recommend Jennifer as one of the best attorneys in Arizona and if the situation ever arises, I will definitely have her represent my children and me again.
Dear Stacey and Kip, How can I ever thank you enough for helping me through the most difficult time in my life? I couldn't put into words my heartfelt gratefulness. You both were so compassionate and professional at every given moment throughout this process with me. I thank you from the bottom of my heart. You helped me to regain my freedom.
I was a client of Attorney Kevin Park for the dissolution of a divorce in 2016. And since I had never had the need to hire an attorney before for any purpose, I was somewhat apprehensive of the process. But the very calm and professional demeanor of Mr. Park eased my fears. He adeptly answered all my questions and I clearly knew the process and what to expect. And the skilled manner he communicated with opposing counsel was perfect. When it came down to negotiating with my spouse’s counsel, I knew I had selected the best attorney for my situation. What I noticed and appreciated was that he was using just the right amount of pressure with opposing counsel as was necessary. If you find yourself in this situation, you will want a seasoned professional like Mr. Park on your side. I'm very grateful that he was my attorney and not the opposition!
Chris is a smart and aggressive attorney for his clients. Chris always tries to reach a fair settlement of his cases. I’ve represented clients when Chris was the opposing counsel and while he is professional and amicable to work with, he does not back off on what he needs to do for his client
Kevin Park of Arizona Estate Planning Attorneys was just what I needed for my divorce. He was very approachable and personable. He was quick to recognize what I needed and provided it quickly and efficiently. I hope to never need a divorce lawyer again, but if I know anyone else who does, I will definitely recommend Kevin.
I feel that Tracey Van Wickler is certainly one of the best family lawyers around. She is logical, intelligent, and truly cares. Tracey always does what is in the clients best interest, does it well, timely and with integrity. She is good at keeping her clients informed as to what is going on and clear in her communication both written and verbally. I have recommended Tracey to other people and will continue to recommend her. I recommended Tracey to someone who was having issues with their ex-wife and his response was, “I know how good she is because I went up against her and she ate me for lunch”. This same person was so impressed with her, he even recommended her to someone else, WOW, that is impressive! I am exceptionally happy with her attention to detail, her ability to explain things in ways that are easy to understand, as well as her ability to keep everyone focused on the most important things. I would recommend Tracey to anyone who may be in need of her services.
I retained Hildebrand Law after interview a number of firms in the valley. Working with Michael C. was incredibly easy and informative. My case progressed in such a organized and thought out way to ensure that my needs were met. Michael was incredibly proactive and was able to see far ahead into my case to steer clear of some roadblocks. I would not hesitate to recommend Michael Clancy, and Hildebrand Law in general, to anyone.
I have worked with Hildebrand law for about 8 years. They are always ready to serve, provide guidance and give you a few options. When they provide you options they also take the time to walk you through the pros and cons of each and give you a recommendation of what is best, but will listen to you and support whatever course you choose after making and educated choice. I’d recommend them to my closest friends and feel Chris Hildebrand is now a friend to me.
Despite the unfortunate situation I found myself in, Chris Hildebrand @ Hildebrand Law helped me maneuver every step with professionalism, expertise, and even a sensitivity that was an added bonus.Chris and his staff helped me even when I didn't know I needed the help. In other words. . . they made sure we did not leave anything undone. And in the rare instance we needed the expertise of another professional, Chris knew exactly who to recommend.Chris also knew, because of his experience, what to anticipate down the road of litigation. That meant we were better prepared to meet the challenges head on, which lead to a more equitable and fair outcome. I appreciated that Chris did his best to meet my every need in a timely fashion, even if I had a simple question that required only a phone call or e-mail or if we needed to talk face-to-face.I highly recommend Chris Hildebrand @ Hildebrand Law, PC.
If an attorney represents a wealthy divorce client, the chances are that no spousal maintenance will be paid. The reason for this is because the spouse of that wealthy person will receive so much property and cash or cash equivalents that he or she will not have a need for spousal maintenance. It would, likewise, make no sense and would arguably be malpractice for an attorney to negotiate an arrangement whereby the wealthy party retains more of the assets in exchange for a contrived spousal maintenance award which may or may not be paid in the future due to the death of a party or the remarriage of the spouse receiving alimony. There is no reason a person would accept less of the assets they can receive now for a promise of future payments from the other spouse. Although some divorces are amicable, I have seen no reason a spouse would subject themselves to unknown risks for the tax benefit of the spouse there are divorcing.
Divorce and the 2017 Tax Bill.
As in most cases, you can find the answer to a question by following the money. The person paying alimony always has greater earnings than the spouse receiving alimony. As a result, the spouse paying alimony is always going to be in a higher top tier marginal income tax rate. Under the present law, the higher earning spouse paying spousal maintenance is able to deduct that alimony from his or her income takes which reduces the payment of his or her income taxes at their highest marginal income rate while the spouse receiving the alimony pays income taxes at a much lower marginal income tax rate. The result is the government receives less income tax. By eliminating the income tax deduction, the person paying alimony will be taxed at his or her highest marginal income tax rate resulting in more revenue to the internal revenue service.
Why will this impact the middle class? That is easy to answer. People in lower economic classes do not, as a general rule, pay alimony. Those in the highest economic classes, as a general rule, do not pay alimony either because the other spouse typically receives so much in assets, investments, and financial accounts that they do not qualify for alimony. The middle class, however, is a much different story. They typically do not have enough assets in the divorce settlement to support themselves and one spouse may be the breadwinner. As a result, someone earning $100,000.00 to $500,000.00 a year or more will be most affected by this portion of the 2017 tax bill.
All of this should be no surprise to law-makers and I suspect it is not. This may be an example of how the Republicans provide tax breaks for the wealthy and finance those in a lower economic position with a subsidy from the middle class in the form of the elimination of deducting alimony.