Federal Way Divorce Law Blog

Divorcing spouses in Washington State who have been working hard to come to a final settlement when ending their marriage may well have a new reason to try and push for a quick resolution. As explained by Bloomberg, the New Year will bring with it a major change to divorce taxes when it comes to alimony payments and this change may well increase the cost of divorces, especially for couples with high incomes.

Historically, if one spouse was required to pay alimony to a former partner, the tax liability for those payments resided with the person who received the money. In addition, the person who made the payments was allowed to deduct the payments from their tax return. This tax deduction in many cases provided a way for people to agree to paying spousal support and therefore helped to facilitate a final divorce settlement. 

If you and your spouse share a significant asset portfolio, divorce can be devastating to your financial future. However, divorce is not something that usually happens overnight. Many divorcing couples saw the writing on the wall for quite some time before making the actual decision to divorce. 

In a high-asset divorce, this advance preparation can help you take certain steps and make strategic decisions that to protect your financial future. If you are on the verge of a divorce that involves high net worth, read on for some essential tips you should know before approaching your divorce proceedings.

Many Americans think that living together before tying the knot is helpful for a relationship. However, one study says that Washington couples who move in together before getting married may actually be more likely to divorce. According to the study, partners who share a home before marriage are more inclined to face difficult issues down the road during marriage. The issue had been noticed in prior studies as well, but some speculated that it would eventually even out as premarital cohabitation became more socially acceptable.

Researchers said that the divorce risk for people who move in together before marriage does decrease in the first year of marriage. When people marry without prior experience of living together, they may have a more difficult time adjusting to married life. However, the study's authors said that in the long term, people who lived together before marriage are more likely to eventually divorce. Researchers based their conclusions on an analysis of data for American women 44 and younger who married for the first time between 1970 and 2015.

Many Washington residents are counting on their 401(k) plans and other retirement accounts to provide a good living in their later years. However, despite all the work that people can do to save for retirement, life events can throw a spanner in the works. For example, the divorce rate among Americans age 50 and up has doubled in the past 20 years. When people choose to divorce over 50, their retirement assets could be significantly impacted, and they may have fewer years during which to recover from the blow.

Retirement funds can be some of the largest marital assets held by a couple of any age. They become far more significant to people divorcing later in life because the funds will be needed in the relatively near future. In addition, it costs more to pay for two single retirements than it does one joint retirement. Therefore, dividing a retirement fund in half doesn't leave either partner as well off as they were before they began the process.