Factors to Consider in Divorces During Hard Economic Times

With a Democratic president and a larger Democratic majority in Congress, we have already seen significant changes in tax laws and federal legislation affecting different aspects of our lives. What will these new laws mean for our divorcing clients and how should our clients change their legal strategies in anticipation of these new laws?

First, lawyers can anticipate that their higher-income clients — those with incomes over $250,000 — may eventually, not right away, pay higher taxes; perhaps 40 to 44 percent could be the top tax rate. Individuals earning less than $250,000 will pay fewer taxes. For middle-income families, lower taxes for everyone will mean that the after-tax impact of alimony payments will be less significant and a less important consideration in our negotiations. For high-income families, where the breadwinner is earning in excess of $250,000 and there has been a stay-at-home parent, the possible future increased tax effect is going to be significant.