How Changes to the Tax Laws Can Affect Your Divorce Settlement
As part of the 2017 “Tax Cuts and Jobs Act,” alimony is no longer deductible by the payor, nor is it included as taxable income to the recipient. This change applies to divorces finalized after 12/31/2018.
Going forward, an alimony award providing monthly support will be paid using after-tax dollars.
Without the old tax advantage of paying alimony with pre-tax dollars, parties are increasingly resorting to monthly payments of property division rather than alimony. And while this might seem like a small matter of semantics, it can have far-reaching financial consequences.
For example, let’s say you’re negotiating a divorce settlement , and your soon-to-be ex-spouse proposes paying you monthly support. It’s crucial that you understand the impact of how this monthly support is defined in your divorce agreement.
If you’re receiving monthly support payments that are clearly defined as alimony, this affords you certain protections that you wouldn’t have if the monthly support is considered part of the agreed-upon property division.
If you’re receiving monthly support payments, but they’re considered property division, and your ex-spouse files for bankruptcy, your support payments could be discharged. In other words, they could simply go away with the stroke of a pen during a bankruptcy case. Alimony, on the other hand, is not dischargeable via bankruptcy.
Also, if the monthly support payments you’re receiving are classified as property division and your ex-spouse stops making payments, less of your ex’s net pay can be garnished to compensate you. With alimony, net pay garnishment can be as much as 50%, but with property division, garnishment is usually no more than 25%.
But there are circumstances where property division payments might be preferred over alimony payments. Unlike alimony, property division payments cannot be modified or terminated by the usual alimony termination provisions, such as death, remarriage of the recipient spouse, or a live-in-lover statute. Property division is a fixed debt, owed in full despite subsequent events.
And it is often a prudent decision to have a tax expert along with a divorce financial planner on your “team.” You might also need the help of an experienced therapist to help you deal with the emotional and psychological aspects of the divorce process.
And when it comes to the financial components of your divorce settlement, your professional team members can help educate you on the impact of issues like making or accepting periodic support payments and whether they’re considered property division or alimony.
Read MoreHarry Winograd Presents 5 STRONG IDEAS – The Business Law Institute
Here are five strong ideas I learned at the 2019 Business Law Institute.
The Business Law Section of the State Bar of Georgia invited me to present on one of my favorite topics – LLC and Partnership Disputes. While at the 38th Annual Business Law Institute, we had the opportunity to interact with and learn from top attorneys in the field. Preparing my presentation and attending the program, I picked up five strong ideas;
- For everyone-The red pie chart indicates that LLCs are where the action is in Georgia. The pie chart illustrates Georgia business entities formed in 2019. The red section are LLCs, the blue is for profit corporations, the green is non-profits, and grey is for other entities (banks, credit unions, etc.). Interesting to learn that 83.5% of Georgia entities formed this year are LLCs.
- For business owners –Owners, officers and directors participate in corporate governance and are subject to the Georgia Business Judgment Rule. This was discussed in my presentation from the LLC perspective, and was explored by Marbury Rainer, Partner at Parker, Hudson, Rainer & Dobbs, in which he discussed how a Board can evaluate executive compensation packages, in a typical setting where Board members often are chosen because they are close to the executive at issue. One strong takeaway is to encourage Boards to obtain independent advice and validation on compensation issues.
- For contract lawyers –There was a surprisingly interesting discussion of boilerplate contract terms by Jennifer Dempsey and William Custer from Bryan Cave which looked at those seemingly routine clauses, and then focused on how to beef up the boilerplate. One strong idea here was for contract drafting to customize boilerplate so that it explained how it should apply to your fact pattern or specific contract situation.
- For litigators –Big news at the courthouse will be the 2020 arrivalof the new statewide Georgia business court. Walter Davis from Jones Day discussed his new role as Judge Davis with the Business Court, and he shared the plans to be open for new business litigation in August 2020.
- For me –This program was scheduled for the same week at the end of October that my work on the Georgia Business Litigation 2020 book arrived from the publisher The Chair of the Business Law Institute this year is Michael Carey from Bryan Cave. At the Institute, Michael introduced my presentation and he used this introduction to showcase the latest edition of our annual treatise. Michael is also a co-author of this excellent resource. More about that 2020 business litigation publication in a separate post soon.
Bodker, Ramsey, Andrews, Winograd & Wildstein honored with Atlanta Bar Association Award
Bodker, Ramsey, Andrews, Winograd & Wildstein received the Atlanta Bar Association’s 2019 Small Firm Service Award. The award recognizes law firms that provide significant service, participation and leadership within the organization. The award was accepted by Harry J. Winograd during the Bar’s Annual Meeting and Awards Luncheon on May 21, 2019. Steve Andrews, Brian Bodker, Jamie Cheattom, Tim Ramsey, Tom Rosseland, Harry Winograd, and Jessica Wood anchored the BRAWW table at the Luncheon. BRAWW has been active in the Atlanta Bar since the firm’s founding in 1986. All BRAWW attorneys are Atlanta Bar members (100% Club), and many of our attorneys have held leadership positions. Jessica was inducted by Senior Judge Philip Etheridge to serve on the 2019-2020 ABA Board of Directors. Tom serves as current Chair of the ABA’s International Section. Tim previously was Chair of the Real Estate Section, and Brian was Chair of the Tax Section. Harry headlines popular CLE’s, including the Corporate Counsel Section’s recent program on attorney-client privilege.
Read MoreTraining Future Trial Lawyers
Harry J. Winograd joins the faculty of nationally recognized judges and trial lawyers for the 2019 Emory University School of Law Kessler-Eidson Trial Techniques Program. Initially modeled after the National Institute for Trial Advocacy programs, Emory focuses on integrating second-year law student knowledge of substantive evidence with practical trial skills through a “learn-by-doing” format. The program concludes this week with 72 jury trials which provide students with a foundation in trial advocacy and to develop confidence in their presentation skills. This year’s class includes over 275 students from more than a dozen countries. Emory Law’s Trial program is the largest in the country and is recognized as one of the nation’s finest. Emory’s annual Trial Techniques program was founded in 1982.
Read MoreDr. Chaouki T. Abdallah speaks to the Atlanta Consular Corps
As a part of the Atlanta Consular Corps, I regularly attend informative presentations that discuss Atlanta’s place in the international community. During a recent event, I had the pleasure of hearing Dr. Chaouki T. Abdallah speak.
Dr. Abdallah is the Executive Vice President for Research (EVPR) at the Georgia Institute of Technology. As a direct report to President G.P. “Bud” Peterson and a member of the president’s cabinet, the EVPR serves as chief research officer for the Institute. In his presentation, Dr. Abdallah discussed how Georgia Tech is one of the top ranked engineering schools in the U.S. and has taken a leadership role with study abroad programs and overseas engagement. It has a campus in Metz, France that has been open for more than 30 years, as well as a new campus in Shenzhen, China that is scheduled to open this year.
Likewise, Georgia Tech has a very substantial international student body at its main campus in Atlanta. In FY 2018, GT had a research budget approaching $1 Billion, almost doubling in size over a decade from FY 2008. Various major international corporations have located their Corporate Innovation Centers at Georgia Tech in order to keep them independently administered. Approximately 86% of the job-seeking students who received their degree from Georgia Tech in May 2018 had been offered a job at graduation. In terms of expected salary, $70,000 is the median starting salary for BS graduates, and $95,000 is the median starting salary for MS graduates. For BS graduates, Georgia Tech is ranked No. 8 in Annualized Return on Investment in Higher Education by PayScale.com.
Following this, we next took a tour of the brand newCoda Building at Tech Square. It has almost 750,000 square feet and will house a mix of highly secure data and research facilities for the Georgia Tech Research Institute. Additionally, there will be various private industry tenants to be connected in a “town square” type of public space for shared collaboration. We even had the opportunity to experience the world’s tallest continuous spiral staircase.
All in all, it was a great day to learn about how Georgia Tech is helping Atlanta expand its international footprint and attract individuals and businesses from around the world.
Click here to read an article on this event from GlobalAtlanta.
To see the rest of the photos from the event on Facebook, click here.
Read MoreJessica Wood holds expert deposition workshop
Jessica Wood held an expert deposition workshop for the State Bar’s Young Lawyers Division, Litigation Committee. Jessica and her co-presenters Brandi Steinberg, CPA, CFE at IAG Forensics & Valuation & Elissa Haynes, Goodman McGuffey LLP, performed a mock deposition and addressed expert-related questions from the audience.
Read MoreSeven Bodker, Ramsey, Andrews, Winograd & Wildstein, P.C. lawyers selected to the 2019 Georgia Super Lawyers list
Bodker, Ramsey, Andrews, Winograd & Wildstein, P.C. is pleased to announce that seven of the Firm’s attorneys have been named to the 2019 Georgia Super Lawyers List.
Brian, D. Bodker, Timothy J. Ramsey, Stephen C. Andrews, Harry J. Winograd, Robert D. Wildstein, Jessica J. Wood, and Thomas Rosseland were all recognized by Super Lawyers for their expertise and contributions in the areas of Business/Corporate Law, Family Law and Business Litigation. No more than five percent of the lawyers in Georgia are selected by Super Lawyers.
In addition, Jessica Wood was selected to the Georgia Top 50 Women and the Georgia Top 100 lists.
Super Lawyers, part of Thomson Reuters, is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The annual selections are made using a patented multiphase process that includes a statewide survey of lawyers, an independent research evaluation of candidates and peer reviews by practice area. The result is a credible, comprehensive and diverse listing of exceptional attorneys.
The Super Lawyers lists are published nationwide in Super Lawyers Magazines, leading city and regional magazines and newspapers across the country. Super Lawyers Magazines also feature editorial profiles of attorneys who embody excellence in their practice of law. For more information about Super Lawyers, go to SuperLawyers.com.
About Bodker, Ramsey, Andrews, Winograd & Wildstein, P.C.
Bodker, Ramsey, Andrews, Winograd & Wildstein, P.C. is a full-service law firm located in Atlanta, Georgia focused on providing clients with a wide range of litigation and transactional legal services. Our clients cover the spectrum from individuals and entrepreneurial start-ups to large publicly traded companies over a diverse field of industries including: manufacturing, media and technology, medical and professional services, banking and finance, real estate development and leasing, retail, and hospitality. We also represent individuals in various matters such as executive compensation, employment arrangements, ownership rights, and family disputes including divorce, child custody and estate litigation. For more information on the firm, please visit www.brawwdev.webarc.dev or by calling our office at (404) 351-1615.
Read MoreTrusts 101
John Killeen recently presented at the National Business Institue seminar “Trusts 101.” John is also the co-author of a paper on the same topic. Click here to download a copy.
Read MoreThe New Tax Law Creates Big Changes to Alimony in 2019
The new tax law made some big changes to alimony. In 2019, alimony payers will no longer be able to deduct the payments on their tax return, & it will be tax-free to those who receive it, reversing the way it is set up now & through the end of 2018. Click here to learn more.
Read MoreTom Rosseland Featured in Atlanta Lawyer Magazine
Congratulations to Tom Rosseland for being featured in this month’s Atlanta Lawyer Magazine for his appointment as Chair of the International Law Section of the Atlanta Bar. Click here to view Tom’s feature in Atlanta Lawyer Magazine.
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