Getting a divorce is a significant decision that requires care and time. You should consider all the ramifications, from the emotional to the financial. You should never rush. However, if you’ve already made the decision and are just waiting to get to the paperwork, there could be an incentive to act sooner rather than later if alimony is involved.
Many divorce settlements involve spousal maintenance payments, also known as alimony. These are especially common if one spouse has been out of the workforce for some time. Maintenance payments give them time to get back on their feet and transition to financial independence. New York uses a formula to determine these payments, though judges have discretion to adjust the amounts if they feel that the formula gives an “unjust or inappropriate” calculation. Some of the factors they consider include:
- Each spouse’s income
- Property holdings
- Marriage length
- Ability to become self-supporting
- Age and health
- Child-related expenses
- Household contributions
- Medical expenses
- Other relevant factors
This year, the exact date that your divorce is finalized will be important for spousal maintenance payments. Under the current law, you can deduct all maintenance payments from your taxes, which has a more significant impact the higher your tax bracket is. For the highest wage earners, the benefit can be substantial.
However, this law is changing on January 1, 2019. If you finalize your divorce after that date, you’ll no longer be able to deduct spousal maintenance payments, which could impose a greater financial burden than before, especially if you have to pay maintenance for many years.
Every divorce is different, and the most advantageous arrangement for all parties will depend on the specifics of your case. However, if there’s a significant income differential between you and your spouse and you expect maintenance payments to be involved, you may want to get the paperwork done as soon as you can.