Divorce can be a complicated process regardless of the amount of property to be divided between the two parties in Ohio. But when a large amount of wealth is involved, it can be even more complex, especially in the wake of the new tax law that is now fully in force. A high-asset divorce can be impacted in many ways. One of the issues most affected is that of alimony.
The person paying alimony is now the person paying taxes on the amount, as it is no longer a deductible item. This affects the amount of money available for alimony, as the tax burden reduces the payor’s income. There may be steps that can be taken to improve the financial picture for both parties. One such step is setting up a trust from which an amount equivalent to the agreed-upon alimony can be paid.
The trust, called a grantor trust, is established in such a way that it generates enough income to pay the designated alimony amount. The recipient then owes taxes on that amount. Additional benefits to this plan are that the payments continue after the payor’s death, when alimony payments stop. Also, any balance remaining in the trust goes to the payee’s heirs.
High-asset divorce can be complex, and any divorce can be emotional. It can be beneficial to attempt to look at the proceedings as a business negotiation. Preserving the value of the assets involved helps to ensure that a fair settlement is reached. Anyone in Ohio considering a divorce may wish to seek out the advice of an experienced family law attorney who can review one’s overall financial picture and help one to arrive at a fair settlement that takes the new tax law into consideration.