Susan Carlisle, CPA at Carlisle Dorafshani Wohl and Associates in Los Angeles, recommends building flexibility into an alimony agreement. If the payer’s income goes up (or down) by a set amount or a set percentage, for instance, the alimony will automatically rise or fall accordingly. Your client “won’t have to litigate a new agreement and risk being subject to the new rules,” she said.
Said McGrory, “A HNW ex-spouse making the payments may try to argue to pay a lesser alimony amount to an ex-spouse who doesn’t have to report these amounts as taxable income. Also, certain states may consider the old law’s tax deduction when determining how much the higher-earning ex-spouse can pay.”
“HNW clients now more than ever will want to consider prenuptial agreements to avoid potential litigation in the future – and it’s best to deal with this new alimony issue in such an agreement,” added Martin Abo, CPA at Abo and Company in Mount Laurel, N.J.