Is Voluntary Alimony an Option in a Divorce
My question involves a marriage in the state of: Pennsylvania
A Husband and Wife make the same exact salary give or take a few dollars. Wife is asking for set amount of sousal support in lieu of the marrital home. Both parties are in agreement. Without getting into details, Is this even a possible arrangement?
Re: Is Voluntary Alimony an Option
Yes.
Absolutely.
In fact, any arrangement the spouses can voluntarily make with each other is better than paying lawyers and fighting it out in court.
The agreement has to be memorialized in the decree (of course) which then has to be approved by the judge but that's usually just a formality.
Re: Is Voluntary Alimony an Option
There are consequences to voluntarily establishing spousal support (alimony). One is the tax consequence. Your spouse would have to declare the payments as income. That reduces the overall net they receive. You would be better off buying out the alimony in present day dollars.
If you are trying to keep the home and pay off your spouse's equity, consider giving your spouse a mortgage and keep it out of the divorce decree.
Re: Is Voluntary Alimony an Option
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budwad
There are consequences to voluntarily establishing spousal support (alimony). One is the tax consequence. Your spouse would have to declare the payments as income.
I believe that the deductibility and taxability of alimony is eliminated by the 2018 changes in the tax law.
The payor won't get the deduction and the payee won't pay taxes on it.
Re: Is Voluntary Alimony an Option
It appears that you are correct. But the rules won't affect anyone that devises or signs a separation agreement before 2019.
Re: Is Voluntary Alimony an Option in a Divorce
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Quoting
arlo
My question involves a marriage in the state of: Pennsylvania
A Husband and Wife make the same exact salary give or take a few dollars. Wife is asking for set amount of sousal support in lieu of the marrital home. Both parties are in agreement. Without getting into details, Is this even a possible arrangement?
It will be a bad arrangement tax wise. Alimony used to be tax deductible to the payer and taxable income to the receiver. That was completely eliminated in the new tax reform bill. On top of that, even under the old laws it probably wouldn't fly with the IRS because it would look like a property settlement disguised as alimony.
However, it is perfectly acceptable to make a property settlement be in installments if the parties have some reason for wanting it that way. However, the parties will need to remember that it IS a property settlement and therefore would not fluctuate if income fluctuated. It would be more or less the same as the wife being the mortgage company that had to be repaid for her share of the house.