Cincinnati Legal Blog

Ohio residents who are getting a divorce should be aware of how the passage of the Tax Cuts and Jobs Act will impact divorces that are finalized on or after Jan. 1, 2019. There are provisions that affect exemptions, deductions, federal tax rates and Alternative Minimum Tax limits. However, divorcing couples may be most interested about the changes that will impact alimony and child support.

For people whose divorce agreements are signed after 2018, alimony will no longer have any income tax consequences. Beginning in 2019, it will be treated as a simple transfer of property to be conducted according to divorce settlement terms. Divorcees who will have to pay alimony will no longer be able to deduct the amounts of those payments from their taxable income. Divorcees who receive alimony payments will not have to include those amounts as part of their taxable income.

Previous generations in Ohio might have focused on romance more than money when getting engaged, but members of the millennial generation are taking a more practical approach. The American Academy of Matrimonial Lawyers has reported that a growing number of millennials want prenuptial agreements. A survey conducted by the organization showed that 50 percent of responding attorneys had prepared an increasing number of the agreements for millennial couples.

One business owner explained that her desire for a prenuptial agreement arose from viewing marriage as a contract. She said that her fiance needed time to warm to the idea. He initially considered it a divorce contract but eventually accepted the practicality of deciding things ahead of time just in case they got divorced. By discussing finances before marriage, the couple had an opportunity to plan the repayment of his student loans.

Cryptocurrency and other digital assets have increased the complexity of estate planning. People in Ohio who are creating an estate plan should ensure that they take care of both the legal and technical aspects of making digital assets accessible to heirs.

One attorney suggests listing the assets and all the relevant information regarding them on a piece of paper that is kept with other estate planning documents. She advises this over putting them on a USB drive since technology is fallible. Information such as key locations, timelock or multisignature requirements, passphrases and PINs may need to be included. Depending on how much trading a person does, this list will need to be updated regularly. A frequent trader may need to update it weekly while someone who trades only occasionally might only do so annually.

When older couples in Ohio decide to divorce, they may face different concerns than those who end their marriages at a younger age. While concerns about child custody and support may no longer be relevant, financial concerns can be a top priority for those approaching retirement. Divorce among Americans over 50 has doubled in the past two decades and continues to rise. For people in this demographic, a split in retirement investments can have a significant impact on financial outlooks for the future.

In addition, it is important for people going through a divorce to properly split these funds. Even in an amicable situation where the parties are fully prepared to divide a 401(k), the proper procedures must be followed in order to avoid a costly and unnecessary hit in taxes, fees and penalties. Some kinds of assets, like annuities, can be more difficult to divide. Therefore, it might make more sense to keep them in the name of one spouse in return for other properties or investments.