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Does Getting Divorced In 2018 Make Good Financial Sense?

Many couples will coast along in a troubled marriage for several years before something finally triggers the move toward a divorce. If you're in that situation, however, it might be time to take action -- before 2018 is over.

Why? Because changes in the tax laws are going to make divorce a lot more expensive in the future, especially for couples with significant wealth.

If you're committed to protecting yourself financially and achieving your best possible future, here are the things you should know:

1. Alimony rules are changing.

In the past, if you paid alimony, you got to deduct it from your taxes -- those were paid by the receiver at a much lower rate. That translated to more money for everybody involved in the long run through what the Internal Revenue Service called a "divorce subsidy."

That's all about to change and that's bad news for both parties. Since payers can no longer deduct their alimony from their taxes, they have less incentive to be generous with their support and there will be less money to spread around between the divorced couple.

Finalizing your divorce now will let you stay under the old rules instead of the new, so that alone is a significant reason to get divorced this year.

2. There may be a ripple effect on your prenuptial agreement.

If you have a prenuptial agreement, you may find that the new alimony rules actually affect your agreement in a negative way.

Many prenuptial agreements address issues of support -- but anything previously written would have the old tax laws in mind. If you don't renegotiate the prenuptial agreement or update it, you could find yourself struggling to handle the financial ramifications. What seemed like an equitable settlement when the old agreement was written could otherwise fall far short of your needs.

There are other reasons -- including those related to your emotional health -- that ending your marriage now may be a good idea. If you've been delaying, it may be time to consult with a few experts, including a tax consultant, before it's too late.

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