Stephen J. Buhler, Attorney at Law

How retirement may be affected by divorce

Couples in Utah should be aware that divorce could mean a lower standard of living both before and after retirement. Furthermore, the passage of the Tax Cut and Jobs Act means a number of changes ahead that can impact divorcees.

Starting in 2019, it will no longer be possible for people who owe spousal support to deduct the payments from their taxes. Since people who receive alimony will not be required to pay taxes on it, they may fall into a lower tax bracket and be eligible for a rate of 0 percent on capital gains. As a result, they may benefit more from taking investment assets instead of the family home.

People may also want to reconsider homeownership since the new tax law caps overall deductions for statewide and local property taxes at $10,000. The child tax credit is also changing, and parents may want to consider this when deciding who will take this credit.

It is important for people to think about financial security during retirement. There is a 7 percent higher chance that a household that has experienced divorce will have a drop in their standard of living after retirement. This may be a particular concern for people 50 and older who are divorcing. In certain circumstances, however, some people may be able to draw Social Security benefits on a spouse's earnings. This could help offset the loss in retirement savings.

Some couples are able to negotiate a divorce agreement instead of going to litigation. If this is the case, they might both be able to work toward a solution that allows each of them to have a more financially stable retirement. An attorney with experience in property division can help a spouse through this process.

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