The date a marriage truly ends may be up for debate for divorcees, but the courts need a firm date of separation for legal reasons. Many aspects of a divorce, including child custody, support payments, and the value of certain types of property depend on the date of separation. In some cases, it’s advantageous for a later date of separation than an earlier one.
How Does Date of Separation Matter?
Different states consider different criteria for determining the official date of separation for a divorce. In some states, the date of separation is the date the spouses physically separate and move into separate living arrangements. In other states, the date of separation is the date one spouse served divorce papers to the other. Many states simply consider the date of filing the finalized divorce agreement with the court as the date of separation.
Although determining the date of separation may seem like an inconsequential detail, the date of separation may actually have a significant impact on several aspects of a divorce. For example, if one spouse receives a large commission, stock options, or bonus from work before or after the date of separation, those assets may or may not fall under community property. Stock options and investment accounts may also continue to accrue value the longer a marriage continues, so the date of separation can impact the division of these assets as well.
It’s also important to determine the exact date of separation to avoid paying for your ex’s financial decisions. For example, if your ex has already started dating another person, you want to be sure of the date of separation so you aren’t on the hook for his or her credit card debt or other expenditures in the new relationship. If you share a credit card with your ex and can prove some charges occurred after your date of separation you may be able to argue that you are not responsible for those charges.
New Tax Laws for Alimony in 2019
The new administration’s tax laws go into effect for the 2018 tax year, and one of the most significant changes is that alimony no longer qualifies for a tax deduction for divorces finalized after December 31, 2018. If your date of separation falls on or before this date, your alimony payments will fall under the old tax laws as long as you continue to meet the requirements. Divorcees paying alimony will be able to claim a tax deduction and divorcees receiving alimony will be able to continue counting it as taxable income.
All divorces finalized on or after January 1, 2019 will fall under the new tax code, meaning payers will no longer have the option to claim alimony as a tax deduction and recipients can no longer claim received payments as taxable income. If you expect that you will have to pay alimony to your spouse, it’s beneficial to finalize your divorce so the date of separation is before the end of the year so you can claim payments as a tax deduction. If you expect to receive alimony from your soon-to-be ex-spouse, then a later date of separation on or after January 1, 2019 works more in your favor.
Find Professional Advice
The date of separation for divorce is a major factor for virtually every divorce, but it is even more important for divorcing couples with significant financial assets. You may want to have your personal accountant or a tax professional review your finances so you know how the date of separation could affect you. A divorce attorney can help you prepare a strong case so you don’t wind up paying more than you should, or to help ensure an ex-spouse meets his or her reasonable financial obligations after your divorce.