As most are aware, the Tax Cuts and Jobs Act passed in December 2017, will become effective on January 1, 2019. While there will be a major impact on several different facets of tax law and reform, the Act will implement a major change in family law, specifically the divorce arena. Section 11051 of the Act will repeal the ability of the payer to deduct payments from their taxes and change how the recipient's alimony is taxed.
I think that every attorney has that one case early in their career that makes them scratch their head and wonder just how a particular client's predicament came to be. For me, I was fresh out of law school and within my first month of practice was presented with a convoluted family law case in which my client, who we'll call Mr. Big, lived abroad, his current wife was believed to be living in Tennessee, and the couple hadn't seen or spoken to one another in over five years.
The Tennessee General Assembly recently enacted a major change to laws concerning past-due child support by substantially limiting the amount of overdue child support that can be awarded. The new law limits backdating unpaid child support to five years from the date an action to collect unpaid support is filed. For example, if a non-custodial parent has failed to pay child support for ten years, the custodial parent can only seek to collect unpaid child support for the first five years before they filed their action with the court. The other five years support that went unpaid, years six through ten, would generally be uncollectible. Previously, a custodial parent could seek to collect unpaid child support dating back to the child's birth date. For actions filed after July 1, 2017, this is no longer the case.
Negotiating and finalizing agreements providing for child support and alimony is often difficult and highly contested. Disagreements over income, need, and other issues become caught up in the already emotional and difficult process that is separation. Making sure this process goes as smoothly as possible is essential to work out agreements that will suit both parties. However, even after an agreement is reached, enforcing payment for support obligations often becomes an issue.
In the emotionally draining, stressful, and time-consuming process that is divorce, a relatively new option for couples may provide a more efficient, lower-cost way of navigating towards a settlement. Collaborative divorce is a process in which both parties to a divorce are still able to select their own attorneys, yet sign an agreement which avoids expensive litigation in court. This client-centered method focuses on gathering information to reach mutually beneficial results, rather than assigning blame. The cost savings may be especially prevalent for couples with more assets, but both attorneys and any individuals going through divorce can benefit from the process.