Negotiating divorce settlements in Pennsylvania and other states is heading into uncharted territory due to the newly passed federal tax laws. For 75 years, the most established tax rule in negotiating family law settlements has been that alimony is deductible to the payer and treated as income to the recipient. Starting on Jan. 1, 2019 that is all changing, and there will be no alimony deduction to the paying party nor will the recipient pay taxes on it.
Pennsylvania has subscribed to the Interstate Child Custody Jurisdiction Act, which is a law that provides a set procedure for determining which state may exercise jurisdiction in a custody case involving two or more interested states. The situation arises, for example, when one parent resides in this state and the other parent lives in another state. The issue of custody must be decided in the family law court of one of the two states.
In Pennsylvania and elsewhere, experts recommend that a spouse who is preparing to file for divorce take some preliminary steps. These actions will increase the chances for a successful transition and for fewer mistakes during the family law proceedings. One early step when marital problems first strike is to seek counseling together. Fairness to oneself and to each other demands that the marital bond be preserved if possible, and in some instances a resolution may be found through counseling.
When one comes to the end of a negotiated divorce settlement in Pennsylvania, the residual tension from a long, embattled process may contribute to a depressed mood. However, by this point various things must be done to establish a solid foundation going forward. The participant in a family law divorce proceding will find it well worthwhile to make sure that the following basic steps are executed and in place.
In Pennsylvania, the system for visitation of the minor children is generally handled much like it is in all other states. Generally, a custody and visitation agreement is negotiated by the parties and signed by the family law judge. The breach of such an agreement could be contempt of court and could expose the violating parent to changes or reductions in his or her visitation privileges, depending on the circumstances.
Alimony is a common feature of many Pennsylvania divorces. Even in marriages where both partners worked, if one spouse earned significantly more than the other, a family law judge will likely still order the higher earner to pay alimony. Currently, alimony may be deducted by the payor and must be reported as taxable income by the payee, but tax reform could change this process.
When a high-earning business owner and his spouse go through a divorce in Pennsylvania, the court will enforce a prenuptial agreement between them unless the agreement was riddled with lack of proper and accurate disclosure. If the higher-earning spouse is not forthright about his/her earnings and assets in the prenuptial, the other spouse may have grounds to challenge it in court during a divorce proceeding. Family law precedent places great importance on enforcing a prenuptial contract unless the wealthier spouse hides the vital facts about his/her assets from the other party.
Tax planning and tax issues are important considerations in a Pennsylvania divorce case. Where the parties are negotiating a settlement with support of minor children, alimony and property division elements, tax results should be considered and incorporated into the agreement. An experienced family law practitioner will counsel the client so that he/she understands and agrees to the full tax ramifications of any agreement that is achieved.
Child custody issues are challenging enough in a Pennsylvania divorce when the children are older. When a baby is involved, matters tend to get a bit more complicated. The family law issues in this situation often do not allow for a true shared custody agreement.
In Pennsylvania, the federal immigration laws impact many married couples. For example, it is a common event for a United States citizen to meet and marry a person from a foreign country. In most instances, family law principles and immigration law provisions will validate and recognize the marriage.