It may be surprising to some North Carolina residents that a strategic divorce is being used by some high earning couples in the United States in order to help them save money on their taxes. Since the Tax Cuts and Jobs Act went into effect in 2018, high earning couples have been subjected to higher tax liability because of the so-called “marriage penalty.” In the eyes of the IRS, couples are better off as single.
It may seem that breaking up a marriage makes sense on paper for these high earning couples. However, before a couple makes this decision, they should know about some unexpected ramifications that could potentially damage their finances.
The last thing that a couple would want to is get divorced in order to save money on their taxes and then find out that they lose money or benefits in other areas. For example, some individuals may have to purchase a private insurance policy because they will no longer be under the health insurance coverage that is provided for the entire household through one working spouse’s employer.
A couple would want to be especially cautious about using a strategic divorce if they own a business together. It may be that the business will be divided in a divorce settlement. The spouse who started the company may actually end up giving away control of the business. They could eventually be pushed out of it completely because they gave away their voting power.
It is also possible that a couple’s retirement benefits could be negatively affected because of a strategic divorce. Some have decided to speak with an attorney to learn about divorce legal issues. An attorney may be able to provide legal advice regarding a high asset divorce, child custody, visitation plans, spousal support, and more.