Month: July 2019

Divorce and the Marriage Penalty Tax

Unmarried couples face many costs, hurdles, and issues, but not the tax married couples pay simply because they tied the knot. The good news is Congress repealed some marriage penalties. The bad news is it retained others and added more, making divorce and the marriage penalty tax news again.

Divorce and the Marriage Penalty

The Marriage Penalty

We call a marriage penalty any time a married couple pays higher income taxes than they would have paid if they were un-married and filed individual tax returns.

The Tax Cuts and Jobs Act of 2017 definitely lowered the cost of being married for many couples. But being married can be more expensive than being two single tax filers on April 15th. For example, if a couple has children and both spouses earn income, they can owe thousands of dollars every year just for being married.

Disparity in Incomes

I’ve written about divorce and the marriage tax penalty before. A common complaint about our tax code is a difference between couples that have similar incomes and couples in which one partner earns much more.

For another example, a couple whose incomes are far apart often pay less if they’re married, while couples whose earnings are more evenly split often pay the same as or more than two singles.

Say that two couples each have total income of $225,000 and no children or itemized deductions. In the first couple, one partner earns $210,000 and one earns $15,000. If they marry, they’ll save about $8,400 compared with filing as two singles.

In the second couple, one partner earns $145,000 and the other earns $80,000. Being married will save them about $300 compared with filing as two singles.

Things change if each couple has two young children and typical deductions for mortgage interest, state taxes and charity. The couple with one high and one low earner has a marriage bonus, although it drops to about $3,200.

The second couple now has a big marriage penalty. They owe about $4,000 more than they’d pay as two single filers—just for one year. Having a $50,000 capital-gain windfall would add nearly $1,000 to their penalty.

SALT and Taxes

In a system that imposes higher rates as income rises, like ours, it’s impossible to tax married couples based on their total income regardless of who earns it while also taxing married couples so they owe the same as two single people.

The U.S. system creates marriage bonuses and penalties. Other countries avoid this by taxing married couples as two individuals shifting to such a system could be difficult in the U.S., in part because of community-property laws in some states.

The Tax Cuts and Jobs Act of 2017 repealed some marriage penalties and broadened some tax brackets, helping many two-earner married couples. But it retained other marriage penalties and added more.

One is the new $10,000 limit on deductions for state and local taxes, such as your property tax bill, known by the acronym “SALT”. This limit on deducting your property tax bill is by return, so married joint filers who list deductions on Schedule A get only a $10,000 write-off, while two single filers living together get a $20,000 write-off.

Affluent married couples hoping to buy a home in expensive areas could also feel a pinch. The overhaul dropped the maximum mortgage debt that’s eligible for an interest deduction on new purchases to $750,000 from about $1 million, and the limit is per return.

So, an unmarried couple can deduct interest on $1.5 million of mortgage debt, while the limit for a married couple is $750,000.

For couples contemplating marriage, estimating the tax cost can be hard. One reason is that marriage penalties often vary over time. For example, a two-earner couple may not owe a penalty when they are first married. If they become a one-earner couple when they have children, they may get a marriage bonus.


The marriage penalties removed by the 2017 law will return after 2025 if Congress doesn’t act before then. Another complication is that the U.S. tax code provides marriage bonuses, even to couples who owe marriage penalties.

Unmarried couples also face problems. They may pay more for health coverage, and they have to prepare two tax returns. They’ll need to take special care with health proxies, powers of attorney and other legal documents that married couples don’t face.

Divorce and Taxes

Since the marriage penalty is where a married couple pays higher income taxes than they would have paid if they were un-married and filed individual tax returns, should you divorce to avoid this penalty?

Divorce is a lot harder than getting married. And the Internal Revenue Service for decades has had the power to disregard divorces that are solely for tax reasons.

The Wall Street Journal article is here.


Is Divorce Rotten in the State of Denmark?

Bucking the trend, Denmark is turning back the clock on divorce by making it less-easy. That may be because Denmark currently has the highest divorce rate in Europe. In our country’s attempts to make divorce less acrimonious and easier on children, have we created new problems by making it so easy? The trend in international divorces may have made something rotten in the state of Denmark.

International Divorce Laws

Dansk Divorce Laws

According to the Guardian, until recently Danes could divorce by filling out a simple online form. But under a package of legislation that came into force in April, couples determined to split must wait three months and undergo counselling before their marriage can be dissolved.

Meanwhile, a survey found that 68 of Denmark’s 98 local authorities were offering relationship therapy to couples in difficulty, on the grounds that keeping families together saves municipalities money on housing and services.

The initiatives, which in some countries might be seen as unwelcome state intrusion in citizens’ private lives, have been broadly welcomed by both the public and politicians in Denmark, with only the small Liberal Alliance party criticizing them as over-reach.

The country has long championed family rights, offering year-long parental leave and universal public daycare, but it recorded 15,000 divorces in 2018, equivalent to nearly half the marriages that year.

The government’s three-month waiting period and “cooperation after divorce” course, taken online or via an app, aims to smooth the process for divorcing couples and children by helping them improve communication and avoid pitfalls.

Parents can tailor their course individually from 17 half-hour modules offering concrete solutions to potential areas of conflict during the divorce process, including how to handle birthday parties or how to talk to an ex-partner when angry.

Florida Divorce

I have written about divorce planning and recent trends in divorce around the world before, such as the new Norse Divorce Course.

Although Florida has a lower divorce rate than Denmark, it is not only because a divorce course is required in Florida. Divorce rates have been falling in the United States, but that is not good news, as many people are having children outside of marriage, and the statistics for relationship breakups is staggering.

Like Denmark, in Florida, the legislature has found that a large number of children experience the separation or divorce of their parents. Parental conflict related to divorce is a major concern because children suffer potential short-term and long-term detrimental economic, emotional, and educational effects during this difficult period of family transition.

This harm can be particularly true when parents engage in lengthy legal conflict. So, like Denmark, Florida requires a divorce course called the “Parent Education and Family Stabilization Course” and may include several topics relating to custody, care, time-sharing, and support of children.

Back in København

In a trial with 2,500 volunteers before launching, the Denmark course has been praised by specialists and those who have completed it. “The data is clear: the program works,” he said. “In 13 out of 15 cases it had a moderate to strong positive effect on mental and physical health and led to fewer absences from work. After 12 months, couples were communicating with each other as if they had not divorced.”

Hjalmar, a marketing executive in his 40’s who preferred not to give his full name, said he took the course in its trial phase nearly four years ago and found it very useful. “Obviously it’s not going to repair a broken marriage,” he said. “But it helps you sort out some pretty important stuff when you may not be thinking very clearly.”

Relationship experts said the course was a step in the right direction but would not work for all couples. “It’s a fine tool and you can’t argue with its results,” said Trine Schaldemose, the deputy head of Mødrehjælpen, a family help association. “But it won’t help couples who are in very high conflict or violent relationships, or with a very low level of resources. They are going to need more than an online course. They will need personal, individual counselling. This won’t be a quick fix for them.”

Many consider Denmark’s new divorce rules were a big improvement. Before, the system was focused more on parents’ rights than children’s. And divorce involved a lot of different institutions, none of which were aligned. That’s changed.

Some experts are unsure about the boom in local authority-provided counselling. Five years ago only 20% offered any couples therapy at all. Any counselling was a positive development but the quality of programs varied and some couples may not be as open when counselling was provided by a local authority rather than independently.

Municipalities insist their programs work. In Ringkøbing-Skjern, which began offering free relationship therapy in 2011, the council says the divorce rate has fallen by 17% and last year 92 local couples sought counselling – the highest annual number so far.

All couples with children under 18 are entitled to five free sessions. Politicians, too, have been broadly welcoming. “Municipalities deserve praise for taking the initiative to help more families prosper and stay together”.

Divorce rates are 25% to 50% across western countries and it costs a huge amount of money and causes a lot of individual pain. Individual treatment would be too expensive. If we really want to take this seriously, we need to work together to develop something scaleable.

The Guardian article is here.


Prenups and Threats to Call Off the Wedding

With the wedding season upon us, people are increasingly demanding prenuptial agreements. But many are also asking what is required to get out of the prenup they just signed. For instance, how valid would a Venezuelan prenup be if there were threats to call off the wedding unless it was signed? A Florida court just answered that question.

Prenup Threats

Venezuelan Prenups

In the recent case, the couple planned to marry in Venezuela. But six days before their wedding, the husband presented the wife a draft of a prenuptial agreement in Venezuela. At the time, the wife was four months pregnant with their second child.

The only financial disclosures contained within the document were perfunctory references to the husband’s ownership of certain nominal non-convertible bearer shares with corresponding assigned nominal values.

Interestingly, the agreement did not provide for equitable distribution or alimony. The husband allowed the wife to peruse the document and then assured her that he would furnish full financial disclosures prior to the wedding.

But the day before the wedding, having not yet provided any financial documentation, the husband threatened to cancel the ceremony if the wife did not sign it.

The wife reluctantly signed the prenup and they got married. However, their marriage did not endure. Less than six years later, the husband filed dissolution proceedings in Miami.

The wife tried to invalidate the prenuptial agreement, contending it was the product of “duress, coercion, or overreaching,” and was unconscionable, as it had been executed in the absence of full and fair financial disclosure.

Following an evidentiary hearing, convened to determine the circumstances surrounding the execution of the agreement, the court entered an order. The following week, the parties were due to appear at the United States Embassy in Venezuela with their marriage certificate, in order to establish expatriation eligibility.

Several years later, the husband retained another attorney and sought to have the wife execute a postnuptial agreement, showing he believed the prenuptial agreement was unenforceable under Venezuelan law.

Even though the prenup was entered into by the parties in Venezuela, and Venezuelan law should govern its validity, both parties urged the application of Florida law.

The Florida trial court found the prenuptial agreement had been executed under duress and in the absence of both full financial disclosure and waiver of said disclosure. The husband appealed.

Florida Avoiding Prenups

I have written about prenuptial agreements in Florida before, especially avoiding them. Because of Florida’s policy of enforcing agreements, prenups and postnups can be difficult to void – but not impossible. Florida has both case law and a statute to help lawyers, judges and the parties determine if a prenuptial agreement, for example, is enforceable.

In Florida, to test the validity of a prenuptial agreement, courts must consider things such as fraud, duress, coercion, in addition to the unfairness of the agreement, and whether there was any financial disclosure.

Under Florida’s Uniform Premarital Agreement Act, a prenup may not be enforceable if a party can prove, in part, that it was not signed voluntarily; or was the product of fraud, duress, coercion, or overreaching; or it was unconscionable.

Some of these defenses may also require a party to show they were not given a fair and reasonable disclosure of property, and did not voluntarily and expressly waive that right, and did not have adequate knowledge of the property or financial obligations of the other party.

“No Agreement, No Wedding!”

In Florida, a premarital agreement is not enforceable if the party against whom enforcement is sought proves that the agreement was the product of fraud, duress, coercion, or overreaching.

But what is “duress”? Often, duress is defined as a condition of mind produced by an improper external pressure or influence that practically destroys your free agency and causes you to make a contract not of your own volition.

Proving duress is difficult, and requires showing the prenup was not free choice or will and this condition of mind was caused by some improper and coercive conduct of the opposite side.

In the Venezuelan case, the testimony established that the husband initially presented his pregnant wife with the disputed prenup six days before the wedding. At that time, the wife asked for evidence regarding his net worth. The husband assured the wife such evidence would be forthcoming.

But instead of honoring his pledge, the day before the wedding, the husband demanded she sign the prenup, with the added ultimatum of “no agreement, no wedding.”

However, it is not unusual for people to give an ultimatum that they will not marry their spouse without a prenuptial agreement. Ordinarily, the “no agreement no marriage” ultimatum does not constitute duress because there is nothing improper about taking such a position.

In the recent case though, the Husband also threatened life-altering consequences, by imperiling their shared, long-term plan to begin life anew with their children in the United States. The court found that these circumstances, which were unrebutted by the husband, were sufficient to support a finding of duress.

The opinion is available here.


Banning Sex While Separated

Are you looking to dive back into the dating pool while you are going through a divorce or child custody battle? If so, did you know there are bills which would ban sex while separated and even from having sex at home until all legal proceedings are finalized? This post considers the hot topic of dating during the divorce and child custody process.

Banning Sex While Separated

Prudish Pilgrims

One measure, first proposed in Massachusetts, would make it illegal for parents in going through a divorce to engage in a dating or sexual relationship with anyone within the marital home. The Massachusetts measure, which was first proposed a few years ago and has not passed yet, seems highly improbable of ever passing.

The Bill provides:

“In divorce, separation, or 209A proceedings involving children and a marital home, the party remaining in the home shall not conduct a dating or sexual relationship within the home until a divorce is final and all financial and custody issues are resolved, unless the express permission is granted by the courts.”

It is a big question whether a bill like the Massachusetts proposal could ever pass a state legislature.

Florida & Sex While Separated

I’ve written about child custody issues before, including how spanking can impact custody. First, Florida does not use the term “custody” anymore, we have the parenting plan concept. For purposes of establishing a parenting plan, the best interest of the child is the primary consideration.

The best interests of the child are determined by evaluating all of the factors affecting the welfare and interests of the particular minor child and the circumstances of that family, including evidence of the demonstrated capacity and disposition of each parent to upon the needs of the child as opposed to the needs or desires of the parent.

Additionally, courts are supposed to consider the length of time the child has lived in a stable, satisfactory environment and the desirability of maintaining continuity and the moral fitness of the parents.

Banning Sex for Sox Fans

While some couples use separation as an opportunity to decide whether or not they can salvage their marriage, others are left simply waiting until they can finalize their divorce.  Separated couples want a defined set of rules regarding dating and sex after separation. The Massachusetts bill, were it to pass, could have implications many have not thought of.

Many people would be surprised to know that adultery is a crime in Florida. Whoever lives in an open state of adultery may be guilty of a crime in Florida. Where either of the parties living in an open state of adultery is married, both parties shall be deemed to be guilty of the offense provided for in this section. A criminal record of adultery could be problematic.

Having sex during the separation does not automatically prohibit you from receiving support or alimony, however, evidence of it may be a factor a court looks to in modifying or terminating alimony based on the existence of a supportive relationship.

Sexual relations during separation may affect custody when and if it impacts the children.  A family court judge has to consider what is in the children’s best interests when determining custody.  Whether or not this affects the children’s best interest depends on the surrounding circumstances. Divorce and child custody proceedings are an emotional process. Moving on with someone new too quickly may make it harder to resolve the case.

The Massachusetts bill is here.


New International Child Custody Laws

Trying to combat a growing problem of parental child abduction, EU lawmakers adopted new rules to better protect children and bring quicker resolutions to child custody fights. What are in Europe’s new international child custody laws?


The EU’s recent actions are a retooling of the Brussels IIa regulation, a cornerstone of EU judicial cooperation in cross-border matters involving marriage, divorce, separation, annulment and child custody.

A rise in international families – currently estimated at 16 million – and subsequent cross-border family disputes – 140,000 divorces and 1,800 children abducted by a parent annually – led the European Commission to propose amending the Brussels IIa regulation to make it more efficient.

“When parents decide to separate, children can be caught in the middle, and it gets even more complicated when the parents come from different EU countries. In these difficult situations everybody should focus on what is best for the child,” justice commissioner Vera Jourova said in a statement. “With the new rules, judicial cooperation will be faster and more efficient to make sure the children’s well-being comes first.”

The new rules aim to further enhance cross-border judicial proceedings on the basis of mutual trust between EU countries. By removing the remaining obstacles to the free movement of decisions, simplifying the procedures and enhancing their efficiency, the best interests of the child will be better protected.

It is hoped the new rules will bring legal certainty, reduce costs and, most importantly, limit the length of proceedings in international child abduction cases, for the benefit of both children and their parents

Florida Child Custody

Rules about children can differ around the world. I’ve discussed international child custody laws, especially as they relate to child abduction and The Hague Convention on child abduction. Child custody and timesharing is a matter I have written about specifically.

The Hague Abduction Convention is a multilateral treaty developed by The Hague Conference on Private International Law to provide for the prompt return of a child internationally abducted by a parent from one-member country to another.

There are three essential elements to every Hague Convention case:

  1. The child must be under the age of 16 years of age;
  2. The wrongful removal must be a violation of the left behind parent’s “rights of custody;”
  3. The left behind parent’s rights of custody “were actually being exercised or would have been exercised but for the removal.”

So, if a child under the age of sixteen has been wrongfully removed, the child must be promptly returned to the child’s country of habitual residence, unless certain exceptions apply.

The catch, of course, is that a child must be taken from a signatory country to another signatory country, and that is where understanding The Hague Convention comes in.

Even signatory countries may be bad at abiding by the convention, especially when it means enforcing the return of children to a parent alleged to have been abusive.

The annual State Department report to Congress on observance of The Hague Convention lists Honduras as “non-compliant” and nine other countries (Brazil, Bulgaria, Chile, Ecuador, Germany, Greece, Mexico, Poland and Venezuela) as showing “patterns of non-compliance”.

EU New Rules

The changes concern mainly proceedings related to parental responsibility matters and international child abduction and will have a positive impact on all procedures involving children by:

Settling cross-border child abduction cases faster

The deadlines applying to different stages of the child return procedure will be limited to a maximum period of 6 weeks for the first instance court and 6 weeks for each court of appeal. Also, Central Authorities will process applications for return faster.

Ensuring the child is heard

Children who are capable of forming their own views, will be given the opportunity to express these views in all proceedings concerning them. This will apply to matters of parental responsibility and international child abduction cases. Determining how and by whom the child is heard is a matter left to national law.

Ensuring effective enforcement of decisions in other Member States

With the new rules, the exequatur, an intermediate procedure required to obtain cross-border enforcement, will be abolished for all decisions. Under the new rules, enforcement can be rejected or suspended largely under the same conditions in all Member States, increasing legal certainty for all citizens and in particular the children concerned.

Improving cooperation between Member States’ authorities

Good cooperation between the Central Authorities of different Member States in handling child cases is an indispensable prerequisite for mutual trust. The new rules promote better cooperation between Central Authorities, which are the direct point of contact for parents. Also, child welfare authorities will be better integrated into this cross-border cooperation.

The new rules also clarify the sensitive issue of the placement of a child in another Member State, and set up a clear procedure to obtain consent from the Member State where the child is to be placed.

Setting out clearer rules on the circulation of authentic instruments and agreements

Considering the growing number of Member States which allow out-of-court agreements on legal separation and divorce or on matters of parental responsibility, the new rules will facilitate the circulation of the instruments and agreements.

“I am very glad that following our proposal the Council adopted new rules to ensure that any disputes between parents who disagree after separation can be quickly solved. This is about putting children first.”

The Europa article is here.



Happy Independence Day

The Law Offices of Ronald H. Kauffman, P.A. will be closed July 4, 2019 and July 5, 2019 in observance of Independence Day. We will resume our regular hours on Monday, July 8, 2019.

Independence day

Have a safe and happy holiday!


Millennials: The New Prenup Crowd

As the New York Times reports, these days, millennials are being credited with the recent spike in prenuptial agreements and postnuptial agreements. With the wedding season in full swing, the rise of a new prenup crowd could mean the downfall of the stigma typically associated with them.

New Prenup Crowd

AAML Statistics

According to a study by the American Academy of Matrimonial Lawyers, 62% of attorneys surveyed saw an uptick in requests for prenuptial agreements, with 51% citing an increase in millennials asking for the protection.

One likely reason: The Generation Y crowd is marrying later than previous generations, with years to build up assets and debt on their own. The term Millennials refers to the generation of people born between the early 1980s and 1990s. The Millennial Generation is also known as Generation Y, because it comes after Generation X — those people between the early 1960s and the 1980s.

That new approach of Millennials accounts for the changing role of women in the work force, too. In 1980, just 13 percent of women who lived with a male partner earned at least half the couple’s income — today, that number has nearly tripled.

So, while prenups traditionally protected the party with money — which often was the man, and which often led to resentment — millennials usually tackle the agreements as a team.

Florida Prenups

I’ve written about prenuptial agreements before. A prenuptial agreement (or “prenup” for short) is a contract between people intending to marry. A prenup determines spousal rights when the marriage ends by death or divorce. This can be especially important in second marriages.

If you divorce without a prenup, your property rights are determined under state law, and a spouse may have a claim to alimony while the suit for divorce is pending and after entry of a judgment.

That’s where prenups come in. Prospective spouses may limit or expand state laws by an agreement. Prenups are also used to protect the interests of children from a prior marriage, and to avoid a contested divorce. Prenups can be a reliable guide down rough rivers if they’re done right.

Millennial Prenups

Another factor in the rise of the new prenup crowd could be practicality, as more than one-third of millennials grew up with single or divorced parents. Though it’s easy to think of a prenuptial agreement as a “divorce contract,” many legal and financial experts view it as a smart business move.

“It’s such a good idea to go into the marriage understanding that — while it’s first

Several reasons you may want a prenup include:

  • Own property or a business
  • Have children from a previous relationship, or have been married before
  • Plan to take time off to raise children
  • Hold significant debt
  • Have robust retirement accounts
  • Will receive stock options during your marriage
  • Feel that a prenup might be a good fit for you? Here’s how to get started.
  • Talk to your partner, sooner rather than later. By starting early, you’ll allow time for multiple discussions — and prevent your fiancé from feeling forced or rushed into something he or she doesn’t understand or agree with.

When you hire a lawyer to complete your prenup, he or she will request all your financials — bank and investment accounts, tax returns, insurance policies, debts — so it’s wise to start compiling that information now.

And, though it might seem like a headache, getting a clear picture of your finances is always a good idea — especially before you merge your life with someone else’s. One thing you must omit: issues of custody or support for future children, as those decisions are made in the best interest of the child at the time.

Ready to make it official? You and your betrothed will each need to hire a lawyer. Depending on the level of complexity and negotiation, legal representation for a prenuptial agreement can cost $2,500 and up.

As long as you work with your fiancé in a team, a prenup can bring you closer together — rather than further apart.

The New York Times article is here.