In summary, there would appear to be little reason for the Internal Revenue Service or the courts to interpret the TCJA in such a way as to allow marriage contracts to circumvent the change in tax legislation and to preserve the deductibility of support payments. Taxpayers who have entered into marital agreements that were either unaware of the changes to the support provisions or were unable to negotiate amendments should partner with a tax advisor. Given the removal of an important tax planning mechanism, other tax planning options should be considered. Brides-to-be and brides-to-be must list all their assets and sources of income. NOTE: Even if the disclosure is complete and appropriate, the agreement may not be bulletproof. The courts can ensure the fairness of the agreement not only when it has been signed, but also when a spouse tries to impose it. Perhaps a variation of a non-contest clause would be helpful. If the spouse agreed to waive his rights after the marriage and did not do so, other provisions would be reduced for them from the value of the pension he receives. Alternatively, the agreement could provide for each spouse to agree to share gifts as part of the annual gift tax exclusion (currently US$13,000 per person).

NOTE: You cannot selectively divide gifts, z.B. by accepting only up to the annual exclusion. Consent applies to all gifts offered by the donor`s partner during the year. Despite the concerns and not without a little grudge, Jane accepted the pre-Nup. After months of intense discussions, an agreement was reached. Since John`s fortunes and incomes were much greater than Jane`s and Jane would abandon her former husband`s compassion, John`s terms were structured to pay Jane in the event of a divorce. And of course, the terms of support were based on the hope that John`s alimony would be deductible and taxable for Jane. A marital agreement involving the transfer of property from one fiancé to another before marriage may trigger a tax obligation on donations if the value exceeds the annual exclusion of gifts.

The internal income code treats these transfers as a gift of ownership, as the waiver of marital rights is not a “reasonable consideration” for the transferred property. I.R.C No. 2043 (b). If you`re going to introduce your fiancé with a pre-wedding gift of considerable value, think twice. The Tax Reduction and Employment Act eliminated the tax treatment of subcontractors that has been in place for more than 75 years. Under the old law, support is deductible from the payer`s income and is insufficient in the recipient`s income, provided the parties comply with the specific requirements of the internal income code (I.R.C. Effective January 1, 2019, under the Tax Reduction and Jobs Act, the parties will no longer be able to enter into an agreement on taxable support payments, and court-ordered support payments will not be deductible from the payer`s income and excluded from the recipient`s income. Certain support obligations created before January 1, 2019 may be subject to tax under the old act; no others. Let`s look at the story of John and Jane Green, a second marriage for both. Jane had divorced and John was a widower. No one thought a remarriage was in their future.

It is interesting to note that John and Jane had known each other and even socialized during their marriage, being part of a larger circle of friends that was part of a nearby tennis and swimming club. Fate must have played the role of Cupid. The club organized a tournament for couples; One of the women became ill and Jane was recruited to take her place as John`s partner. And so, they suspected, John and Jane began their journey to make a couple. A year later, John proposed and Jane agreed. John, however, had a pre-wedding. He wanted them to enter into a marriage. “He said: “We both have children whose inheritance rights must be protected. It is clear that one of us will die before the other. With the 2017 Law on Reducing