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Opinion

Don Jr. Is About To Get Screwed By His Dad’s Tax Plan During This Divorce

I preemptively apologize for the blatant schadenfreude, but I am going to love it when Donald Trump, Jr.’s ex-wife screws him with his father’s tax plan. This week, after twelve blissful years and five children Vanessa Haydon Trump, the wife of the president’s oldest son, filed for the big D. The case is proceeding as an “uncontested divorce,” meaning that (at least at the time of filing), Ms. Trump isn’t expecting a trial. Instead, the two will likely negotiate through lawyers to arrive at a mutually-satisfactory settlement agreement that works out child custody and support, property distribution, and alimony.

The uncontested status is exactly what I’d expect from a couple like the Trumps; I’m sure they have a prenuptual agreement, which would have had a clause about what happens with spousal maintenance (New York legal term for “alimony”), as well as property distribution. That prenup couldn’t have contained provisions with any kid-related issues, but it would definitely have included alimony. That doesn’t exactly mean that there won’t be any fighting over alimony – but just that the argument would focus on the enforceability of the prenup, as opposed to alimony more generally.

Law & Crime spoke with Jennifer Rosenkrantz, a New York matrimonial lawexpert and partner with Schlissel Ostrow Karabatos.  Ms. Rosenkrantz explained:

“The Trumps almost certainly have a prenuptial agreement which controls how much maintenance Vanessa Trump will get.  Assuming that the maintenance provisions in the agreement are not “unconscionable” (a high burden to meet), they will be upheld and she will be bound by them. Without a prenuptual agreement, a court would determine the correct amount of spousal maintenance by applying a standard formula to the parties’ income; that formula would allow for a maximum of $3,066.67 a month in alimony, unless the court deviates from the formula.”

Prenup or no prenup, ex-spouses are never particularly psyched to pay alimony. The one thing that has always softened the blow, though, is that the paying spouse gets a tax deduction for the alimony paid, and the receiving spouse has to claim that money as income. Don Jr. is going to be sorely disappointed to learn that this all changes under Daddy’s tax plan. While the rest of America may be busy becoming great again, FSOTUS stands to lose a pretty valuable tax deduction.

Starting January 1, 2019, alimony payments are no longer deductible to the payer or included in the income of the recipient.  That means the Trumps have about nine months to resolve all their divorce issues before things get expensive for Don Jr.

Vanessa Trump (or at least her lawyer) is no dummy. She can see the Mueller indictments and discovery demands being handed down daily. She knows that the smart move is to legally distance herself from her in-laws, stat. Few maneuvers have the guillotine-like power of the filing of a Complaint for Divorce. Once it’s filed, the marital clock stops. Assets and income are no longer acquired jointly. Spousal privilege no longer prohibits one spouse from testifying against another. Things are different in the eyes of the law, even if the divorce hasn’t yet been finalized.

It sure wouldn’t be difficult for Vanessa Trump to drag out settlement negotiations until after next January; at that point, she’ll slide out of any obligation to include alimony in her income. Alternatively, Vanessa could use the impending tax deadline as leverage to press Don Jr. into a quicker (perhaps more generous) settlement. Either way, it’s a total win-win for her.

While Vanessa Trump’s lawyers are surely working hard to ensure that Don Jr.’s return to bachelorhood pads her bank account as much as possible, the truth is that the obscenely wealthy won’t be hit nearly as hard as will regular Americans by the change in alimony taxation. Law & Crime spoke today with matrimonial law expert Kristin Lis, partner with Smedley & Lis. Ms. Lis was concerned about how the change would affect people like her clients:

“If their divorce isn’t finalized until after 1/1/19, their attorneys are going to have to account for the loss of the deducibility/includibility of alimony. That could certainly mean that Don Jr. agrees to pay less alimony than he otherwise would have.  But the reality is that people like the Trumps, who have plenty of assets and financial security, won’t be hit nearly as hard as the average American will be.  For Don Jr., who uses mega-accountants to maximize write-offs for things like private jets, this change will simply mean one less beneficial tax deduction. By contrast, a truly financially-dependent post-divorce spouse may now find his or herself financially unable to leave a bad relationship now that there is reduced potential for alimony.”

Bottom line, bad as things may be for Don Jr., they’ll be worse for the rest of us. I think we can file that under #ShockingNotShocking.

One day into divorce proceedings, the talk in the media is still about the “tremendous respect for each other and our families” that the Trumps have had. Only time will tell whether Don will put his “tremendous respect” where his wallet is.

(Photo by Drew Angerer/Getty Images)

This is an opinion piece. The views expressed in this article are those of just the author.

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