Grantor trust for the benefit of an ex-spouse shifts income taxation to the lower-bracket recipient post-TCJA.
Post-TCJA (2019+), alimony is no longer deductible/includible. IRC §682 (pre-TCJA rule preserved for trusts) allows a grantor to fund an irrevocable trust for an ex-spouse and shift income taxation to the ex — useful when payor is in 37% bracket and recipient is in 22%. The 15-point rate arbitrage on $100K/yr = $15K/yr saved. Must be established as part of divorce decree.
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A Qualified Domestic Relations Order splits qualified plans between spouses with no 10% penalty and no tax.
Three flavors of §6015 relief remove joint liability for a spouse's understated tax, deficiency, or unpaid balance.
A properly-drafted marital agreement locks down separate ownership of pre-marital and gift/inherited assets.
In the year of separation, MFS can beat MFJ when incomes are lopsided, deductions are personal, or spouse is untrustworthy.
§408(d)(6) IRA transfers and §223(f)(7) HSA transfers pursuant to divorce decree are tax-free — no rollover rules apply.
Divorced spouses can still both claim §121 use/ownership tests via §121(d)(3) tacking — up to $500K exclusion preserved.
Property transfers between spouses (or ex-spouses within 1 yr / incident to divorce within 6 yrs) are tax-free.
With alimony non-deductible post-2018, restructure as property transfers, HSA/IRA splits, and unallocated support.