Protecting your Assets: How the TCJA will affect the Denver Housing Market

Denver housing market

With so much uncertainty surrounding the Tax Cuts and Jobs Act, it can be hard to know how these changes will affect you, personally. Yes, there have been changes to alimony and standard deductions in general…but what about how it might affect the Denver housing market?


In many cases, the property you own is one of your greatest assets and is a major factor in divorce proceedings. So, knowing how these changes might affect the Denver housing market is crucial when planning your future.


To get more information about these possible changes, Sandi Gumeson of Wellspring Divorce Advisors Denver turned to real estate expert AK Cotton of Coldwell Banker.

Will the change in tax laws discourage people from buying homes?

The short answer is no, I don’t think it’s going to slow down the market or affect housing prices. The demand in Denver is too high and inventory is too low. At the end of the day, people still want to buy a house and with rental prices, it still makes economic sense. BUT – there are a lot of factors involved in this.


Is there something you would tell a prospective buyer when they’re thinking of purchasing a home, now that the tax laws are changing?

I still think the most important thing is education. Even before this tax reform bill, most homeowners didn’t really understand the financial impact of tax law and how that could affect what they can afford.

Here’s a good article outlining some of the changes and how it relates to the real estate market. (click here)

What else do you think people should know when it comes to the new tax laws and the Denver housing market?

The original tax bills proposed some pretty major changes that might have had more of an impact on the real estate market conditions. But, during negotiations, the final bill that was voted on protects a lot of our tax benefits as homeowners.


For example:

  • Keeping the capital gains exclusion (living in your home 2 out of 5 years as opposed to the proposed 5 of 8 years).
  • Mortgage Interest Deduction decreased, but not as much as proposed and won’t affect the majority of homeowners (loan limits from $1m to $750,000).
  • 1031 exchanges for real property stay the same.


Thank you, AK Cotton, for your insight and information! For more information about how you can connect with AK, click here.


Sandi Gumeson


Sandi Gumeson is a Certified Divorce Financial Analyst® in the Denver area.  She is also a CPA (CA License), a member of the AICPA, and a member and on the Board of Directors for the Institute of Divorce Financial Analysts.  Sandi’s extensive experience in finance, analysis, operations, budgeting, and forecasting enables her to provide a high level of expertise in understanding the overall financial picture for her clients.  To contact Sandi for assistance, call 303-378-9323 or email






The Final Version of the TCJA: Here’s what you need to know


On Friday, December 15th, 2017 the final version of the legislative text involving the Tax Cuts and Jobs Act (TCJA) was released. This was accompanied by the supporting Conference Committee notes. Here is a summary of how this might affect you in 2018:

Executive Summary

Income tax brackets

  • Seven total brackets.
  • Top bracket down from 39.6% to 37%.
  • Most brackets have been trimmed slightly.
  • Subject to sunset.
  • Effective January 1st 2018.


  • No change for 2018.
  • For agreements entered into on 1/1/19 or later, alimony is NOT tax deductible for the payor and the recipient will not be taxed.

Capital gains and dividend rates

  • Unchanged from current law.

Standard deduction

  • Increased from $6,350 to $12,000 for single filer.
  • Increased $9,350 to $18,000 for head of household
  • Increased $12,700 to $24,000 for Married filing jointly.
  • Effective January 1, 2018.

Suspension of personal exemption

  • Will require change to standard practice of claiming withholdings on W-4 for all employees.
  • There is no guidance yet on how this will be done.
  • Effective 1/1/2018.

Phaseout for Child Tax Credits

  • This increased dramatically. This will affect support calculations by allowing more high-income individuals to take advantage of the credits.
  • The phaseout is increased from $75,000 to $200,000 for individuals.
  • These are valuable credits as they work as a dollar for dollar offset against taxation rather than a deduction from income.

$10,000 cap on state and local income and property tax deductions.

  • This is a combined total.
  • This provision will affect our clients drastically: Consider the average California family with a $1,000,000 home and $10,000 property tax bill that comes along with it. The property tax alone will eat up the entire deduction. Now, assume that family earns $400,000 per year with two wage earners. Their combined state income taxes easily exceed $30,000 which will no longer be deductible on their federal return.

Mortgage interest deduction

  • Limited to $750,000 loan effective for all purchases going forward.
  • All homes purchased before 12/15/2017 grandfathered to $1,000,000.
  • Home equity interest is not deductible and no grandfathering.

Repeal of miscellaneous itemized deductions

  • Under current law, it is possible for a client to deduct a portion of their legal fees during divorce as miscellaneous itemized deductions; specifically, those legal fees incurred in seeking or defending oneself from alimony. In highly litigated high-income cases this number can rise to six figures and provide much needed tax benefits during dissolution. The new law suspends all miscellaneous itemized deductions.

 Bill does not amend or repeal Capital Gains exemption for principal residence despite revisions proposed.

  • Both houses had included repeal or phase out of exemption but did not end up in final bill.

Doubled the estate tax exemption

  • $11,200,000 for singles.
  • $22,400,000 for married couples.


Many of the reforms sunset in 2025.



With limitations on deductions for state and local taxes and mortgage interest, far fewer clients will end up itemizing in the coming years.

What does this mean?

This means our process for entering data into Dissomaster (California support calculator) will change. It will be extra important to be sure you do not enter full mortgage interest amounts if the indebtedness is over the $750,000 limit. In the interim you can use the tax settings in Dissomaster to prepare hypotheticals showing support guidelines with non-taxable and non-deductible alimony by doing the following:

  1. Go to the tax settings.
  2. Toggle the settings under the general tax settings section.

We ran a hypothetical guideline calculation with the father earning $20,000 per month and mother earning $3,000 and the combined net disposable income decreases by $600 per month.

There are provisions in the bill that keep taxpayers from accelerating state and local taxes or deductions payments for future years into their 2017 return. So, there is no way to game this change as we may have in the past by accelerating said deductions into higher income years.


wellspring divorce advisors

Wellspring Divorce Advisors helps individuals and couples address the financial aspects of divorce in a civilized, equitable, and efficient manner by providing expert divorce financial planning and advice.

Contact us to find out how we can help you through this process.

Life After Divorce: Determining Your Beneficiary Designations

beneficiary designation

A Little Backstory

In January 2009, the U.S. Supreme Court ruled (Kennedy v. DuPont Plan Administrator) against a woman suing her late father’s pension plan for money her mother received. This occurred even though the mother had forfeited her rights to the pension in their 1994 divorce. The Supreme Court determined the beneficiary designation form and the procedures set under the plan were sole determinants of benefit distribution.

Employers are required to pay benefits as stated in the original beneficiary designation form, in spite of a divorce decree.

Have You Changed all Your Beneficiary Designations?

It is important for all divorcing individuals to revisit their estate planning, including beneficiary designations, wills and trusts.  Changes must be made to retirement plans in accordance with the rules set forth by respective employers.  Otherwise, children and/or new spouses may not be eligible to receive benefits.

Remember the following points:

  1. Wills have no precedence/jurisdiction over the beneficiary designations of IRAs, 401(k)s, insurance policies and annuities.
  2. It is always important to designate a contingent beneficiary for these accounts. Otherwise, if a  primary beneficiary predeceases the owner, the account will need to be probated.
  3. Naming a minor as a beneficiary sends estates straight to probate.  Probate courts must supervise distributions left to minors.  Establishing trusts in the children’s name will bypass probate.
  4. Changing beneficiaries can often be done online or with the assistance of a financial advisor.

If you do not have a financial advisor with expertise in divorce, please consider obtaining one. Divorce is likely to be the most difficult financial transition you will ever experience.In fact, in an article on, contributing author Robert Laura said, “I would even go as far as saying some people actually come to us (financial planners) before going to a therapist, pastor, or other source.”

The Bottom Line.

Professional guidance and support during and after this emotionally charged time will prove invaluable.


wellspring divorce advisors

Wellspring Divorce Advisors helps individuals and couples address the financial aspects of divorce in a civilized, equitable, and efficient manner by providing expert divorce financial planning and advice.

Contact us to find out how we can help you through this process.



Our firm does not provide legal or tax advice. Be sure to consult with your own tax and legal advisors before taking any action that would have tax consequences. The information provided herein is obtained from sources believed to be reliable; but no representation or warranty is made as to its accuracy or completeness.

The Tax Cuts and Jobs Act: A Closer Look at How it Will Change Divorce

tax cuts and jobs act

As you may have heard, Congress will likely be voting on major changes to the tax code this fall through the Tax Cuts and Jobs Act (TCJA).  At this time it has not been put into law, and the Senate may propose changes; however, if it passes, here is what you need to know.

(The changes are generally effective for tax years after 2017.)

How will these changes affect you?

There is one main change that will impact divorcing couples:

Alimony or Maintenance will no longer be tax deductible.

Up until now, alimony (aka, spousal support or maintenance) is deductible by the payor and taxable to the payee.  This often allows divorcing couples to shift income from a higher tax bracket to a lower tax bracket and reduces their overall tax bill, thereby sending less money to the IRS.

The proposed change could have large financial implications: It will cost the payor more and allow the recipient to receive more. Per the language in the Act, the change applies to divorce decrees and separation agreements executed after 12/31/17. Only time will tell if State Laws and alimony formulas will be adjusted to account for the change in tax treatment.

The proposed tax change would mean that alimony would have the same tax treatment as child support.

More changes you should know about.

1. Change to the income tax rate.

In an effort to simplify the tax code, there will be 4 tax brackets instead of the seven brackets that we currently have.  The new brackets would be 12%, 25%, 35% and 39.6%.  Note that the highest tax bracket is unchanged at 39.6%.

2. An increase in standard Deductions.

Current standard deductions would almost double to $24,000 for joint filers and $12,000 for single filers.  While there is currently a standard deduction for those filing Head of Household, the TCJA is silent as to the new standard deduction for Head of Household filers.

The purpose of this change is to simplify the tax filing process by greatly reducing the number of taxpayers who itemize deductions.

3. Maximum Rate on business income for individuals.

Small businesses such as Partnerships, Sole Proprietorships, LLCs, or S- Corporations are considered “pass-through” entities.  This means that the income generated from the business is reported on the owner(s) individual tax return and taxed at individual rates. The highest rate of tax under the current system is 39.6%.

Under the proposed changes, a portion of the income can be treated as “business income” and will be taxed at a maximum rate of 25%. This could potentially be a huge saving for those who own these types of businesses.

In reading the Tax Cuts and Jobs Act, this provision is complicated.  It’s a good idea to consult a tax professional.  This provision alone will keep the CPAs quite busy!

4. A new limit to Mortgage Interest Deduction.

Currently, if you have a mortgage up to $1,000,000, you can deduct the interest on that mortgage as an itemized deduction. However, the proposed change reduces the limit to interest on mortgages of $500,000 or less.  This change has an effective date of November 2, 2017.  So any mortgage or refinance incurred after November 2, 2017 would be affected by the new law.  Existing mortgages would be grandfathered in and not affected by the change.

While many regions across the country will not be impacted by this change due to lower housing prices, this will impact many buyers in areas with expensive real estate markets.

It’s time to consult a professional.

There are many other changes listed in the Tax Cuts and Jobs Act.  If you are concerned or want to know if you should do any tax planning before the end of the year, it is a good idea to consult your tax professional sooner rather than later.


Sandi Gumeson


Sandi Gumeson is a Certified Divorce Financial Analyst® in the Denver area.  She is also a CPA (CA License), a member of the AICPA, and a member and on the Board of Directors for the Institute of Divorce Financial Analysts.  Sandi’s extensive experience in finance, analysis, operations, budgeting, and forecasting enables her to provide a high level of expertise in understanding the overall financial picture for her clients.  To contact Sandi for assistance, call 303-378-9323 or email



For more about the TCJA from Wellspring Divorce Advisors, click here.

A Long Separation: How this can affect your future financial planning

long separation

We have seen many new clients recently who have experienced a very long period of separation from their spouse. Why? The couple made a conscious decision to simply live apart in separate households without progressing to divorce proceedings.

There are many divorce financial planning complications created by these long separations. Here are a few that come to mind.

1. How will we determine the date of separation for valuing assets and other considerations?

Many of the couples choosing to live separate lives do exactly that with the exception of their finances. We see cases were the couple owns two homes together and each lives in one of them. They may even continue to share income by having both parties deposit their earnings into joint accounts.

In the State of California all earnings of an individual are the separate property of the party earning them. In the event the divorce does happen down the line a decision must be made about separating out these post separation earnings. In the instance where only one party has earned income they may argue for a much earlier date of separation in order to claw back all of those post-separation earning as their separate property.

Of course the non-working party would then seek the latest possible date of separation to combat the other’s claim. Date of separation is a legal issue with potentially major financial implications. We suggest you work with your attorney and your Divorce Financial Analyst at Wellspring Divorce Advisors to determine the cost vs. benefit of making a claim on date of separation as the litigation can be costly and your position hard to prove.

2. Who has had use of the community property assets?

In the State of California we have precedent case law that requires the party making use of the community asset be charged for the value of that usage. The most common example is a home owned by the community used exclusively by only one party for an extended period of separation. This is known as a Watts Credit in California.

In order to determine the amount of a Watts Credit for exclusive use of a Community Property home a real estate appraiser will determine the Fair Rental Value of the home. Your Divorce Financial Analyst will then determine the actual cost of maintaining that home such as mortgage, property taxes, insurance and basic maintenance if the Fair Rental Value exceeds the cost of maintaining the home the party with exclusive use must pay the Community for the difference.

Example: I can rent my home on the beach in La Jolla for $12,000 per month (The Fair Rental Value), it has no mortgage, $2,500 per month in Property taxes and $300 per month in insurance and $700 per month in maintenance for things like a gardener and large water bill to maintain my rare orchid garden. In total it costs $3,500 per month to maintain the home but is worth $12,000 in Fair Rental Value to the Community resulting in a $8,500 per month credit owed from the party with use of the home to the Community. Over a four year separation the total Watts credit would be $408,000 or $102,000 per year. Ouch.

Talk to your attorney and Divorce Financial Analyst at Wellspring Divorce Advisors for assistance in making a decision about the long term viability of maintaining the home in your individual financial circumstances.

3. Who has control over Community assets during separation?

Whether it be a traditional stock and bond portfolio traditionally managed by one party, a real estate portfolio managed by a professional manager or a business started and owned by the Community, someone must maintain control and oversight of the assets or else risk their partial or complete loss due to lack of management. We usually see couples separate and simply maintain the status quo where whomever was responsible for certain financial decisions remained in that role during separation.

We are here to tell you – DO NOT FALL INTO THAT TRAP.

Abrogating your responsibility for financial decisions during marriage is a bad idea in our opinion and a full scale sin in the middle of a separation. Yes, you may trust your spouse still but now you have no ability to see what they are doing, what kind of decisions are being made and where you might find concerns in those decisions because your financial partner now lives in another house.

The minute you separate you should discuss the separation with a Divorce Financial Analyst at Wellspring Divorce Advisors so we can help you to set up workable ground rules for financial decision making and assist you in making those decisions through our sophisticated and experienced financial advice. We have seen jobs lost, investment accounts dissipated, credit card debt accumulated and many other financial calamities during these long separation and can help you avoid making the same mistakes.


wellspring divorce advisors

Wellspring Divorce Advisors helps individuals and couples address the financial aspects of divorce in a civilized, equitable, and efficient manner by providing expert divorce financial planning and advice.

Contact us to find out how we can help you through this process.