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New Hampshire Supreme Court Weighs in on Treatment of Taxes in Divorce

The New Hampshire Supreme Court issued two orders this month involving the treatment of taxes in a divorce. First, the Court upheld prior case law stating that in order for a spouse to be able to receive consideration for taxes it would pay if property were to be sold, the sale has to be certain and imminent following the divorce. Typically this scenario occurs when one spouse is awarded the marital home and the other spouse is awarded real property or other property such as a stock portfolio. The spouse receiving the marital home will not incur taxes in most instances (although not all, depending on the price of sale), because the sale of a marital home is not generally a taxable event, whereas the sale of commercial property or a vacation home will generate a tax.

In the second case, the New Hampshire Supreme Court ruled that tax debt is marital debt, the division of which can be ordered by the Family Court. In fact, it was ordered by the Court that the Family Court has exclusive jurisdiction over the allocation of this kind of marital debt.

As you can see, tax treatment is an important consideration in crafting both your mediated agreements and proposals to the court. At Brennan Lenehan, we can assist you with this legal issue as well as all of your divorce needs.