Alimony – An Overview and Summary
Alimony is a word that can stop any married male in his shoes. Alimony, or spousal support, is a term that is used to describe payments made by one spouse to the other after a separation and/or divorce. While this concept may sound simple, there are many nuances that are applicable to this issue that need to be understood before a party agrees to pay any amount or form of alimony.
Typically alimony is paid by the wage earner who earns the higher amount to the lower of the two wage earners. It is also extremely important for anyone that finds themselves in a situation where alimony may be possible, paying or receiving, to contact an attorney. If you attempt to negotiate alimony without the aid of an attorney, you run the risk of ending up with the responsibility of paying too much or receiving too little. In a judicial setting, the determination of alimony is an issue that is considered by the different state courts meaning that the amount or form of alimony under a certain set of facts can vary from state to state. Alimony also comes in different forms, for example, alimony can be awarded in a lump sum, a lump sum paid off in regular set payments, it can be rehabilitative or to compensate a spouse for some earlier event or expenditure, it can be permanent in nature or some hybrid of the forms. There is no set formula for determining an amount of alimony, rather certain factors are considered when making a determination. This determination, while often guided by prior cases, is done on a case by case basis.
As with most issues in divorces, resolution can come by an order of the Court or by an agreement of the parties. In either case, for alimony, varying factors will be used in setting or determining a final amount. The factors, though they vary from state to state, can include, the length of the parties’ marriage, marital misconduct or fault of either party, the earning potential of the parties, the age of the parties, the health of the parties, other assets the parties’ may have, and other such factors. However, many times alimony is viewed as a mechanism for allowing a spouse to live in a lifestyle to which they have become accustom. It is important to realize that this does not mean a spouse receiving alimony is entitled to live exactly the same as they did prior to the separation or divorce. It also does not mean that a spouse will never have to work again as quite the opposite is true. If a spouse can work, they will have to. If they refuse to, the Courts will likely impute some income to the non-working spouse as an offset against alimony they would receive.
Often when setting an amount of alimony, a spouse to receive alimony charts their expenses and other reasonable needs. From this figure, the amount they can contribute themselves by way of income or other resources are considered and then alimony is used to make up the short fall in their total reasonable needs. When the needs and expenses are factored, it is also likely that a Court or opposing counsel will want to review the expenses to ensure they are reasonable under the circumstances to ensure alimony is set at a reasonable and fair level. The income of the spouse paying the alimony is a very important factor as that will have a great deal of impact on the amount to be paid meaning that a spouse can’t pay what they don’t have. The Court will also not leave the party paying the alimony destitute; however, some degree of belt tightening may have to be done. As to how much alimony will be paid in a certain case, such is a case by case determination. If you are considering alimony in two different cases where both parties were married for 15 years, and one of the two cases has a combined income of a million dollars per year and the second case has a combined income of $75,000 per year, a spouse in the million dollar marriage may be entitled to receive more by way of alimony and will likely receive more unless the million dollar spouse receiving alimony earns a substantial income.
Alimony can also only be classified as such if it is paid pursuant to an order of the court. In other words, if for 6 months one spouse pays the other $1,500 per month without an order and considers it alimony then begin paying the same amount pursuant to an order, the initial 6 month of payments, regardless of intent, are not considered alimony, particularly when it comes to tax classifications.
The payment and receipt of alimony can have income tax considerations. Traditional alimony payments, those that are paid periodically, usually monthly, for a permanent duration, are taxable to the party receiving the payments and deductible to the spouse paying the alimony for tax purposes; however, other alimony payments can also have tax implications for both the paying and receiving spouse. This means that the party paying the alimony receives a benefit by deducting the payment on their income tax return and the spouse receiving the alimony must claim the alimony as income. However, there are a number of considerations which must be taken into account when looking at this issue. First, the alimony payments must be in cash, they cannot be property or other consideration. The payments must be made pursuant to an order, though this order can be a temporary order, an order of separate maintenance and support, or a final order. The parties must be living separate and apart when the payments are made, there can be no obligation for payments to continue after either party death and the payments cannot be child support. If all of these factors are met, the alimony or spousal support can be deducted without itemizing on your return. Alimony can also be deducted even if paid to multiple former spouses. In the event there are questions concerning how alimony should be treated on a tax return, consult with a qualified tax professional, preferably one who has experience in domestic law, particularly alimony.
Conduct of the spouse to receive alimony is also important. In some states, adultery or other marital misconduct can serve as a statutory bar to alimony or perhaps increase the amount of alimony paid. This means that if you engage in any conduct that serves as a bar to alimony, then a spouse, regardless of their need or any other qualifying factor, can be completely and forever barred from receiving alimony. Alimony can also terminate upon the occurrence of a number of events. For instance, if alimony is considered permanent and periodic in nature, then it will continue until the spouse receiving the alimony remarries or either spouse dies. As well, some jurisdictions have enacted legislation that will end alimony if the spouse receiving the alimony cohabitates in a romantic relationship for more than 90 days.
Traditionally, the husband was the party paying alimony; however, it is not unusual for women to pay alimony to husbands. It is also not unusual for the particulars of a divorce decree or divorce agreement to set specific parameters on alimony. For instance, an agreement my make alimony non-modifiable for a certain period of time, alimony may be set to continue at one level for a period of time then reduce or alimony may have a buy out provision where an obligation for periodic alimony may be paid in full for a lump sum. Essentially, anything that can be agreed upon by the parties can be incorporated into an agreement. Alimony can also generally be adjusted if there is a change of circumstances for either party.
Overall, alimony is one large issue that encompasses many smaller issues. If you are ever faced with having to pay, or if you may receive alimony, take some time and consult with a domestic attorney to make sure you understand your rights.
This article is not offered as, nor is it to be construed, as legal advice, nor does it create any relationship, attorney/client or other, between the author and the reader. To obtain any legal advice, consult an attorney licensed to practice law in your state.
