Alimony: To Be Or Not To Be?
In recent years alimony, due to the negative connotations, has been referred to as maintenance. Traditionally, alimony was awarded to the wife and paid by the husband. However during the 1970's and 1980's judges began to award alimony to the husband depending upon the circumstances. Alimony is awarded to either spouse in an effort to maintain the standard of living that both parties were accustomed to during the marriage.
Alimony awarded prior to the divorce is called pendente lite alimony. It is taxable income to the recipient and tax deductible to the payer.
At the time of the divorce, if alimony is awarded it can be one or a combination of the following:
Permanent: This type of alimony is to be paid until either the death of the payor, or the remarriage of the recipient. Some agreements may include a "cohabitation" clause that states alimony ends when the recipient cohabits with another person in the avoidance of Marriage.
Lump sum: This type of alimony is a one tine payment of alimony instead of periodic (usually weekly or monthly) payments. Lump sum alimony, just like all other alimony, is taxable, so be sure to consult with a CPA experienced in divorce to determine the tax consequences of this type of payment prior to agreeing to it.
Temporary: This type of alimony lasts for a specific period of time, and may be awarded when the persons involved are on almost equal ground, but due to certain circumstances one person may need financial assistance in order to "get on their feet,”
Rehabilitative: This type of alimony is the most commonly awarded alimony. It is awarded in a situation where the recipient is younger, or able to eventually enter or return to the workforce and become financially self supporting. Rehabilitative alimony may include payments for the education necessary to enable the recipient to become self supporting.
Keep in mind that if you are awarded any type of alimony it will cease upon death of the payor. It is a good idea to include life and disability insurance policy in an amount sufficient to replace the alimony. Because you have an insurable interest in the person being insured you are able to buy the policy yourself. This could be money well spent in the event that life and disability insurance are not part of your agreement. Every state has its own criteria for determining the need and extent of alimony. However, generally the following factors may be considered:
1. Duration of the marriage.
2. Earning capacity of both parties.
3. Age, as well as physical, mental and emotional state of each party.
4. Other income, including but not limited to interest and dividends.
5. The contribution by one spouse to education and furtherance of career of the other.
6. The contribution of one spouse as a homemaker
7. How much earning power will be affected by the parenting requirements of the custodial parent.
In addition to the above, the judge may consider ANY economic circumstances of either party that they (the judge) deem to be just or proper. The amount of alimony payments is generally calculated based on the above considerations.
As with any other aspect of your divorce, if possible it is always best to negotiate alimony rather than have a judge arbitrarily determine if your situation is one that will include alimony.
The preceding article provided a very informative outline of how alimony is determined. A concern that every recipient spouse of alimony has is, “What if he or she does not pay me my alimony payment after the divorce is finished?” The cold hard fact is this: the sooner you can become independent from your ex-spouse and their alimony payment the better you will be! If you are depending on an alimony check to cover next months house payment then you are running a huge risk of the house payment either not being made on time or not being made at all. By the time you get a court to hear a case and find your ex-spouse in contempt, your house may be foreclosed on.
The other negative issue with alimony payments is the detrimental effect it has on a parenting plan. Alimony arguments are among the most common among divorced couples. A monthly alimony check means a monthly conversation with your ex-spouse about an issue that usually creates conflict. Your kids will see it. Your kids will feel it.
Couples that are in mediation feel that sometimes alimony is something that they have to have and the facts are this, if you depend on alimony it to put food on the table, you might eat macaroni and cheese for a while. Because, alimony is not a fair process all of the time.
Divorce Mediation Institute of Utah
Helping people in Salt Lake City, Cottonwood Heights, Sandy and all surrounding areas.