Tip: Include a provision in your divorce judgment or settlement agreement for an automatic cost of living increase or a provision that any future award be based on a percentage of your spouse’s current income.
Alimony (or spousal support) used to be given to ex-wives to allow them to live in the same style as when they were married. These days, courts more often award maintenance to economically disadvantage spouses, regardless of sex, to help them acquire skills to be self-supporting. Courts can also order support to homemakers to compensate for faithful service.
According to Gayle Rosenwald Smith a Philadelphia Lawyer, alimony is awarded in only 15 percent of divorce cases.
The basic factors to determining if, and how much alimony a spouse receives are the following:
- The actual need and ability of the spouses to pay
- The length of the marriage
- The physical, emotional health of the spouses, as well as their age
- The standard of living established during the marriage
- The earning capacity and educational level of each spouse
- The reasons for the dissolution of the marriage – fault-
There are actually several different types of alimony: limited duration or term, permanent, lump sum, rehabilitative and reimbursement.
- Limited duration or term alimony is paid over a specific time period or number of years and is based on the length of the marriage, dependent spouse’s needs and the needs of minor children.
- Permanent alimony is usually considered when there has been a marriage of over 20 years or if a spouse has a serious illness that does not allow them to generate their own income. This type ends when one of the spouses dies.
- Lump sum alimony is simply paying the alimony amount agreed to all at once, which is sometimes an attractive option as it reduces the continuous financial dependency on the ex spouse.
- When a divorcing spouse seeks to further their education so they may support themselves after a divorce, rehabilitative alimony is considered. Rehabilitative alimony is sometimes paired with another type of alimony, and usually ends when a spouse obtains employment at their full potential.
- Like rehabilitative alimony, reimbursement alimony is often awarded in addition to another type of alimony. Reimbursement alimony is designed to pay back the dependent spouse for “lost” employment opportunities or personal/professional goals that were sacrificed for the benefit the other spouse and the marriage.
What You Need to Know About Divorce and Alimony:
- Judges decide how much alimony you’ll get.
- If your judgment does not provide for alimony, most states will not permit you to ask for it after the divorce unless the agreement specifies otherwise. A nominal amount of alimony – even $1 a year – will preserve your right to ask for more money later.
- In equitable distribution states, courts may award one spouse a larger share of the marital property and also require the other spouse to pay health insurance or reasonable medical expenses not otherwise reimbursed as alimony.
- Alimony is taxable income for the person who receives it. Alimony is tax deductible for the person who pays it. There are alimony calculators that accountants and attorney’s use to maximize the amount of tax deductible alimony and net alimony for both parties so the IRS receives less.
- Review the IRS Publication 504, Divorced or Separated Individuals for information on how to determine and label alimony amounts.
- Be sure that payments have a paper trail. Receiving payments by personal check or by garnished wages from the spouses’ employer are easily documented.
- Consider your spouses’ age, job status and remarriage (if you know if they are remarrying) to ensure the realistic payment amount and dependability. For instance, if your ex were to retire and or move in a year how would that effect your alimony payment.
- Alimony, like child support, can be adjusted by court order when there is a change in the payee’s circumstances, such loss of employment or change in health. Remember the court can’t adjust the support with out you proving you cannot afford to pay the agreed to amount. So simply not paying for months is not recommended as you can be ordered to pay the amount past due plus future due payments when you could have requested that the payments be lowered before becoming delinquent.
Chart of Alimony/spousal support factors by state prepared by the Family Law Section of the American Bar Association.