Alimony is money that is paid by one spouse to another during and/or after divorce, dissolution, or legal separation. Spousal support and maintenance are modern terms used to describe alimony in states like California that no longer recognize alimony. Alimony, spousal support, and maintenance (collectively referred to as “support”) are not gender-based and may be awarded to a man or woman. The right to receive support is not guaranteed but is determined on a case-by-case basis and awarded when one spouse has the means and the other, needs. Regular support payments are taxable income to the payee and tax deductible by the payer. If, however, the amount of payable support decreases by a certain amount per year within the first three years of payment, the tax deduction may be subject to IRS “recapture” rules and additional support payments may not be deductible. Women who are negotiating support payments or preparing to ask for alimony at trial should always consult with a tax accountant or lawyer to determine the best type, duration, and amount of support to request.
Support may be paid temporarily, for a limited term or for a long term. It also may be paid in a single lump sum payment, modified, terminated, or waived.
Temporary Alimony, Support, and Maintenance
A spouse may be ordered or agree to pay support for a temporary or short period of time. Temporary or pendente lite support payments are generally paid soon after a Complaint or Petition for Divorce, Dissolution, or Legal Separation is filed, and continue until long-term support payments replace temporary support payments, or a spouse’s right to receive support is terminated.
A spouse or former spouse who was the primary breadwinner or higher income earner during marriage usually makes temporary support payments to the unemployed or lower earning spouse. Temporary support payments are designed to ensure that both spouses’ living expenses and the couple’s bills are paid during the divorce, dissolution or legal separation process and ideally, to maintain the financial status quo that existed during marriage. Unfortunately, temporary support payments may not be sufficient to cover the supported spouses expenses or cover ongoing, outstanding debt, and supplemental income is required.
In some states like California, temporary support is calculated using a computer software program that is based upon a statutory formula established by the legislature. The formula uses a variety of factors including, among other things, the parties’ income, other sources of support, tax deductions and qualifying expenses like medical insurance and union dues. Once calculated, temporary support is paid by the transfer of cash or checks from one spouse to the other, or the payment of bills by one spouse to a third party for the benefit of the other spouse (i.e. rent payments to a spouse’s landlord).
Limited-term Support and Rehabilitative Maintenance
Limited-term support is in some ways similar to temporary support. It is paid for a pre-determined period of time and intended to cover a spouse or former spouse’s expenses, or to supplement his or her income while he or she completes an education, gets a job or otherwise becomes self-supporting. Limited-term support may be calculated in any number of ways, but is usually dependent upon a number of factors such as age, income, education, length of marriage, estimated time it should take for a dependent spouse to become self-supporting and disabilities. Limited-term support may also be referred to as Rehabilitative Maintenance because it is designed to maintain a spouse or former spouse’s financial stability for the length of time it takes him or her to be “rehabilitated” or be self-supporting. “Rehabilitation” in the divorce, dissolution and legal separation contexts usually involves reeducation, retraining or the development of new skills necessary to become employed and earn an income. In cases where a spouse left or deferred a career or education to raise a family during marriage, rehabilitative maintenance is often awarded.
Long Term Support
Long-term support, unlike temporary, limited-term or rehabilitative support, is paid for a more lengthy, if not indefinite, period of time. The primary breadwinner or highest earning spouse often pays long-term support upon the dissolution of a long-term marriage or divorce from a disabled or elderly spouse. Long term spousal support or maintenance is not guaranteed and is determined on a case-by-case basis. It is calculated in variety of ways in different states, but usually takes into consideration, and extensive array of criteria including, but not limited to the following factors:
- Age
- Health
- Education
- Income
- Earning capacity
- Length of the marriage
- Contributions and sacrifices made during marriage
- Reasons for the dissolution of marriage (in fault states and cases)
- Marital standard of living or lifestyle
- Alternative sources of income
- Asset liquidity
- Disability
A spouse may receive long-term support for a period equal to one-half the length of the marriage, more or less time, or indefinitely. The right to receive long-term support, even after terminated, may remain open infinitely and may be reinstated if circumstances require. Historically, long-term support or alimony was commonly awarded in long term marriage because wives were stay-at-home moms with very few job prospects after divorce. Today, even though women may still be discriminated against and have difficulty obtaining employment after their lengthy marriages end, judges and commissions can be unforgiving and unreasonably limit the amount and duration of support paid. These injustices can be difficult to overcome because the guidelines for setting support and maintenance are subject to individual judges and commissioners’ discretion, which allows their opinions and biases to cloud their judgments. On the other hand, there are still a significant number of judges and commissioners that favor supported spouse and continue to award significant sums of support payable for an infinite period of time.
Lump-sum Support
Lump-sum support payments may be awarded to or accepted by a spouse in lieu of regular taxable alimony, spousal support or maintenance payments. Lump-sum payments or buy-outs usually require a single cash payment from one spouse to the other, or the transfer of more valuable assets to the supported spouse in the divorce, dissolution or legal separation. The lump-sum payment or transfer of assets is usually made a part of the overall divorce, dissolution or legal separation settlement agreement or judgment and therefore avoids taxation. Lump-sum payments or buy-outs can be an attractive alternative to regular payments because they are paid at the time of the divorce, are not dependent upon the paying spouse’s continued employment or income and, provided the transfer occurs within one year after the date of divorce, dissolution or legal separation, may avoid taxation.
Support Waivers
Either or both spouses may waive alimony, spousal support and maintenance payments. Support waivers are common in short term marriages or cases where both spouses have maintained their careers during marriage, do not have children, are independently wealthy, agreed to waive support before marriage in a prenuptial agreement, or accept a valuable marital asset in lieu of regular support payments. Waivers made by persons who were not defrauded, coerced or incapacitated at the time of the waiver, are usually irreversible unless the future right to request support was preserved or the court finds other valid grounds for rejecting the waiver and entering a support award. If you are thinking about waiving support, speak to a lawyer first.
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