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Alimony is the amount of money one spouse pays to the other, by court order, for support and maintenance.
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 payor. 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 of 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 one 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, usually one to two years. This type of alimony 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 a life and disability insurance policies 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: Duration of the marriage. Earning capacity of both parties. Age, as well as physical, mental and emotional state of each party. Other income, including but not limited to interest and dividends. The contribution by one spouse to education and furtherance of career of the other. The contribution of one spouse as a homemaker. 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 and how much will be awarded. |
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