In strict legal terms, a divorce effectively dissolves a marriage. However, there may be obligations that outlast a marriage separation or divorce. These obligations can be given in the form of spousal support, also known as alimony, from a more financially capable spouse to help the other partner achieve stability in his or her post-marital experience.
What is Alimony?
Alimony is the financial obligation of a spouse towards the former spouse after a divorce or during separation. It is intended to help the former spouse achieve financial freedom. It is also called spousal support or maintenance (in foreign jurisdictions).
Alimony is a court-ordered payment and can only be given in instances where the law recognizes the marriage. State laws on alimony often vary.
Before an order on alimony is made, the court will consider the financial status of each spouse and how the payment or non-payment of alimony would affect the recipient. In structural terms, alimony can be paid so long as a condition continues to exist, or for a short period, or permanently. The court may also order a lump-sum payment.
How is the Amount of Alimony Determined?
The court has discretionary powers over the award, duration, and the amount to be paid for spousal support. So, the court may decide to grant alimony or not. This is different from child support, which has specific monetary guidelines.
In making a decision over spousal support, the Uniform Marriage and Divorce Act specifies the following factors for the courts' consideration:
- The health, age, financial condition, and overall well-being of the spouses;
- The period the receiving spouse would require to start earning and be self-sufficient;
- The duration of the marriage;
- The earning ability of the paying spouse to afford the spousal support without unbearable financial consequences; and
- The couple's standard of living during the marriage.
How Long Must Alimony Be Paid?
The concept of alimony was developed to help the spouse that was more reliant in the marriage to be financially stable. Therefore, a divorce decree could state that the alimony should be paid for a long time or a very short period. Where the court does not specify the period for payment of alimony, the payments must still be made till the court rules otherwise.
Other circumstances may affect the payment of alimony, such as:
- Where the recipient remarries, the payment may likely end.
- Where the paying spouse loses earning ability.
- Where the recipient gains employment or another source of income that accrues a higher income than that of the paying spouse.
- The death of the recipient.
- Upon the paying spouse's death.
The death of the paying spouse may not end the payment of alimony if the recipient is unlikely to obtain gainful employment or achieve financial stability due to health conditions, physical disabilities, or age considerations. In such instances, a court order may be obtained to levy the spousal support on the paying spouse's estate or life insurance proceeds.
What Is Rehabilitative Alimony?
Rehabilitative alimony is a type of alimony given to a former spouse for a (short) period until the recipient can float a business or acquire skills or education needed to establish financial independence. In an instance where a spouse had to quit his or her job to take care of the kids, rehabilitative alimony can be granted to support that spouse in the event of a divorce.
Usually, the divorce decree specifies the period for rehabilitative support payments, but parties also have a right to review the payments on a predetermined basis. In cases where the recipient is facing ill-health or incapacitated, the court may step in to vary the terms of the review clause and order the paying spouse to continue the payments.
What is Lump-Sum Alimony?
Lump-sum spousal support often allowed instead of a property settlement, is the fulfillment of all alimony obligations of the paying spouse in a single, fixed payment. The amount to be paid is the total sum payable of all monthly payments.
What is Permanent Alimony?
Permanent spousal support occurs where there is no termination date for the payment of alimony. Therefore, payments will continue till either the recipient remarries or dies or the paying spouse dies.
Spousal support is deemed fulfilled or suspended in some states where the recipient is in cohabitation with another partner. Although, the courts will first determine if the third party can support the recipient's financial dependence or not.
Permanent alimony payments may also be varied where the recipient obtains gainful employment or discovers another source of income e.g., payout on royalties, winning a lottery, inheritance, etc.
If a paying spouse suffers a disability or loss or reduction of income, it may be a ground to terminate, suspend or reduce the payment of alimony. However, the court will inquire into the cause of loss or reduction of income to determine if it was in good faith before granting or refusing the request.
What is Reimbursement Alimony?
Reimbursement alimony is meant to repay a spouse who invested in the education or business of a spouse, but later got divorced shortly after the spouse obtained such qualification of boost. It is irrelevant whether the receiving spouse needs the money or not.
In some cases, the divorce decree may award the recipient a larger part of the property acquired during the existence of the marriage. Where there isn't much marital property, the court will award financial compensation.
What Is Temporary Alimony?
Sometimes, parties execute a legal separation agreement before finalizing the divorce. During this separation, alimony may be signed as a term of the agreement. This will include the period and payment amount. This kind of alimony is called temporary alimony.
The parties may decide not to file the agreement in court, but if they do, the court may investigate the terms of the alimony to determine if the agreement is fair and was made in good faith.
Temporary alimonies can also be adjusted by the court's orders where the agreement was filed in court. Where it was not filed in the court, the parties may amend the terms upon agreement.
Is Spousal Support Taxable?
For a recipient, alimony is deemed as an income and therefore taxable. The taxes are also proportionate to the size of the payout received. For the paying spouse, alimony is considered tax-deductible.
Generally, spousal support is terminated by the death of either spouse or if the recipient remarries. In cases of cohabitation, some states may permit a reduction, suspension, or termination of spousal support, depending on the surrounding circumstances.
Other grounds for termination may include the gainful employment of the recipient in a job that can make her self-reliant or a major source of income has been triggered e.g., inheritance.
Where the paying spouse seeks to terminate the alimony based on cohabitation, he must lead evidence to prove that the recipient is being catered for by the third party. It should be noted that many states recognize same-sex relationships, heterosexuals, and cohabitation.
To get a court order terminating alimony, a paying spouse must prove that a new condition has arisen that should terminate the spousal support, or the continuance of spousal support would constitute undue financial hardship on the paying spouse.
In very limited instances, spousal support may be extended beyond the original timeframe. However, the request for an extension must be made before the expiration of the period of payments.
It is important to note that the termination of spousal support cannot be reversed.
Alimony Laws Vary by State
States have the powers to legislate on alimony issues and the laws are often different. The more prevalent view is that rehabilitative or temporary spousal support should be favored ahead of a permanent alimony. If a former spouse was the principal caregiver of the couple's children, it is more likely that the option of temporary support will be available.
Alimony may be denied or granted if the recipient was responsible for the divorce. Specifically, North Carolina and Georgia will deem adultery, marital misconduct, and abandonment as valid grounds to deny or limit the award of spousal support. In many other states, the courts do not investigate the partner responsible for the breakup; instead, they recognize the no-fault divorce approach.
The states likely to award a recipient life-long alimony are Michigan, New Hampshire, New Jersey, Oregon, Virginia, and Washington. Permanent alimony may be available to spouses who have had a long marriage while one spouse earned lesser than the other during the pendency of the marriage.