The payments are tax deductible to the payor and taxable to the payee.

While fault may still be a factor in determining alimony in some jurisdictions, courts today normally consider need, ability to pay, length of marriage, age and the health of the parties.

In the United States, no two states award calculate alimony in the same way. Except for very short marriages, courts work from an axiom that the dependent spouse (usually the woman) is entitled to approximately the same standard she enjoyed while married. Both spouses are expected to make reasonable efforts at finding and maximizing their earning capacity, but the dependent spouse generally receives sufficient support to cover the difference between her earning capacity and her marital standard of living.

In negotiation a marital settlement, divorcing spouses must clearly distinguish between payments that are part of a property settlement and those that are alimony.

A distinction between the two is critical if for no other reason than tax consequences. Alimony payments, which are tax deductible to the payor and taxable to the payee, are different from property settlements, which are generally without tax consequences to either spouse.

(When divorcing couples improperly call a property division alimony, they run the risk of recapture by the Internal Revenue, which happens when the alimony paid decreases by more than $15,000 annually within a three-year period after a divorce. The IRS regards the alimony payments as property distribution and recaptures the obligor’s income retroactively. At the same time, the formerly labeled alimony payments are deemed tax-free property distributions to the recipient. Recapture makes for a substantial income tax refund to the recipient (usually the woman), who can file an amended return, and an equally substantial retroactive tax bill to the payor (usually the man), who gets a substantial jolt).

Because of this, courts generally look beyond the label the spouse may attach to any payments between them as part of a marital settlement, and no two states distinguish between alimony and property division in the same way. In evaluating property settlements, courts pay attention when the settlement seems one sided, that is, one sided in favor of the payor spouse.

A failure to distinguish between a property settlement and alimony can come back to haunt long after the marriage is over. For one, the terms and conditions of a property division are set in stone; alimony is often modifiable, based on changing circumstances. Moreover, payments of property division are unaffected by remarriage, whereas alimony often terminates if the recipient, who is usually the woman, spins the roulette wheel of romance and makes another trip to the altar. A former wife cohabiting with a new love may drive her former husband to distraction, particularly when he is paying her alimony, but payments in support of a property settlement are a distribution of what they had when they were husband and wife.

And finally, alimony continues only during the lives of the spouses; property settlements are inheritable and can be enforced by the decedent’s estate.

By comparison, property division looks back, fairly distributing what a couple accumulated during a marriage; alimony, and other forms of support, look forward, insuring that the less economically advantaged spouse maintains a reasonable standard of living. The marital standard of living, however, is not an absolute marker in determining alimony. Two people cannot live as inexpensively as one, so in practice the inevitable shortfall is shared by both spouses. Moreover, in many cases divorcing couples maintained a high standard of living by accumulating ever increasing levels of debt. Indeed by the time of the divorce, debt dues day is often at hand.

Bankruptcy on the part of payor spouse looms as a danger to the recipient. Alimony and child support are not dischargeable in bankruptcy, but a bankruptcy by the payor spouse after the divorce can derange the finances of the recipient. The recipient of a property settlement has some protection in the event of bankruptcy by the payor spouse, but the terms and conditions of property settlement agreement defining alimony must be clear and lucid.

In a divorce, the marital estate is divided first, then alimony is set. In determining alimony, a court may consider how the marital property is divided, the marital standard of living, each spouse’s separate assets, the length of any premarital cohabitation, the spouse’s age and health, the needs of the children and the ability of the dependent spouse to return to work (if children are a factor), the contributions one spouse made to other’s education or career advancement, presumptive inheritances. In particular, however, is the situation of the homemaker spouse.

Despite the emancipation of women, courts seek to protect women, particularly those who have been in long-term marriages and out of the work force. Judges understand that a career as a homemaker, which has obvious economic value to the family and society, does not translate into money-making ability in the marketplace. For this reason, in divorces involving couples where the man is a dominant wage earner, courts award women substantial alimony in addition to what would appear to be a large share of the marital estate. This is particularly true in the case of long-term marriages where the children are adults and the husband shucks the wife.

Prior to no-fault, awards of alimony were made on the idea that they were punitive; that is, it was used to punish the guilty for bad conduct leading to the breakdown of the marriage. In this, fault on the part of a spouse could be a bar to the receipt of alimony or a reason to compel a spouse to pay to pay the other.

Some states consider fault or misconduct by either spouse in determining alimony; some consider it a relevant factor, and some do not consider fault at all.

Sometimes these payments continue until the recipient, usually the former wife, has remarried or until either party dies.

When alimony is contested, very often one party (the husband, who is usually the spouse who is likely to pay alimony) will request that the financially dependent spouse (usually the wife whose work experience is stale) undergo a vocational evaluation to determine her employment prospects and educational shortfalls. Ostensibly this routine helps set the proper alimony with an eye to additional schooling and education to place her place in the work force.

A majority of courts will not reinstate alimony in the event that the a subsequent marriage by the recipient is annulled.

Like child support, a chance in circumstance of the payor or the payee is grounds for seeking modification of the terms and conditions of alimony.

The retirement of the payor spouse, either because of age or health, is a change in circumstance that may constitute grounds to modify support. When retirement is in good faith or unelective, such as reaching 65 or being forced from the workplace involuntarily, the modification, if any, may be granted if the benefits to advantage to the payor outweighs the disadvantage to the payee.

Cohabitation by the recipient may make alimony payments a bitter issue with the person making payments. See also Cohabitation.

In uncontested divorces, alimony is not often a consideration.

See Maintenance and Spousal Support.

See also Bankruptcy.

Your Suggestion

1. Marital Fault
   Marital fault is not always a factor that the court considers when determining alimony or spousal support. For example, a spouse may not be penalized in an alimony award if he or she committed adultery.
   Contributed on 3/13/2007 by: DivorceDex.com Staff

   Category: Spousal Support  (Applicable in All States)
2. Factors Considered
   While fault may still be a factor in determining alimony in some jurisdictions, courts today normally consider need, ability to pay, length of marriage, age and the health of the parties when determining the award.
   Contributed on 4/5/2007 by: DivorceDex.com Staff

   Category: Spousal Support  (Applicable in All States)
3. The Lump Sum Payment Option
   The lump-sum payment option is often enticing to both parties. Alimony or spousal support paid as a lump sum will permit the payor to pay less and the payee gets a larger sum of money at the time of the divorce. For example, it would be easier for a payee to purchase a home after the divorce is final if he or she received a lump sum payment from the payor.
   Contributed on 4/5/2007 by: DivorceDex.com Staff

   Category: Spousal Support  (Applicable in All States)
4. Negotiating a Lump Sum Payment
   The payor will always try to pay a less amount in lump sum, then he or she would pay over a longer period of time in periodic monthly payments. This is truly the incentive a payor has to offer a lump sum payout. The payee must recognize the financial sacrifice he or she is taking by accepting a lump sum payout, while not forgetting the immediate taxes that will be paid.
   Contributed on 4/5/2007 by: DivorceDex.com Staff

   Category: Spousal Support  (Applicable in All States)

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