Alimony is a payment from one party in a divorce to the other party for financial support.
Alimony in futuro or periodic alimony (usually after a long-term marriage) is
based upon one party’s ongoing need for financial support and the other party’s
ability to pay alimony. This right to receive alimony continues until one of the
parties dies or the party receiving the alimony remarries or the party receiving
the alimony receives support from a live-in relationship. Alimony in futuro is
normally tax deductible by the party paying. Alimony in futuro is normally
taxable income to the party receiving payment. The amount may be subject to
modification or change for material change in circumstances.
Rehabilitative alimony payable for a specific number of months or years may be used to help a spouse become rehabilitated, such as paying alimony for a specific period of time to help a spouse to return to school to increase his or her earning capacity. Your attorney can help make this tax deductible to the party paying by making this rehabilitative alimony end upon death of a party and following the technical rules that must be followed when these provisions are drafted. The amount may be subject to modification or change for material change in circumstances.
Alimony in solido is a lump sum of money that can be paid in installments each month. If the parties agree on this type of alimony, Wife cannot petition the court to increase the amount after the divorce because alimony in solido cannot be modified or changed for any reason. Alimony in solido is not tax deductible by Husband. Alimony in solido is not taxable income to Wife.
Transitional alimony continues only for a certain, definite period of time and will end or terminate upon the death of either party unless otherwise specifically stated in the divorce decree, such as a provision that the alimony will terminate upon remarriage of the recipient. Transitional alimony cannot be modified unless the parties otherwise agree in an agreement incorporated into the order. Check with your tax advisor and attorney to discuss the issue of this type of alimony being tax deductible by the party that pays and included as income by the party that receives payment.
When possible, the economically disadvantaged spouse's standard of living after a long-term marriage ending in divorce should be reasonably comparable to the standard of living enjoyed during the marriage or to the post-divorce standard of living expected to be available to the other spouse.
Alimony factors and considerations
- The most important factors are the length of the marriage, financial need by one party, and financial ability by the other party to pay.
- The relative earning capacity, obligations, needs, and financial resources of each party, including income from pension, profit-sharing or retirement plans and all other sources;
- The relative education and training of each party, the ability and opportunity of each party to secure such education and training, and the necessity of a party to secure further education and training to improve such party's earning capacity to a reasonable level;
- The duration of the marriage;
- The age and mental condition of each party;
- The health and physical condition of each party, including, but not limited to, total or partial physical disability or incapacity;
- The extent to which it would be undesirable for a party to seek employment outside the home because such party will be custodian of minor child(ren) of the marriage;
- The separate assets of each party, both real and personal, tangible and intangible;
- Marital property division;
- The standard of living of the parties established during the marriage;
- The extent to which each party has made contributions to the marriage, including financial, homemaker, and other contributions, and contributions by a party to the education, training or increased earning power of the other party;
- The relative fault of the parties;
- Other factors, including the tax consequences, as are necessary to consider fairness between the parties.
Any time there is an issue of potential alimony involved, you need the assistance of a very experienced divorce lawyer. If one spouse makes much more than the other spouse, you should employ a very experienced divorce lawyer as soon as possible prior to signing any papers and prior to discussing any possible settlement.