What are your Spousal Support options in a Divorce?
What are your Spousal Support options in a Divorce?
While divorce may end a marriage, it doesn't end obligations of one spouse to another. In many relationships, one spouse is more financially well off than the other. In a divorce, this earning discrepancy means that the less well off partner is entitled to receive spousal support, or alimony, to help him or her establish a new, post-divorce life.
Spousal support is financial assistance that recognizes a partner's contribution to the marriage and helps the recipient achieve financial independence. Alimony is available only to those who were legally married; and, rules vary by state. The court will award financial assistance based on factors such as the duration of the marriage, each person's earning capacity, contribution to household or career, and physical health of the recipient.
Alimony may be paid in one lump sum or on a temporary or permanent basis. The court typically will consider the circumstances of each partner when deciding on how much and how long assistance is needed.
Which Option to Choose?
Rehabilitative alimony is granted for a specified time period. It provides the recipient with the funds to obtain the job skills and education needed for him or her to become self-sufficient. This type of spousal support is also available to the stay-at-home parent who takes care of the children.
Although the court order or agreement specifies a duration for rehabilitative support payments, this alimony can be reviewed at the end of the set period. The court or divorcing parties must include a review provision in the agreement. The paying spouse has the right to stipulate in the agreement that there be no review. However, the court can override the payor's wishes and continue the support due to hardships such as the illness or incapacity.
Lump-sum spousal support is often granted in lieu of a property settlement. This is a fixed amount paid regardless of the recipient's situation, i.e., remarriage, cohabitation, or lack of financial need. Lump-sum alimony could also be paid to the estate of the deceased recipient. The amount awarded is equal to the total of future monthly payments.
Permanent spousal support continues until the recipient remarries or either payor or payee dies. Some states will terminate or suspend permanent support if the recipient cohabitates with another partner. In this case, the court would consider whether the third party was providing support for the recipient and whether the living situation was similar to a remarriage.
Permanent alimony payments may be adjusted due to changes in circumstances such as the recipient getting a better-paying job, receiving a major income source (inheritance, winning the lottery), or incurring medical expenses not covered by insurance.
Payments are also subject to change if the paying spouse either suffers a loss or reduction in income or retires. It is not a good idea for the payor to deliberately try to become a pauper. The court will review the situation to determine whether the financial downturn was in good faith and may deny a reduction in alimony request.
The dutiful spouse who works full time to put her partner through school and is dumped shortly after is a candidate for reimbursement alimony. As the name implies, this support reimburses one spouse for expenses incurred in helping the other complete an education or training program. Whether the recipient needs the money is irrelevant; reimbursement alimony is payback for providing support during the payor's time in school.
A court may also award the recipient a substantial amount of marital property as compensation. However, in reimbursement cases, the couple usually has not accumulated much property so a financial award is given instead. Reimbursement alimony can be paid in one lump sum or over a period of time.
Separation vs. Divorce
Temporary alimony can be paid when a couple separates but the divorce is not final. The parties execute a written marital separation agreement stipulating how much and when payment will be made. The agreement does not have to filed in court; if it is, the judge can decide whether the amount of temporary alimony is fair or if either party was coerced into signing the contract.
As with other forms of alimony, temporary spousal support can be adjusted. If the support agreement was not filed in court, the couple may set up a new payment plan themselves. A judge must order changes to agreements filed in court.
Alimony takes a bite out of the payor's wallet but also provides him or her with a tax deduction. For the recipient, spousal support is considered income and is therefore taxed as such. When considering accepting a lump-sum alimony, beware that you could owe a significant amount of taxes on such a large payout. Consult a tax professional to help determine your best option.
No Mas, No Mas
Death of either spouse or remarriage of the recipient are the most common reasons for terminating spousal support. Some states allow for the reduction, suspension, or termination of alimony if the recipient lives with another person in a romantic relationship.
The payor must provide the court with evidence that the payee lives with another party and are generally recognized as a couple. Many states now recognize homosexual as well as heterosexual cohabitation. Other reasons for termination include the recipient becoming self-supporting through employment or receipt of other financial support.
The payor may petition the court to terminate alimony by providing evidence a condition (ex: cohabitation) exists that would automatically terminate support payments. Or, the payor could prove that the continuation of alimony would be a financial hardship or unfair treatment. Proving hardship or unfairness is not easy; the court looks for circumstances that prevent the payor from maintaining a normal standard of living.
Once spousal support is terminated, it cannot be reinstated. If the recipient desires an extension of alimony, he or she must request a modification before the agreement expires. If the payor proves one of the automatic termination conditions, support ceases permanently.
Different States, Different Laws
Spousal support laws vary among states. Most states have cut back on awarding permanent alimony in favor of temporary or rehabilitative spousal support to encourage the recipient to become self-sufficient. Recipients may also get temporary support if they are the principal caregiver of the couple's children.
Michigan, New Hampshire, New Jersey, Oregon, Virginia, and Washington are more likely to grant the recipient life-long support payments. Cases involving long marriages where one partner earned much less than the other are most likely to be awarded permanent alimony.
States may limit or deny spousal support if the recipient was the cause of the breakup. Georgia and North Carolina see adultery, abandonment, and marital misconduct as grounds for limiting or denying alimony. Most states, however, recognize no-fault divorce and do not consider who's to blame when awarding spousal support.