Spousal support, often called alimony or maintenance, provides monetary payments from one ex-spouse to the other after divorce. It aims to maintain financial stability until both partners can become self-sufficient. Given the complex eligibility factors, changing rules, and tax implications surrounding spousal support, understanding this challenging process is vital.
Types of Spousal Support
Post-divorce spousal support comes in different forms based on duration and structure of payments. Courts determine the appropriate type based on case specifics.
Temporary Support
Temporary maintenance helps cover living expenses while the divorce proceeds. It establishes an amount paid until final orders.
Short-Term Support
Sometimes called rehabilitative alimony, short-term support assists recipients in becoming financially independent within a defined period through schooling or jobs.
Long-Term or Permanent Support
For marriages over 10-15 years where one spouse did not develop career skills, permanent maintenance often applies until remarriage or death.
Lump Sum Payment
A one-time, lump sum payment may satisfy the support obligation, especially in short marriages. This avoids ongoing battles over monthly amounts.
Reimbursement Support
One spouse may be ordered to reimburse the other’s educational costs or expenses supporting their career during marriage if the marriage then dissolves.
Payment Amounts and Formulas
Some states use defined formulas and guidelines based on spousal incomes and years married. In other states, judges have broad discretion on amounts.
- Temporary support relies on budgets and financial records reflecting marital lifestyle.
- Permanent maintenance involves complex calculations of need and ability to pay. Historic incomes, education, employability, and assets are considered.
- For higher income couples, supports aims at equalizing post-divorce standards of living.
- Payments usually occur monthly but can be structured in other ways the couple agrees on.
Factors in Awarding Alimony
While eligibility factors differ among states, key general considerations include:
- Length of marriage – Support more likely with longer-term marriages.
- Age and health – If a spouse is near retirement age or has medical issues.
- Education/work skills – Employability and income potential.
- Lost career opportunities from family roles – Reduced earnings due to being primary caregiver.
- Standard of living during marriage – Maintaining similar comfortable lifestyles.
- Income and property division – Relative financial means and assets.
- Financial resources – Benefits, investment income, trust funds.
- Childcare responsibilities – Custodial parent’s reduced income.
- Contributions to other’s education or career – Reimbursement basis.
- Marital misconduct – Fault or domestic abuse may impact awards.
When Is Alimony Awarded?
The spouse seeking support must demonstrate financial need for maintenance and the paying spouse must have the ability to pay. Courts do not order support that is economically unfeasible.
Need Factors
Considerations showing need for support include:
- Being primary caregiver during marriage resulting in lost career progress and lower earnings
- Lacking marketable job skills due to time out of workforce raising children
- Insufficient assets and income to maintain close to marital standard of living
- Age or health limitations that prevent or reduce work ability
- Years spent building the paying spouse’s career through unpaid contributions
Ability to Pay Factors
Ability to pay support involves:
- Having significantly higher income and career earnings potential
- Receiving more income-producing marital property through equitable division
- Having income from non-marital assets or family resources
- Possessing substantial retirement accounts or business interests
Changes to Alimony Due to Retirement
When the paying spouse reaches full retirement age as defined by Social Security, continued maintenance may be reexamined and adjusted lower based on reduced income needs and retirement account distributions. Or retirement itself may terminate obligations.
Cohabitation and Remarriage Impact on Support
Spousal support usually ends if the receiving spouse remarries or cohabitates in a relationship resembling marriage. However, termination is not automatic in all states.
- Cohabitation meaning living together differs among states. Romantic involvement must often be proved.
- To end support, cohabitation requires financial interdependence and permanence. Courts scrutinize living expense sharing and intimacy.
- Burden of proof varies. Some states presume cohabitation ends support. In others, the paying spouse must prove shared finances and marriage-like commitment.
- Prenuptial agreements may require spouses alert ex-partners about remarriage so support stops timely.
Modifying Alimony Orders
Support orders can be modified if material changes to finances or circumstances occur. Both upward and downward modifications are possible.
Reasons for Upward Modification
Alimony may increase due to:
- Paying ex-spouse earning substantially more income
- Receiving spouse’s health worsening with increased costs
- Paying ex-spouse no longer having custody costs
Reasons for Downward Modification
Alimony may decrease due to:
- Paying ex-spouse retiring or losing job
- Receiving spouse increasing earnings through new career
- Receiving spouse cohabiting and pooling resources
Process for Requesting Alimony Changes
Either party can file a motion for modification outlining evidence of changed circumstances. Both spouses provide updated financial statements, tax returns, career details, health verification, and proof of grounds.
Enforcing Support Orders
Courts enforce owed alimony through strict measures including wage garnishment, property liens, credit damage, and jail time for those who refuse to comply.
Contempt of Court
Delinquent spouses face contempt of court charges. Failure to prove inability to pay results in penalties aimed at payment compliance.
Wage Garnishment
A portion of wages can be garnished until alimony arrears are satisfied. Most states garnish up to 50-60% for spousal/child support until paid.
Property Liens
Liens are placed on real estate or personal property to eventually force sale to cover unpaid support. All assets may be frozen until satisfying amounts due.
Tax Refund Interception
Past-due alimony allows federal and state tax refund interception. Owed spousal support has first priority for keeping refunds.
License Suspension
Professional, occupational, and driver’s licenses can be suspended for failure to pay alimony if allowed in the state. This quickly motivates payment.
Passport Denial
Alimony debts over $2,500 prompt denial of new U.S. passport applications and may lead to revocation of existing passports until compliance.
Credit Reporting
Unpaid support is reported on credit reports, damaging credit scores and ability to obtain loans, mortgages and new credit cards.
Civil Judgments
Substantial overdue support allows civil court monetary judgments, property liens or foreclosures until amounts owed are satisfied.
Jail Time
In rare cases, prolonged refusal to pay spousal support despite ability to do so results in civil or criminal incarceration, fines and other penalties.
Bankruptcy Limits
Alimony, maintenance and support during divorce proceedings cannot be discharged through bankruptcy except by the recipient spouse’s bankruptcy filing.
Taxes and Spousal Support
The tax implications of alimony impact both spouses, unlike child support. Understanding the deductibility rules aids settlement.
Paying Spouse Tax Deduction
Alimony payments are deductible from the paying spouse’s taxable income if structured to meet IRS requirements. Amounts paid reduce adjusted gross income.
Receiving Spouse Taxation
Correspondingly, the spouse receiving alimony must report support payments as taxable income. This applies to divorce, separation, and temporary support.
Requirements for Deductibility
For the paying spouse to deduct support and the receiving spouse to report it as income, the alimony must meet certain conditions:
- Payments are regular and recurring. One-time lump sums or property transfers are not deductible.
- Payments are mandated by a divorce or separation decree, not voluntary.
- The legal document states amounts will end upon death or remarriage.
- Payments may not continue past recipient spouse’s death.
- Spouses cannot be members of the same household when paid.
Child Support vs. Alimony
Child support and alimony differ significantly in tax status, purpose, duration and termination conditions.
- Child support is never tax deductible for the paying parent. Alimony payments are deductible.
- Only alimony terminates upon remarriage. Child support continues until emancipation.
- Alimony aims at spousal financial support. Child support provides for minor offspring needs.
- Alimony may involve complex modification litigation. Child support adjustments are formulaic.
Using Support for College Costs
Neither child support nor alimony mandate contributing to children’s higher education and related expenses. However, tax benefits exist if agreed to.
- Alimony used for college costs remains deductible by the paying spouse.
- Contributing child support for college allows claiming education tax credits.
- College support agreements should detail amounts, duration, children eligible, and income reporting.
Conclusion
While spousal support remains controversial for some, it helps rectify financial imbalances after the collaborative union of marriage dissolves. Understanding the different types available, eligibility factors considered, changing rules, enforcement methods, tax implications, and termination events empowers both spouses to negotiate fair, realistic support terms given their unique situation and needs. With good legal and financial guidance through the divorce process, spousal support provides an important economic bridge to a new life apart.
